• This is a rush transcript from "The Journal Editorial Report," November 15, 2008. This copy may not be in its final form and may be updated.

    PAUL GIGOT, HOST: Coming up next "The Journal Editorial Report," world leaders gather in Washington to address the global financial panic as the Bush administration announces a retooling of its $700 billion rescue plan. U.S. Treasury Secretary Henry Paulson is here.

    And bailing out the big three. Detroit's auto makers are calling for help and Democrats in Congress have a $50 billion answer. But will it cure what's ailing the car industry?

    "The Journal Editorial Report" begins right now.

    Welcome to "The Journal Editorial Report." I'm Paul Gigot.

    Twenty world leaders gathered today in Washington to review progress toward calming the global financial crisis and to set a course toward preventing the next one. The meeting comes amid news that the Bush administration is revamping its own $700 billion rescue plan to put a greater focus on the struggling U.S. consumer.

    U.S. Treasury Secretary Henry Paulson is the face of that effort. He joins me from Washington.

    Mr. Secretary, welcome.

    HENRY PAULSON, SECRETARY OF THE TREASURY: Paul, good to be with you.

    GIGOT: Good to have you here. Let me ask you first about the G20 meeting. Have you talked at all with the President-elect Barack Obama, giving him any advice about whether or not to participate?

    PAULSON: Paul, I haven't.

    GIGOT: OK. Gordon Brown, the prime minister of Britain, has floated this idea. I know it's not going to come to anything this summit, but he's talked about this idea of a vast global regulator for financial institutions. What do you think of that idea?

    PAULSON: I think we need obviously to see regulatory coordination because we have a global marketplace. But I don't believe a one — one global regulator is practical.

    GIGOT: Why isn't it practical?

    PAULSON: Well, we have a good number of sovereign nations. In the E.U., they don't have one global regulator or one E.U. regulator. But I think the principle, which is important, is we have a global capital market system, and I think having common principles and seamless coordination is a very good idea.

    GIGOT: We'll see how that evolves. Let's talk about the new financial rescue, the $700 billion financial rescue plan. It's been six weeks or so since it's passed, yet the jobless rate keeps falling and the economy is, if anything, struggling a little more. What can you tell taxpayers that they've received for that $700 billion?

    PAULSON: What I can tell taxpayers they received is the financial system's been stabilized. We never promised that the — that this rescue package was going to solve all ills of the economy or the government could push a button and do that. But at the time we went to Congress, we were at the tipping point. Credit markets were frozen. Interbank markets were frozen. It was passed on October 2. By the — ten days later, by the 14th, we had 9 banks with — accounting for 55 percent of the deposits in the united states commit to take dollars. Ten days later, we had $115 billion out the door to those banks.

    We're working very hard. It's going to take us a good bit longer to get the rest of the money into the banking system. It's — as I said, the system is stabilized but there's much more to do.

    GIGOT: So what you're saying is we stabilized, stop the panic, prevented a real systemic collapse. But what about prices within the financial system? I'm thinking about interbank lending rates or, for that matter, mortgage rates which really haven't fallen. Do you see any that chance mortgage rates are going to fall?

    PAULSON: Paul, I'm not going to make a projection there. But what I will say is that sometime before we went to Congress, we stepped into the situation of Fannie Mae and Freddie Mac, that these were, as you know, two big institutions that had a very flawed regulatory regime, that there was a lot of confusion around the — what the government — whether the government was really on the hook or not. And, of course, we knew that we had a responsibility there, and we stepped into that situation and stabilized it.