(CNSNews.com) - In an interview with CNSNews.com video reporter Nick Ballasy Wednesday night, former President Bill Clinton said it was possible that the U.S. government could earn a profit from the proposed $700 billion bailout of the financial industry.

“I think that as (House Financial Services Chairman) Barney Frank said yesterday, in the end, it won’t wind up costing the country anywhere near $700 billion, and we might actually get all our money back and then some, if we manage it right,” Clinton told CNSNews.com.
 
To make his point, Clinton said that previous federal bailouts, including the bailout of Chrysler and the bailout of the Mexican government that Clinton engineered when he was president, turned out to be profitable for the government.
 
“So the devil here is in the details, and that’s what’s being debated, and I think it’s very important that the American people understand this,” said Clinton. “It is necessary to stabilize the stock market. Over half of the American people have investments in the stock market. But you don’t want any unjust enrichment of just throwing the taxpayers’ money away. So, in the Chrysler bailout, so-called, the American people made money. When I made the emergency loan to Mexico, which was very unpopular at the time, they paid the loan back three years early and we made $600 million in interest payments. We made a profit off of it.”
 
In 1995, Mexico was in danger of defaulting on its debts. The Clinton administration put together a $40 billion loan guarantee package for the Mexican government but it ran into stiff resistance in the U.S. Congress.
 
On January 31, 2005, Clinton announced that he would unilaterally use $20 billion from an obscure Treasury Department account called the Exchange Stabilization Fund (ESF) to provide the Mexican government with a line of credit. The ESF had been established during the Roosevelt presidency to allow the U.S. government to buy dollars on the international market to bolster the dollar’s value.

Mexico ended up borrowing $12.5 billion from the line of credit. On January 15, 1997, Clinton announced that Mexico had paid this money back and argued that the U.S. had made a profit on the deal.

“In the end, Mr. Clinton said, the United States ran a profit of more than half a billion dollars on the loans,” The New York Times reported on January 16, 1997. “That money, which American officials said would go toward deficit reduction in the United States, is above the interest the cash would have earned had it remained in the Federal Reserve's emergency stabilization fund, which was originally designed to steady the dollar rather than the currencies of allies.”

In the Chrysler bailout, Congress approved $1.5 billion in loan guarantees for the company in 1979.  In exchange, the company gave the government “warrants” representing a stake in the company.  When these warrants were later redeemed, they provided $300 million in revenue to the U.S. Treasury.

Here is the transcript of CNSNews.com’s exclusive interview with former President Clinton:
 
Nick Ballasy, CNSNews.com Video Correspondent: “Mr. President, we have a question about the bailout, the economic situation.  What do you think: Should the taxpayers pay $700 billion to bail out companies that have essentially failed?”
 
President Clinton: “No, but that’s not what’s going to happen.”
 
Ballasy: “Well, the economic situation.”
 
President Clinton: “The proposal, as I understand it--of course this is why Congress has to have hearings and review it--is to set up a fund that will provide liquidity to these companies and, hopefully, will enable a work-out of individual mortgages. You know, Hillary has been calling for a freeze on home mortgages and a work-out of these individual mortgages--if, as we did during the Depression.
 
If we do that, and we make investments as the government did like in AIG--where they took an 80 percent ownership share and loaned the money at a fairly high interest rate--I think that as Barney Frank said yesterday, in the end, it won’t wind up costing the country anywhere near $700 billion, and we might actually get all our money back and then some, if we manage it right.
 
So the devil here is in the details.  And that’s what’s being debated, and I think it’s very important that the American people understand this. It is necessary to stabilize the stock market. Over half of the American people have investments in the stock market. But you don’t want any unjust enrichment of just throwing the taxpayers’ money away.  So, in the Chrysler bailout, so called, the American people made money. When I made the emergency loan to Mexico, which was very unpopular at the time, they paid the loan back three years early and we made $600 million in interest payments. We made a profit off of it.”
 
So, if this is an infusion of cash to stabilize the shaky market, build up confidence--I think Mr. Buffet’s investment in Goldman Sachs probably did a little of that today. But if that’s what it is, and this can be managed properly, and it can maybe keep 2, 3, 4 million people in their homes--if we do it right. But, that’s what the Congress is trying to figure out: How’s this going to work?  Those are the questions that the Treasury secretary and Chairman Bernanke should answer. So, I want to be able to support this because I want the American economy to stabilize and start to grow again. But you have members of Congress in both parties, that, it seems to me, are answering, asking these questions. The principles articulated by both the nominees for President seem to be more or less consistent with that. So let’s just give them all a chance to work it out and see what happens.
 
I wouldn’t be in favor of just throwing the money away and, basically, putting good money after bad and enriching people who made bad decisions. But I think this can be done in a way that really stabilizes the financial system of America and allows growth to occur again and reasonable loans to occur again and gets us moving again.