Fox Business Channel will be airing a great interview with Paul O’Neil at 3:45 today.

In a broadcast exclusive with FOX Business Network’s Liz Claman, former U.S. Treasury Secretary Paul O’Neill talked about the significance of the subprime mortgage crisis, his thoughts on the weak dollar, recession and market volatility. Excerpts are below. The full transcript is available upon request.

On subprime:

“I think it’s a containable problem. The thing that is so interesting to me about subprime loans is that it is something that has been coming at us for a long time now. All the people I know in the financial community that were part of subprimes and no-document loans, had to have suspended their intelligence in order to believe that it was possible to make loans that had a remote chance of actually being good loans and not think that eventually the music was going to stop and somebody was going to be caught holding a lot of terribly bad paper. So all this talk about risk adjustment systems and we have this great model for judging risk was all bologna.”

On whether he’s nervous about the weak dollar:

“I’d rather the dollar was stronger than weaker. For me, the level of the dollar is an important market judgment about our economy relative to other economies in the world.”

“People are commenting, and I think this is true, that the underlying level of oil on a fundamentals basis is lower than 95 dollars but the market is trading at 95 dollars, and so there is a trading froth. And I think there is a trading froth between the US dollar and other currencies at the moment.”

“I don’t think there is much we can do about it [the weak dollar]. As secretary of the treasury I couldn’t say on camera like I can now. You know the whole idea of manipulated dollar to make it strong is crazy. All of the evidence over the centuries of countries trying to strengthen their currencies by buying it is madness.”

On recession:

“I don’t think we are in a recession now. I think this built quite a bit of underlying strength in our economy. Our financial markets hate uncertainty and what is going on right now is people not being very sure about where the bottom is.”

On market volatility:

“It’s a little unnerving to see last week a 362-point move in the Dow Jones Average in one day…I can almost remember when I was a student in college, the DJIA was 500 so when you see a 362 pt move in one day, do the plus or minus, it’s a little hard to get your mind around the idea we can have movement of that substance in a really short period of time. And then get it all back.”

On whether it’s particularly hard to be a CEO today:

“I don’t think so. If we did a random survey of 50 CEOs, almost every one of them wouldn’t trade their job for anything else. They wouldn’t want to be a junior lieutenant.”

On Rubin at Citigroup temporarily:

“I think they’re lucky that Bob is there. He’s been around Citi since 1991 I think…It’s important that they settle the issue of who is going to be the permanent successor as quickly as they can because a big organization like that is not favorably affected by uncertainty.