SOUTH BEND — Sen. Barack Obama spent 10 minutes with The Tribune before his Washington High School appearance Wednesday night.

Here’s the transcript from that interview:

The Tribune: Senator Clinton has said that she’s coming back to the area on Saturday — it will be her second visit. Are we going to see you back here soon?

Sen. Barack Obama: Well, I’m just starting my first. We’re going to be campaigning actively in Indiana. We’ve got until (May) 6, which means that we’re going to be spending a lot of time here. This is going to be my first big road trip, multiple days, we’re going to hit a lot of towns, and I’m sure that we will do a second go-round across the state before the primary on May 6.

Tribune: A lot of issues facing people all over the country, and here in the Midwest, one of the big ones is home foreclosures. Indiana’s 10th in the country. Senator Clinton has the 90-day moratorium plan (where she’d halt foreclosures and negotiate set rates for borrowers), you have a plan of your own. What are you going to do about the problem?

Obama: Well, I’ve been working with (Sen.) Chris Dodd (D-Conn.) and (Rep.) Barney Frank (D-Mass.) in the Senate and the House to put together a program where the Federal Housing Administration steps in, negotiates with the borrower and the lender. The borrower is going to get a fixed mortgage that they can pay and the lender is going to have to reduce their interest rates slightly, but will get any benefits if home values go back up, so the borrower will have to share some of the equity in the house if housing prices go back up. The point is both take a slight loss, but you stabilize folks in their homes, and that’s good for the entire community.

And it will only apply to people who are actually living in their homes. We don’t want to help speculators, we don’t want to help people who bought homes that they just plain couldn’t afford. What we want to help are those who are right in the margins, who’ve really been hurt because home values went down, or because they got drawn into deceptive loans and teaser rates that they just couldn’t end up sustaining over time.

Tribune: How do you keep (the subprime crisis and mounting foreclosures) from happening again?

Obama: I think the most important thing is to have a strong regulatory system in place. Two years ago, I put into place what I call the Stop Fraud Act which would prevent predatory loans, much better disclosure, a credit rating system so people would understand exactly what they were getting themselves into.

The mortgage lenders spent $185 million over the last several years preventing this kind of report from happening. I think the time is now right for us to go ahead and put that in place.

Tribune: Gas prices — certainly not a new issue this year but obviously a big one. You have proposed in a (television) commercial airing here in Indiana a profit windfall penalty (on oil companies). How do you impose that without the oil companies passing it along to consumers in the form of higher gasoline prices?

Obama: Well, look, I think that what we can do is to simply say — they’re making $11 billion worth of profits. Their profit margins right now are astronomical. Oil hit $112 a barrel on the world oil market. A lot of what we want to see is them reinvesting in refinery capacity, which would reduce prices over the medium term, but also renewable energies.

We haven’t seen enough investment in the kinds of biodiesel strategies that could benefit Indiana, benefit my home state of Illinois. We’ve seen a huge surge in corn-based ethanol, but that’s probably not going to be the long-term answer.

We need to start shifting to other biomass — switchgrass, animal refuse — and there are a whole range of ways that we could produce energy and fuel. But we haven’t made the investment and that’s why I want to put $150 billion into research over the next 10 years, to develop these new strategies.

Tribune: But how do you, in the short term, that windfall tax: How do you keep that from getting passed on at the pump?

Obama: Well, I don’t think the answer is necessarily a sweeping tax. It may be a penalty if they are making a certain profit above a certain amount and that goes into a fund that we reinvest in refinery capacity or clean energy.

The other thing I do want to make sure it does is that in providing immediate relief to consumers, the most important thing that we can do is provide a tax break to the middle class. I was the first candidate to propose tax cuts for the middle of the country: $75,000 a year for an average individual, offsetting some of their payroll tax. Senior citizens who are making $50,000 a year or less: exempting them from income tax on their Social Security payments.

That could mean an extra $1,000 in the pockets of the average family. That could, in the short term, at least, offset the extraordinary hike in gas prices that we’ve been seeing.

Tribune: In that same commercial, you’re at a gas station and you say you don’t take money from oil companies. Nobody takes money from oil companies, because corporations can’t give to campaigns. And critics have said that you do take some money from CEOs of those companies.

Obama: Well, what you said is not entirely true. Oil companies have PACs (political action committees). Oil companies have lobbyists. They organize and provide big bundles of money to candidates all across the board. And we don’t take money from PACs and we don’t take money from lobbyists. Not just from oil companies — we don’t take drug PAC money, we don’t take insurance PAC money, we don’t take bank PAC money or lobbyist money. So it’s true that I’ve received money from various people who might work in the oil industry, because we campaign nationwide, we get money from everybody. We’ve got 1,300,000 donors. But that would include a guy who works at the gas station at the corner who sent me $25 over the Internet.

Tribune: A poll conducted here statewide, and the Tribune was among the commissioners of that poll, puts you 3 points behind Senator Clinton, but that’s within the 5-point margin of error. What do those numbers tell you about the way you need to come into Indiana and campaign?

Obama: It’s close. It means we’ve got to campaign hard, and we feel pretty good about where we are. We had to spend more time in Pennsylvania because we were so far behind there, which gave Senator Clinton something of a head start in terms of campaigning across the state. And obviously she’s had former President Clinton and her daughter Chelsea campaigning as well.

We feel like we’re just getting known around the state. Obviously, in the northern part of the state that is part of the Chicago media market, I’m known and that gives me some advantage. In the southern part of Indiana, I’m not well-known at all, and so we’re going to have to do a lot more work south of Indianapolis to make sure that people have a sense of who I am and what I stand for.

If we continue with the message of pushing back against the special interests, providing health care to all Americans, tax breaks for the middle class, rolling back tax cuts for companies that ship jobs overseas, those are all things that I think the people of Indiana will respond to.

Tribune: Let’s talk about Pennsylvania for a minute. Polls are showing you gaining on Senator Clinton. Let’s say you don’t win Pennsylvania. How close is close enough?

Obama: Oh, you know, if you don’t win Pennsylvania then you don’t win Pennsylvania. My attitude is, I campaign in every state, and I try as hard as I can. Some states you win, some states you lose. But because we competed in every state, I think that’s part of the reason why we won twice as many states as Senator Clinton.

We don’t care whether it’s a primary, whether it’s a caucus, whether it’s a big state or a small state. We think all states are important and we’re going to campaign here in Indiana just as hard as we’ve campaigned in Pennsylvania or any place else.

I think that we have a chance of winning here and that’s all you can ask for.

Tribune: You’re here after 10 p.m., you’ve done other appearances late at night. I guess the question that some people might want to know is, how do you keep going, how does the campaign trail affect you as a person, and why the late night appearances?

Obama: I try to work out every morning. Sometimes it’s harder than others, but that’s helped. I draw energy from people, and meeting them and talking to them and hearing their stories.

When I start feeling sorry for myself, I think about some of the troops from right here in Indiana who’ve been deployed for 15 months in Iraq, and don’t see their families at all. It reminds you that there are people who are going through much more difficult tasks than I am and my job hopefully is to make sure that I’m doing a good job for them.