the scorched earth partisan politics in washington could push america over a fiscal cliff and quite possibly into a recession if congress doesn't act. economists now say that the so-called fiscal cliff has now overtaken europe as the biggest threat to the u.s. economy. in other words, our home-grown storm has a bigger chance of causing a hurricane here than the actual hurricane that's blowing our way from europe. i've been berating congress on this show to pass legislation now to head off a series of tax increases and spending cuts mandated to take effect on january 1st. because congress couldn't come up with a better deal to raise the nation's debt limit last year. i am not alone in my calls. the federal reserve chairman and the international monetary fund are warning congress to act before it's too late. if you get hit by another recession, you'll join me in pointing my finger directly at the political partisanship that sr. has poisoned your path to economic stability and to prosperity. now, if i were a politician, i would not want to be party to anything that pushes the united states in to a recession. but many of your elected politicians don't have the political will to compromise and to reach across party lines and agree on measures to reduce our debt. in the this close to a national election. not a chance. that's not enough to persuade you, take the most recent snapshot of the economy. if there is one thing i understand, i understand the economy. 34,000 more people filed for unemployment claims last week. 12.6 million of you are out of work. housing prices are flat. and gas prices are up 11 cents in the last two weeks. we've got enough problems to worry about without going over a fiscal cliff. christine romans joins me now, the host of "your bottom line." tell our viewers what this fiscal cliff is. >> it is something that's replaced europe as the biggest threat to the recovery. "the washington post" says the main threat to the u.s., what we are doing to ourself. huge automatic tax increases. on january 1st next year the alternative minimum tax, the bush tax cuts, expire. also if you do nothing, that means if nothing changes, your taxes will likely go up. at the same time medicare doctor pay will also go down. on top of those tax increases, at the very same moment, massive cuts to federal spending. if current law stays in place, the government must slash $1 trillion over nine years from federal spending. half from defense, half from non-defense departments. the bipartisan policy center says it will cause a million jobs over two years, jobs in the private sector, many from contractors working from the government. right now they are trying to figure out how to prepare those lay-off notices. the economy is barely growing right now. 1.7% if you average out the first half of 2012. the second half of 2012, 2.5%. some say it might be too optimistic. if the economy goes off the fiscal cliff, the congressional budget office says gdp will shrink at a rate of 1.3% in the first half of the year. that's unless we back away from the fiscal cliff. that is a recession and it is uncharacteristic of the cbo to make a call like that. fed chairman ben bernanke again warned congress this week about this potential. what makes it so scary, it is all happening in an election year. no one expects congress to deal with any of these big issues until after november 6th. also approaching the debt limit limit again, we could hit that early as december. all of this is on congress's to-do list in an election year. >> when people say they want smaller government, you brought out a good point, particularly in defense spending. it is not government employees. it is government contracts to private sector workers in many cases. christine, don't go far. this is a hot topic. what would that recession look like? cnn contributor and conservative commentator will cain joins us now and bill gross, founder and co-chief investment officer of pimco. the world's largest investor in bonds. bill, i'll get to you in a second. will, i have investigated the origins of your name. it turns out that will cain is gaelic for ostrich with head in sand. because you think we should do nothing. >> i don't think we should do nothing. i think the obviously of your call for action on the nis cal cliff is clear to everyone regardless of their political ideology. i don't want you to be near-sighted. because right around the corner from the fiscal cliff is another problem. in fact it is a problem exacerbated by avoiding the fiscal cliff. if i can, may i show you? >> you have a graphic? >> tlaert. from t that's right. this shows the united states debt-to-gdp ratio, this blue line extending from the green, our current situation, shows what happens to our debt-to-gdp ratio should we avoid the fiscal cliff. that is tax cuts are extended and spending cuts avoided. within 30 years we soar to 200% above gdp. if we go over the fiscal cliff -- you go those are numbers, that's debt-to-gdp, that's long term -- a frequent guest to this program, has said high levels of government debt to gdp has a depressing effect on the economy, as much as 24%. reducing gdp over 20-year period. you're feeling that. you will feel that. all i'm saying is the conclusion is, lord make me chaste, just not yet. >> i don't really want to discuss your chastity on television. bill gross, a very compelling discussion about how you want to keep debt to gdp ratios at a -- in a tight relationship -- except that you can have low debt and low gdp as well. you look at this. you are investors in bonds, the u.s. is still got the advantage of borrowing money very inexpensively. give me your picture on this. >> well, i think will has a point, but i think i'm on your side and christine's side in terms of the need to sort of go carefully. the american economy, like a drug addict, has become hooked on credit and debt in both public and private xhis. but edaddicts can be cured cold turkey. so you need to describe some methadone both from the standpoint of the federal reserve and from washington's fiscal policy which is what you speak to. that to me means gradually reducing deficits from 9% to 8% to 7% of gdp every year with a focus i think on shifting from consumption to investment spending. >> i don't even see the incremental approach here. that's what's interesting to me. it is all or nothing. it is either the fiscal cliff or it is 200% get to gdp ratio. we need policymakers who can signal to the world and signal to americans that they get it and they're going to try to fix it slowly and responsibly. i don't think anybody has heard that. right? >> no. of course. that is the call here. the call is to get out there as voters and look for and support those people who are running in your districts, not because they are democrats, not because they are republicans, not because they say get your hand off my entitlements, but because they are prepared to come up with a middle ground which is going to be the only solution. will cain accuses me of coming up with a new problem as i solve the most immediate problem and i wonder whether you ever played asteroids. when that asteroid is coming at you, you've got to shoot it. it is irrelevant that there are 86 more asteroids coming. i would love to not live in a world where we are playing with asteroids. >> the issue is what is the middle ground? how do we get from my long term solution to your short term emergency measures. >> let's short them both out. >> i would suggest we know the path. >> bill gross, let me ask you this. if we have this middle ground, this approach where we reduce debt over time or we have some indication we reduce debt over time, yet we engage in measures that will increase economic growth -- which is code for creating jobs. that's exactly what we need to do generally speaking. how will the bond markets react? the fear that people have is that at some point everybody's attention is going to turn to the united states, it's been busy with europe. they're going to say you guys have unsustainable debt and your interest rates are going to go way up. >> i think that's a possibility. at the moment treasures are being bought by not only the federal reserve but by the chinese and others with the confidence that, as we call it, the united states is the cleanest dirty shirt in the world. to a certain extent, if we continue to run 8%, 9%, 10% deficits as a percentage of gdp, then as will points out, at some point our debt to gdp rises to levels of greece. >> hold that thought. we're getting to solutions now. we'll pick off where we leave off when we come back. later i'll tell you about another part of the storm you need to know about -- the people who should be watching out for you are not and that makes you want to keep your money in your mattress and that holds you back from achieving all the economic prosperity you can. when i come back, i'll tell you about how safe you aren't two years after the passage of the biggest financial regulation in 75 years. ♪ ♪ [ male announcer ] its lightweight construction makes it nimble... ♪ its road gripping performance makes it a cadillac. introducing the all-new cadillac xts. available with advanced haldex all-wheel drive. 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customers didn't like it. so why do banks do it ? hello ? hello ?! if your bank doesn't let you talk to a real person 24/7, you need an ally. hello ? ally bank. no nonsense. just people sense. i am rejoined by cnn contributor and conservative will cain, as well as bill gross, founder and co-chief investment officer of pimco. christine romans is with us as well. i want it pick up where we left off. christine, surprising amount of agreement. this is actually not that surprising. i think everybody in america -- with maybe a very few exceptions -- understand we need tax reform, we need debt reform, we need to solve the jobs problem. i don't think anyone would like us to go over the fiscal cliff. why is this problem not getting solved? >> the honest part of this is everyone's got to give something up. when you have tax reform. some people give up some of their retirement benefits -- i don't even know what's all on the table to give up but no one wants to give anything up. in a way it is like america is living the me more now bubble era. no one wants to pay for what we've already spent. >> i reject your premise. fiscal cliff will be avoided. calvin coolidge said if you see ten problems coming at you, chances are if you stand still, nine will fall in the ditch. in the meantime, while we're putting it off until december, will it havegativeconomic ef eep playing asteroids, we'll never focus on the long-term problem, the entitlement reform -- >> bill gross is the smart money on this, he deals with the people who buy the bond. christine could be right, i could be right, but ultimately the bet is made in the world in which bill operates. >> i think the long-term is the threat, ali, in terms of the u.s. bond market. that means long term bonds. to the extent that we continue to run deficits at 8% and 9%, that means higher inflation and ultimately that's a negative for those 20 and 30-year treasuries, what an investor would want to do to protect himself or herself is to buy shorter term securities, buy three to five-year securities so inflation couldn't erode their principal so quickly. there is a defense mechanism for bond holders and i think that's gradually taking place not only in the united states but elsewhere around the world. >> ultimately, bill, what is it that the people who lend us money, the bond holders, the people who keep america solvent through this crisis, what's the best thing they need it see in your opinion? this is confusing because right of after we got the downgrade, money got cheaper to borrow in the united states which got puzzling for all of us. what do they need to see to keep our borrowing rates low long enough for some of us to repair the damage we've gone through? >> two main things. one, low inflation. inflation is an enemy of the bond holder so deep low. but at the same time, bond holders want growth. that's typically associated with the stock market, but as we see in greece and spain and other countries in euro land, to the extent that you move negative in terms of growth, then your bonds are subject to default so that's a delicate combination, low inflation, relatively attractive growth. i mean 1% to 2% minimum growth in terms of real gdp at a min p minimun. so let's have some growth, let's have some low inflation. that combination results from gradually reducing deficits over time as opposed to cutting them immediately and producing that recession that washington is warning about. >> bill gross for congress. we need more people like that. will cain, cnn contributor and our good friend, christine romans. coming up next, the woman who took on wall street and washington to protect you. she became a target for the banking industry and its republican defenders in the senate. when things got too hot, the obama administration sacrificed her. she couldn't fix the system from the outside so now she wants in. elizabeth warren right after the break. 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[ male announcer ] febreze eliminates odors and leaves carpets fresh. ♪ [ male announcer ] febreze. eliminates odors and leaves carpets fresh. ♪ i tell mike what i can spend. i do my best to make that work. we're driving safely. and sue saved money on brakes. now that's personal pricing. it used to be that there were three ways you could find financial prosperity. you could work your way up the ladder, get regular raises, buy a home. but with almost 1 million people officially out of work in the united states, job stability is uncertain, growing your income as a path to prosperity is even less certain. so scratch that from the list. option two. you get rich off of your home. the home, by the way, that used to go up in value year of after year after year, that bubble burst when we overborrowed and gorged ourselves on cheap credit. when we learned the hard way that home prices don't always go up. when prices fell, they took a big pile of american wealth down with them. if you can afford a house today, if you have the down payment and credit score and steady job. well, low mortgage rates make it a great time to buy but you will not get rich off your house any time soon. so what's left? the only remaining legal way to change your economic situation for most people is investing, buying stocks, bonds, mutual funds, exchange traded funds or any other tradable security. anything other than keeping your money in cash which earns you nothing. investing in a smart way was once a potential path to a better life, even if you did it relatively passively, through your 401(k) at work or your pension plan or your i.r.a. money invested was money you could generally county on to grow over time. until 2008. the financial crisis and its aftermath proved that the game was rigged. the deck was stacked. the house held all the cards. banks inflated profits. they made risky bets that blew up in our faces, nearly taking down the global financial system. and the government bailed them out, and they went back to making billions of dollars for their investors and executives. and, surprise, surprise, the banks are still behaving badly. look at the $6 billion in trading losses that jpmorgan chase, america's biggest, and thought to be safest, bank. or the admission by british banking giant barclays that it, along with other banks, manipulated libor, the base rate around which trillions of dollars of loans worldwide are set. hsbc, asia's most respected bank says it's sorry for laundering money. two guys are in jail for insider trading, but most people who gamble with your hard-earned money walked free. they lose a little pay, their employers get a fine that they can probably pay with money that comes out of their vending m ii machines. for every year i can give you why to invest, you can give me nine nor why you shouldn't. remember elizabeth warn, best known as an advocate for financial reform in america. her willingness to go head-to-head with wall street is why the obama administration brought her in two years ago to get the consumer financial protection bureau off the ground. she is now the democratic candidate for senate in massachusetts. i asked her what she sees as the strengths and weaknesses of our financial system. >> the strength is the consumer financial protection bureau. and the reason it's the strength is it has a very clear mission that is to mow down the fine print in credit cards and stop the cheating on mortgages and to level the playing field and make it easier for families to see what something costs and for make direct comparisons and to pick the one that's the cheapest. and it has political insulation. it's set up so it can do its work in a professional manner on behalf of the american people. give them a real voice in washington. i think that's the strongest part of dodd-frank. i think the places where there are problems under dodd-frank are when dodd-frank, quite reasonably, said we're going to give it back to the agencies like the economic futures trading commission, to work out particular regulations to figure out how to regulate dlif tieriv, so on, so forth, how to get them on to a market. the problem is they did that, and then the republicans in congress started attacki the regulatory agencies. >> that's where your problem came in. they said that they can't have you running this body that has this absolute ability to make decisions about -- without what they call congressional oversight. they did let someone else be confirmed. they did let richard cordray be confirmed. it was a watered-down version of what you wrote, but is it helpful? >> i do want to say about the consumer agency, as it is set up right now, it's pretty insulated from political influence. and so it's really getting out there right now. it's established a consumer hotline so that people who have a problem with a financial institution or credit card, a mortgage, can call in and get somebody on their side. it's writing the regulations to make mortgages clearer, take the tricks and traps out of credit cards. it's out there working for service members and for seniors and for students and other groups that have been targeted by lousy credit products. and right now as it stands, it's got good insulation from the politics of washington. what is going on is the republicans have introduced bills to cut its funding, to make it more political, and to repeal it outright. in other words, they're assaulting it, trying to make it -- trying to weaken it so that it won't be able to do its job. that's where the real fight is going to be. does the agency survive as a strong voice for consumers? or are the republicans able just -- and their banks just to be able to mow it down and basically turn it into something weak and useless. >> there are only three ways americans can prosper. their wages can increase. we know historically that's not been happening for lower and middle income people. they can -- the value of their home can go up. while you have worked on protections for mortgages, ultimately it will be a long time before we have a housing recovery. so the final way is that they can invest prudently in the stock market through mutual funds and that is working against americans. every week they find some more evidence of the system being rigged against them. we need leadership to say that the american consumer, the american investor, the american home buyer and the american worker comes first. why is that leadership not coming out of the white house? >> you know, here's how i see this. you are exactly right. what we need is we need a level playing field, a set of rules, that are transparent so that you know when you make an investment the game isn't rigged against you. so that it's not rigged against you in every possible way. right now i lay the blame with congress. every attempt that congress has made the democrats have introduced to try to get some more account abl into tability financial system, bank lobbyists and their friends have blocked, they said no, we won't do it, and they've engaged in what is really a gorilla war right now. dodd-frank and their friends in the united states senate have gone out and secretly lobbied, they've tried to create loopholes and tangle the bill in complexity. in other words, the financial system hasn't changed. >> coming up next, you heard elizabeth warren talk about the controversial dodd-frank act. i'm going to hit that hard when we come back. it is one of the president's landmark pieces of legislation designed to protect you and your finances. it is two years old now, but depending on the political wins, it could be watered down or washed out all together. i'll speak to the new head of the consumer financial protection bureau. package... oahhh! 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[ male announcer ] ...forbusiness.com. ♪ ha ha! i bo because of its efficiency. i bought the car because i could eliminate gas from my budget. i don't spend money on gasoline. it's been 4,000 miles since my last trip to the gas station. it's pretty great. i get a bunch of kids waving at me... giving me the thumbs up. it's always a gratifying experience. it makes me feel good about my car. i absolutely love my chevy volt. ♪ jonathan horton climbed all the way to the ceiling... in the middle of a department store. some parents might have scolded him. ♪ jonathan's parents gave him... gymnastics lessons. ♪ it's amazing how far you can go with a little help along the way. ♪ td ameritrade. proud sponsor of the 2012 u.s. olympic team. i have been telling you a little ad nauseam about a coming economic storm -- congress is not protecting you, and it is putting your prosperity at risk. we've been talking about these storm clouds, the fragile u.s. economic recovery, the looming expiration of tax cuts, and the onset of record spending cuts. in short, the fiscal cliff that we are heading over if congress doesn't act. but there is another part of the storm you need to know about. the people who should be watching out for you aren't when it comes to the safety of the financial system. there are at least a dozen different federal agencies charged with regulating and monitoring the financial industry. it is a veritable alphabet soup of regulatory acronyms and all of this isn't getting the job done. now it's not the fault of these agencies entirely. some of them are trying their very best with limited resources because congress has deliberately given them less money in order to try and weaken them. there are powerful interests working against you being protected from the financial wrongdoing. now some of you may be asking -- well, wa a minute, didn't this already get fixed? didn't some kind of financial reform already pass congress? um-hmm. a little something called dodd-frank. it's named after congressman barney frank and senator chris dodd. it turns two years old this weekend. i shouldn't call it little. the mammoth bill is more than 2,300 pages long. dwarfing previous financial reform. born out of the financial crisis, this was an honest attempt to restore the public's trust in the financial system. now polling suggests that americans are in favor of the law. recent survey found voters support dodd-frank by a 53-point margin. not 53%. 53% more support dodd-frank than oppose it. that is a lot of support for a lot of legislation. has any of this made you any safer? the nation's largest banks -- you know the ones that were too big to fail -- they're even bigger now. they're still making the same risky bets that got us in trouble four years ago. that is something that the dodd-frank volcker rule was supposed to prevent. it is in here. named for former fed chairman paul volcker. the idea is simple -- federally insured banks shouldn't invest their own money to make a profit. but the rule isn't finished yet -- an early draft was 298 pages long and it has a big loophole in it. banks can make bets if they hedge their entirely portfolio. remember that $5.8 billion that jpmorgan chase lost on bad trades? the banks says those weren't investment they made for profit, they were hedges intending to protect themselves and their clients. well, that might be true. or it might be like me saying i'm not bald, i'm simply hairless. the bottom line, the almost 300-page volcker rule contained in dodd-frank may not have prevented those losses at jpmorgan chase. meantime, any teeth that dodd-frank does have are in danger of being pulled. bills have been introduced in congress chipping away at these new protections. lawsuits have been filed against some of its provisions and rule making has buried this thing in stall tactics. the simple fact -- people with deep pockets are trying to gut this bill and they have ben factors in congress. make no mistake, this is about your money and your prosperity at risk. one of the key parts of dodd-frank was the consumer financial protection bureau which elizabeth warren created. i spoke to the new head of that bureau, richard cordray. i asked him if we're any safer today. is there something that drives you? is that some enforcement action you'd like to take, the thing you'd like to fix? you're the new guy in town, the sheriff. there are certainly a lot of crimes going on. is there something you want to nail? >> actually, i want to do something slightly different from that. we have a variety of tools. enforcement is one of them. we're going to use that tool where it is appropriate. but if we can work with institutions to get problems fixed through corrective actions, if we can work by providing new clear rules of the road in the first plas, get consumers to muscle up and understand that they also have to protect themselves and they should take responsibility to do that and we will help them with trusted worth while information, all of those are ways that we can help clean up this marketplace. not just with the enforcement tool. >> but you'll agree with me, i don't know how many mortgages i've had in my life. i couldn't possibly understand my way through them. it is unreasonably complicated. >> yeah. and partf our job. it is a hard job, i would agree with you, is to take those documents, try to boil them down and make it clear to you what are you key points, what should you know and make sure that you can know it ahead of time and make good decisions based on that. >> you had an enforcement action against capital one. it is the first big one that you've had. tell me where that fits in the grand scheme of what you'd like to do at the cfpb. is that a traffic ticket or is that a major felony? >> i would say it's a property offense and it's a property offense that's going to amount to approximately $200 million for the institution. one of the things i would note is that the bank officials were just as distressed i think as we were to find out what was happening with their vendors and they were very cooperative in trying to fix the problem once it was identified. but all these institutions have to exert more careful monitoring over the people who are doing business on their behalf and they need to be cognizant of the fact that they have to treat consumers fairly. that is part of the law. it is not just good business practice, it is part of the law and we'll make sure people are held accountable for that. >> there are still people, republican senators, who say you an your agency are bad for business in america, bad for banks and bad for business. what's your response to that? >> i think we're good for good businesses and we should be bad for businesses when they're doing things that they shouldn't. that's what a fair enforcement regime is about. but i think there are a lot of good businesses out there that will benefit by making sure that their competition is held to the same standard they hold themselves to and it should all be about serving the customer. there was an era where we used to say the customer is always right. it was never actually factually true but it represented an attitude, a sort of approach to how you served your customers. we want to make sure that's returning to this marketplace. coming up next, powerful interests aren't giving up on the fight to kill financial reform. my next guest says the effort to protect you puts banks in a straight jacket. and clearly that's the greater concern, right? we don't want anything that gets in the way othe big banks. i'm one of six children that my mother raised by herself, and so college was a dream when i was a kid. i didn't know how i was gonna to do it, but i knew i was gonna get that opportunity one day, and that's what happened with university of phoenix. nothing can stop me now. i feel like the sky's the limit with what i can do and what i can accomplish. my name is naphtali bryant and i am a phoenix. visit phoenix.edu to find the program that's right for you. enroll now. the interests working against keeping your money protected are armed with heavy financial firepower. hundreds of millions of dollars have been spent first fighting financial reform, and now trying to weaken its implementation. last year the securities and investment industry spent more than $100 million on lobbying. commercial banks clocked in at more than $61 million, and that doesn't include campaign donations meant to influence members of congress or the millions that are spent by independent groups. here's what i can't figure out. what makes no sense to me. why these banks think they shouldn't be regulated? after all they've done wrong, after demonstrating a fascinating ability to avoid regulating themselves, fair and proper regulation is necessary and is something that will only make them stronger. it will save them, in fact, from themselves. there's one lesson from the financial crisis, it's this -- banks cannot be counted on to effectively manage risk when the payoff for gambling is just too sweet. joining me now, frank keating, e president and ceo of the me american bankers association. a former oklahoma governor. frank, thank you for being with us. would the problem be to separate all of those under $1 billion banks, community banks that give money to small businesses that need to have credit, from the largest of the banks which control so much of the money and are in fact absolutely too big to fail because they pose a systemic risk to the financial system if they were to fail. i think everybody will agree, there are too many regulators and it is too complicated, but you guys need to be regulated. your clients do need to be regulating fairly and in an understandable fashion. >> you're right. the fact is banks have always been regulated and that is a healthy thing. because if i'm a banker and you give me your life savings in a cd, for example, or savings deposit, that is insured by the fdic. the bankers pay the premiums to the fdic. >> good system, not very complicated. >> commercial banking is simple. i think to have a plex abflexib system that will respond to the risks that individual banks are taking, either to prohibit those risks or prohibit that conduct, and/or permit larger institutions to compete abroad. that's very important. you can do dumb things abroad. but the community banks -- it's crazy with 37 employees to have to read thousands of pages of regulation and conform to them. >> the good thing is that you were a governor so you understand the politics of it, you understand americans hate the banks. they need the banks. it's important. they do -- a lot of banks do really good things but americans hate banks. they think the deck is stacked against them, they think they get cheated by the banks and they think the minute you take your eye off the ball, the banks will do something else that's damaging to them and the econom how do you bridge that gap? how do you say, you know what? left to their own devices, some banks will do the wrong thing so we need rigorous and good enforcement. look nofrt rth to canada. they manage their banks very, very well and very simply. >> i think that in the united states, the problem -- as you well know, because you've talked about it -- the subprime loan debacle was political pressure on fannie and freddie to buy junk. a number of banks -- not the community banks but a number of banks did purchase that stuff, securitized it and off it went. it was a terrible blunder on the part of the united states. how many times -- i had nothing at that time to do with the american bankers association, did i see an ad on television, no background check, no credit check, no assets or income, we'll make you a loan. really! if you're a banker, you want to be paid back. it was silly and it was greed filled. but now i think as a result of the focus on this kind of conduct to have systems in place to protect against risk, to prevent a bank from doing reckless things or an investment bank or mortgage broker, i think that's all healthy but it has to be digestible so it is going to work as opposed to being avoided because it is so huge you can avoid sentences and paragraphs. >> it is so big. what is your proposed solution. we don't throw the baby out with the bath water. we worked lard to get this legislation. it was well intended. you say it is a little bit unworkable for a lot of your banks because it is just -- how do you have 37 employees and parse this to make it make sense? what's the solution? give me a solution. >> we're a free market society. >> the free market brought us the financial crisis of 2008. americans are not interested in hearing that the banks are a free market. absolutely not. >> no, no, i realize that. but i'm saying capitalism must succeed in order for people to be prosperous and greed and excess criminality and the like obviously should not be tolerated. let me give you the solution, i think. dodd-frank had very little republican support. it was rushld throughed throughs pages with very little debate. after the election or before the election the bipartisan policy center -- i was on that panel, very bipartisan, there will be a study what do we no to do to fixed to-frank to make the system work, and yet to make sure that excess and greed loses. >> frank, thanks for joining us. frank keating, ceo -- president and ceo of the american bankers association, former governor of oklahoma. when key bomb, we come bac introduce you to a woman who's protecting your money today. 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>> i think they are not doing their jobs in a way that is muscular enough. only about a third have been finalized. even when they are finalized or proposed they are quite lengthy and complex. they are hard for the public and academics to understand, those who need to provide analysis to make sure the regulations are doing their job. i think one of the reasons is the lobbiests come in and they are accommodating that and they shouldn't. we need a profound in the way the financial sector is doing business. >> the banks that were too big to fail before the financial crisis are bigger now. in 2006 the top five banks held $6 trillion in assets. that is 43% of america's total economic outpresident. last year they held $8.5 trillion in assets. why have the efforts to make banks safer and more manageable come up short? >> i think we are still working this around the edge instead of tackling the core problems. there have been constraints on growth. funding costhave started to go up because i think the markets understand that dodd-frank is going to be put into the process if they get into trouble again. there has been some progress but there has not been enough. we need more competition. we need to rationalize big bank structures and provide more clarity to share holders about how their business lines break out. i think there could be a lot of market pressure to break up the large institutions that do not perform well from a share holder perspective. this is another way that regulators can provide more information from this living will process. dodd-frank requires big banks to basically show the regulators that they have break up plans. that informatio could be helpful to the markets. >> banks are important. we need them. they serve a purpose. but there is an element of trust that is important. the recent poll shows consumer confidence in u.s. banks was at 60% in 1979. you can see a lot of variation but you can see how it tanked. it stands at 21% of americans have confidence in u.s. banks. do you think that is fair? should they be more confident? >> i think if i were a main street household i would have the same view. my respect for a lot of financial institutions has deteriorated also. i think you need to differentiate the banks that make loans. they are not involved in the scandaled you are seeing now. this is bad activity going on the trading desks of larger institutions. there is a cultural problem on the trading desks. they think the laws don't apply to them or some of them don't. i think the core problem that needs to be tackled and again regulators are trying to work this too much on the edges as opposed to telling you you can't do it this way. everybody knew it was subjective. why wasn't it fixed when these issues came to the attention of some regulators in 2007 and 2008? i don't get that. going forward regulators need to get more muscular and tell banks they have to stop doing this. >> shea bair thanks for the hard work you put in. she is the former chairman of the fdic and founder of systemic risk council. coming up i have told you about how congress needs to act and who is standing in your way of prosperity and who is going to protect you. now it is your turn to tell me what you think. i will tell you how you and i are going to debate. i upgraded to the new sprint direct connect. so i can get three times the coverage. 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