market committee. the new york fed also seeious live involved in banking regulations, talks about the volcker rule and jpmorgan, among other things. >> i think we all would like to see the situation resolved in as rapid and timely fact as possible. we have 17 different countries trying to work toward greater fiscal, chick integration and that's obviously very difficult. the thing i say on the positive side is i think the european leadership is very committed to european union. >> how much concern does europe give you in terms of the u.s. economy? is it something you feel could derail the recovery and how would it do that? >> there's two aspects of europe you have to consider. one is european growth is very, very weak. that's part of the landscape right now. european gdp is basically stagnant so that has consequences for the demand of europe for our goods and services and so that does put a bit of a governor on how fast we can grow.

the second issue of course is financial. if europe were to evolve in a very bad direction in terms of the integration of europe, the confidence of the investor community in that integration story, then financial markets could get very unsettled and that would be another source of contagion back to the united states. >> how leveraged are u.s. banks now to the situation in europe? have they done a good job of limiting that leverage? >> i think the u.s. banks the thing i would say is, one, a lot more capital than they had a fuse year ago, a lot more liquidity, a lot cleaner balance sheets, very little exposure to peripheral europe. of course, the situation -- you can imagine scenarios in europe that got bad enough and broad enough that will would be consequences back to the u.s. banking system. all we can do is make sure the u.s. banking system is in a situation where it has capital

and liquidity resources to handle shocks. >> there has been a lot of talk about whether or not the big banks should be broken up. where do you come down on that debate? >> i think it's obvious we want to eliminate any doubt about this too big to fail issue. we can do that in sort of two ways. one, force large systematically important financial institutions to hold more capital, have larger liquidity buffers to reduce the probability of their failures to a very, very low level and, number two, work on the resolution side so if they were to get into difficulty they could be allowed to fail. the third option is to try to break up these banks entities but i think that's a little bit more difficult than what the proponents of this sort of argue. they just want to break them up. so how do you do it? and if you were to do it, would you actually have financial institutions that could serve global multi-national corporations that are doing business around the world? so it's not as if these

institutions don't actually satisfied a real need. >> doesn't sound like breaking up the big banks is your preferred -- >> i'm open to it if somebody can articulate how it would actually happen. >> do you think banks should be prohibited from proprietary trading? something like macro hedging, is that something that should be prohibited? >> as you know, the dodd-frank act established volcker rule. that's the law. we're going to enforce the law of the land as it stands. we know what pure agency trading is, we know what proprietary trading is but there's a whole bunch of stuff in the middle. how the regulations are written and how they'll be enforced is going to be important in how we carry this forward. >> jpmorgan is big in the news. the question is is there something the new york fed

missed? and secondly, is there something that we learned about what happened to jpmorgan about the state of the financial system right now? >> i think it's very important, steve, to stress what supervision can and can't accomplish. you have to be realistic about what supervision can do. i think supervision is ensuring banks have sufficient call tap and liquidity to handle large shocks. it about ensuring they have appropriate governance, control and that we worked to help ensure the banks get to the right place. it not to prevent the banks from making mistakes in any dimension. banks are going to make mistakes from time to time. our job is to ensure the banks can survive stress consisteneve the banking system can continue unfettered to offer bank

assistance. >> we have more of the interview with bill dudley. it's online and we'll have later this morning. i think i took a lot of the things that rick said about the fed and i asked him about them. i didn't save that for you guys but some of the good stuff with europe and jpmorgan. a little reluctant to talk about jpmorgan. he's a regulator so it constrains him but the idea that the fed is not there to keep the bank from making mistakes. >> that's been one of the big questions is if the regulators were already there, sallie, and were already in the room all the time, how effective is it to ask for more regulation if they didn't seem to see what was going on either. >> i agree with him that banks are going to make losses. and in the scheme of this

evenings that this is whether they have $128 billion of equity capital backing it, eh, you know. that's okay. the point that really has struck with me is just that complexity issue, and the fact that, you know, it took these guys a while to get to the bottom of it. and we just need to make sure that we've got enough capital there that when these things are bigger and they're not found that, you know, the banking system remains in good shape. >> steve, thank you very much for bringing all of these interviews for us. when is the next hit? >> you mean -- >> when is the next part of it? >> about 10:30. >> and give them the plug. >> where are you playing tonight? >> we're having a discussion about the moon cussers. these were people who cussed the moon.

>> they were pirates. bad pirates. >> the captains cussed the moon for not showing. >> and the moon cussers cussed it when they did show -- >> i got it all from this thoreau thing. >> i got it from disney. >> when we come back, we'll see if the stocks are on the move ahead of the opening bell. we'll head down to the exchange right after this. that's why only aviva rewards you with savings for getting a check-up. it's our wellness for life program, with online access to mayo clinic. see the difference at avivausa.com.

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welcome back to "squawk." take a look at the futures now. s&p 500 would open up about four points highered. we're joined now. david is not there but he's got a big documentary this evening. but also, i want to talk about facebook. we didn't get a chance to talk about this yesterday, but i saw some comments. it seems crazy what's happened here with these analysts and the way the rules have been written. >> there's a presumption. i don't know how they got to the

reporters saying this is business as usual. i put in 10% of everything i put in. i never got this call ever. this so-called business as usual is ridiculous. can you imagine the boosting the amount of stock that's for sale from insiders. they're saying the price has to go up because there's tremendous demand. all they were doing was picking off the retrail investors, getting all their favorite clients out. while we have a decelerating earning story. can you imagine if these estimate cuts would come out this week, that stock will be at 25. >>. >> and carl, what else are you guys doing today? >> we've got meg whitman on the program. and we're going to remember mark haines who passed away one year ago today. as you know there's a picture of him on the floor of this trading floor. we'll talk about what mark meant to the show, meant to this network and all of us.

>> and to journalism. >> journalism, yes. >> we will look forward to that. yes. poignant moment. coming up with final thoughts from our guest host. tomorrow it's a very special edition of "squawk box." we're introducing the masters of the market. look who made the cut. and an interview with thomas friedman. don't mix "squawk box."

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with every door direct mail. ♪ ♪ welcome back to "squawk box." it's time for the stock of the day. >> stock of the day is tiffany. the luxury retailer reporting earnings of 64 cents a share. that was 5 cents below estimates. also cut the outlook on declining expectations. >> there's a brand new economic statistic this morning. launching what it's calling

flash pmi today. market says this will be the earliest available indicator of business conditions across the manufacturing sector each month. the data will hit at 8:58 eastern. sally, i know yao been spending a lot of time looking at facebook and jpmorgan. we have not gotten to the points you make in the harvard business review piece out in june. your point is the board should be focusing on different things than they are at this point. >> i think it comes back to the issue of kem plexty. members of a big bank have been were very complex. the details they're given are significant and wide ranging. so what i try to do is go through that for my experience within the companies as an analyst. try to cut through and say there are a few tools they have to cut

this through complexity. one of them is compensation. another dividend policy. looking at businesses doing well. not just the ones doing poorly. and watching customer metrics. >> in terms of the compensation. that's the stick approach or the care approach too. >> we've taken an approach it's more equity held for a longer period of time. i don't think anybody would look at the downturn and say they didn't have enough equity. i think there's time for a rethink here to have a bit of a risk mitigation and moderation through these teams. >> to the extent you don't think the boards are doing their jobs -- >> i didn't say that. >> but 53.9 that had to be above -- it's growing but it's down from the last. >> this is the flash pmi just now. >> you say they don't have enough in the game. >> you know, i'm not sure that's

the issue. i think the real issue for boards is they are drowning in all these metrics and complex y complexity. they're supposed to protect. >> they're also supposed to figure it all -- >> they're very hard working individuals. think of capital. economi economic. and that's just capital. >> you know when the investors are coming back? what would it take? >> i think a lot of great advisers are keeping them in the market correctly. clearly when there's a dippable market -- >> how long will they have to be in. >> couple years. there's a lag, absolutely. >> it's like a ghost town. i'm sure there's no broker they call right now. >> that's from when you were a broker. there are not those anymore. things have changed a lot.