it's wednesday, september 12, 2018, "squawk box" begins right now. ♪ good morning, everybody. welcome to "squawk box" on cnbc. we are live from the nasdaq market site in times square. i'm becky quick along with joe kernen andrew ross sorkin reporting live from washington today on the tenth anniversary of the financial crisis you have been pulling this together you're the man who wrote "too big to fail" and you have this huge program no, i don't it's pretty amazing what we've seen >> thanks. we have a big lineup today on qua "squawk" and then "squawk on the street." roger cohen will join us at k

6:30 the lawyer, if you will between going between dick fuld, lloyd blankfe blankfein. then we will talk to former senator chris dodd he will talk about the banking regulations that bear his name i'll also be joined by mick mulvaney, acting director of the bureau of consumer protection. lots of questions for him. it's all leading up to tonight's premiere "cry visisis on wall s: the week that shook the world. that airs at 10:00 p.m on "squawk on the street" we will have a live interview with the three key players in the midst of the crisis, hank paulson, ben bernanke, and tim geithner a big day ahead. >> you're so steeped in this, in

everything that happened were there with the tick tock all the way along. anything you heard ten years later from any of these people that you went back and talked to that surprised you or caught you off guard? >> you know, i think actually -- i don't know if this is a popular thing to say or not, there has been a lot of introspection over the last ten years about the mistakes made about where they could have done better there was obviously and continues to be a huge amount of criticism that's been heaped on all of these players on both the banking side and the policy side hearing them react to that criticism, hearing where they think they could have made different steps and how they would have done it to me has probably been the biggest surprise i think you'll be hearing -- i hope you'll hear some of that when we talk to paulson, geithner and bernanke later.

>> do you think it's something that's haunted any of them or do you feel they did the best they could possibly do? >> it's a little bit of both i think the crisis continues to hauntvirtually anybody who participated and was in the midst of it. it's something they think about religiously and regularly. i was with a group of them yesterday -- brookings is putting on a two-day symposium with virtually every policymaker that ever was in the midst of this ten years ago, it's almost like a reunion you can tell this is something they thought a lot about over the past ten years most of them look back at the policy steps that were taken and say, you know what if you asked me ten years ago whether the economy would be at 3.9% unemployment and doing as well as it's doing today and that the t.a.r.p. money have been paid back, i don't think they would have believed you ten

years ago. on that score, just the math, the economics of it, they're pretty happy with where things landed the political issues, the populism, the culture, the divide in the country, some of that stemming from the crisis is something they think long and hard and talk about today. >> we'll continue this conversation, also to the mull over over the next three hours andrew will be here from washington, weighing in on all of it. let's check the markets this morning. look at the u.s. equity futures. yesterday all three major averages ended in the green. the first time that's happened in two weeks they all rose simultaneously dow futures up 30 points this morning. the s&p opening up by 2 1/2 points the nasdaq up by 16. yesterday apple along with exxonmobil led the dow futures or led the dow advances which were up by 113 points. look at what happened overnight in asia. you'll see when it comes to the

nikkei, it was down by a quarter percentage point similar declines for the hang seng and shanghai. in europe this morning it looks like there are some mixed results. the cac is higher, it's up by a half percentage point. the ftse down by a tenth of a percent. we'll continue to watch this also look at what's been happening in the u.s. treasury market treasury yields at least at this point, yeah, continue to be approving some of those highs that we've seen recently the ten-year at 2.959% hurricane florence is headed now towards the carolina coast probably charging is not the right word it's kind of --moseying. >> a lot of water and rain it could be the strongest to hit the area in decades. jackie deangelis joins us from carolina beach, north carolina what can you tell us

where are we we're wednesday and talking late thursday or friday morning i guess? >> was the latest forecast as of yesterday, landfall friday morning. the national hurricane center is now saying it would be as late as saturday. the warnings with the delay of the storm doesn't mean this storm won't pack a powerful punch. there will be major accumulations of rain, in some places 20 inches signs of preparation here in carolina beach have increased as we get closer to what people think will be the landfall here. i'm starting to wonder if enough action has been taken. look at this bike shop five sandbags in front of this building a lot of window here if you have wins at 140 miles per hour, a building like this will have a hard time keeping up with the pace of that storm with

just five sandbags dichotomy, across the street we have a caldwell banker that's all boarded up that will help a little bit. this building is on stilts if there's major flooding or storm surge, that's the other concern. they'll be a bit more protected. but as we drove up the main drag and looked around, while the precautions have been taken, if this storm is really that powerful t could be difficult. talking to people on the ground, there's a feeling of fear in the air but also a motivating fear a lot of people have made the decision to leave, to go inland, heed the warnings of state and local officials. mandatory evacuation here in carolina beach will be tonight at:00. those evacuations, they are mandato mandatory, but nobody can force people out of their homes. basically they're saying ifyou stay you're staying at your own risk if we can't get out to help you, we gave you a lot of warning to

let you know about that. there are those folks that will hunker down. it's the minority at this point, but a lot of peopl funds to leave town, they can't go inland and raechbtent a hotem so there are the three risks, the wind, the rain, and the storm surge which could be as high as 20 feet. >> there's time. you can only do so much. we'll talk about that now. we've certainly had almost a week now hopefully a lot of people are doing what home depot tries to do pete cappel is vice president of field merchandising for the home depot. he joins us from atlanta that's where the site is for the company's command center for florence and for -- that's where

it always is, i know, pete you have started i think on monday full on, 200 employees, 24-hour round the clock logistical preparations. >> yes good morning that's correct we actually started over the weekend making preparations, but full on on monday. and we are full on right now >> i wish you could just do everything so that nothing bad happens. but obviously you can't do that what are the most important things that you try to do up front to just relieve the damage >> it's about getting the right product in the right place at the right time to get the community as prepared as possible in the face of an oncoming storm >> before, during and after you will be full out right now you're focusing on the areas i guess that will be most

affected so there's things headed to north carolina, south carolina, virginia >> that's correct. preparations have been made in all of those locations we're making our prestrike shipments into the stores. we'll be on it during and we stay on it after to make sure we can return to normal or get the communities to normal and get them what they need as quickly as possible. >> are the things you learned from harvey and irma that you didn't know before that caused you to do anything different this time? it's similar in the sense it's slow moving, could be more of a flooding or a water issue than a wind issue though this could be both, i guess. >> i think it's important to note every one of these storms is different whether it's harvey, irma, regardless of how many years you go back they all have different results. but we did learn an awful lot last year from harvey, irma and

maria that we applied this year. >> there's another storm olivia that you're dealing with now, and i didn't realize this, you have a store in guam, so you know there's another tropical storm in that part of the world. you're also preparing for that >> you have tropical storms in guam, hurricane olivia in hawaii, florence in the atlantic there's a couple other storms in the atlantic we're keeping an eye on both the atlantic and pacific theaters have storms, as you mentioned. it's something we keep an eye on before, during and after >> how many basic emergency supply kits -- there's water, food, first aid, batteries, radios, how many of those do you think that you'll try to get out? >> as many as we can there's plywood. there's all kinds of pre-disaster needs that we try to get in the communities.

that's what the command center is for we try to coordinate everything starting with the customer all the way back to a vendor or distribution center to make sure we get those products there as quickly as possible. >> we'll be thinking about you, pete thanks for everything you do appreciate it. let's get back to the markets. joining us is anders garcia amao and zander payne we made it through earnings season, now the markets are looking around trying to figure out what to focus on next. what do you think that will be >> i always worry this time after earnings in the u.s. because we go from focusing on the micro to the macro, then you focus on what's happening with the trade wars, you think about other things that don't affect earnings directly or they haven't so far here in the u.s

from that perspective i love earnings season. >> so we look at headline risks, we look at the trade wars, is that noise or is that stuff people should be paying attention? >> there's a trade war going on? i didn't realize that's all we can talk about you right now is trade wars, trade wars, trade wars i think that's putting weight on the market but the one thing is in a bull market the surprises are always in the positive we keep getting surprised with good news. that's probably going to continue if i'm an investor right now my big effort concern is a melt up because the news will keep coming in better and better. >> you think the markets are under pressure right now because we keep getting new highs. >> good point, but evaluations are cheaper now than the beginning of the year. the market is at a higher price but because earnings were so good the last quarter the

valuation on the market is cheaper. i would argue the valuation would be higher now if we get past these trade wars. >> one thing i wanted to mention is even though trade wars are not affecting ooz muas much ears here, they are affecting it abroad i tried to separate the politics from what's happening in the markets. internationally they can't do that now trade is such an important part of economies >> meaning the u.s. market is in a better place to be >> that's a -- you can see the distinction. i'll tell you a crazy stat over the last seven years the s&p 500 in total returns has given 173% returns em, during the whole seven years has given you 14% returns. that divergence only continues to get worse >> that's the reason we have a lot of people saying this is no longer going to be a place where you can throw your money in the s&p 500 and see big returns come back that is over, that it's time to

start picking stocks what do you say to that? >> my view is from an asset allocation standpoint. international emerging markets look more appealing. that sounds crazy because i just mentioned these wars affect them worse. having said that, valuations from a relative standpoint, the s&p 500 when you look at ratios which are cyclically adjusted pes have only been cheaper 3% of the time when you -- sorry, expensive for em, they have been expensive only 3% of the time. em is close to the bottom when it m cos to v it comes to valuation. >> let me ask you quickly, we have apple out with its announcement today that stock was a big one leading the dow yesterday. we've seen a huge run up over the course of the month in shares of apple. is this something where it's buy on the rumor, sell on the news or not >> they make such great

products, will you see that showcased this week with three new iphones coming out the ipods, i love them it's a good launch valuations on apple versus the market are so much cheaper here, i have to think it's a good long-term buy. emerging markets are definitely the buy now. they're so much cheaper than the u.s. be greedy when others are fearful is the time to buy >> great to see both of you. ryan payne, anders garcia-amaya, thank you. coming up, we'll tell you what to expect from apple. and former yum brand ceo david novak celebrating taco bell being voted the best mexican restaurant in the country. celebrating -- i don't even know if he knows. we'll inform him of that it was an obvious choice for me. secretary of state john kerry has a plan and he'll be here

and former young china mickey pant will be here and strauss zelnick of take-two interactive will be here tomorrow alerts -- wouldn't you like one from the market

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new iphones and other tech gadgets later today. the company recently hit a market cap of $1 trillion. i think amazon did briefly as well that's the amazing thing we were waiting for apple to do it for five years. >> then within a month we get another. >> timothy lesko joins us now. i guess i can buy an apple tv, but there's nothing earth shattering coming out, right not a new watch or anything like that >> right i don't think anybody is expecting anything earth shattering i think the world wants

something crazy from apple, but they just continue to innovate and move the ball forward. i don't know what people expect the phone will do. it will still be a phone and a computer more than a phone >> exactly whatever it is, i'm sure it will be enough for people to want one and i mean i look at sporting events now, whether -- wherever you are. if they take a shot of the crowd, every person has an iphone and they're pointing it at the event even me, if i send a text message to someone, and the answer comes back green, i'm like who are you you don't have an -- they don't need to do anything earth shattering to maintain dominance, i don't think >> i tonight think they need to do anything earth shattering to maintain dominance on the high end. i think what they do want be to do is build up the rest of the

product line internet thing of devices like apple tv, as the world moves to streaming television, certainly in the car eventually. those projects are still 5, 8, 9, 10 years down the road. once you go in, you never leave. i think you're right, when someone sends me a green text i'm surprised and i know it might not get back to them >> it's like what is wrong with you? i guess i would like to not put in a password, face sensors. anything that people will say wow about with the introductions? >> i think it's going to be hard to say they'll say anything wow about the iphone ios 12, which is really what you're buying. the device itself is just running an operating system. that operating system has been

telegraphed. on the ipad side, a face i.d. powered ipad and maybe laptop. at the end of the day making it easier for people to use, buy things, do things, watch things is what they want. getting rid of passwords, which is the bane of human existence is what the world is heading for. then add cybersecurity concerns to that and face i.d. may be a powerful platform for a lot of their devices. >> for a long time apple seemed to -- i wouldn't say it trades at a discount to a market multiple but it doesn't trade like a high-flying tech multiple i guess some concern about new products is part of it you would still buy the stock here because it's purely based on a multiple relative to its peers?

>> what aftpple has been able t do, they've reinvested cash on the product its and other areas of the business. the world is littered with technologies that went away like the blackberry, like nokia's share of the cell phone operating system market, but apple has been smart about it. i think they continue to create what's next. everybody else just milked a cash cow until it was gone you talked a lot about market capitalization and how companies spend to a trillion, fail and then go back to 300 billion, 400 billion in market cap, but apple has legs because they developed things all along >> they bought a few things, but not panicked and made some huge acquisition. they wilhad a lot of pressure td that >> microsoft continued to try to do that for a period of time

it wasn't until satya nadella took over that business that they got into the business of making money again apple, everything they do makes money. >> thank you, tim. timothy lesko, thank you taco bell has claimed the title of america's best mexican restaurant i hear snickers. what's the problem that's according to a new harris poll the chain topped mo's which ranked number one last year, and chipotle which won in 2016 we will talk to ceo david novak. he will be our guest host starting at 7:00 a.m we talked many times about taco

be bell >> i think they've been number one before in the last couple of years. you had mo's, chipotle, bloom is off the rose with chipotle >> mo's is good. >> there's a new chipotle. too natural. too healthy. right? >> it's not -- that's not what turns me off >> i need something wrapped in doritos, with fritos, has meat >> sour cream. >> sour cream. the fire sauce >> that's not me. we'll talk more about all of this, but when we come back, back from the fringe it's been ten year s since the financial crisis roger cohen will join us next. he was key player between washington and wall street. and a programming note, don't miss the interview with

david tepper tomorrow at noon eastern time. as we head to break, a looked a yesterday's winners and losers on the s&p 500. what's inside? a moment of joy.

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good morning, everybody. welcome back we've been watching the u.s. equity futures we're seen modest advances after all three major averages ended higher yesterday dow yesterday was up by more than 100 points. the futures this morning indicated up by 25 points. s&p futures look like they would open up by 2 1/2 points, the nasdaq up by 14. stocks to watch, the fcc has paused the clock on reviewing sprint's $26 billion merger wit t-mobile the agency says it needs more time to review the proposed benefits of the deal, economic mold models and network expansion. neilsen is expanding review of its options including a possible sale of the company this comes after a reuters report that nielsen was being pressured by elliott management. and gilead sciences says a drug to treat rheumatoid

arthritis did reach its goals. gilead are also investigating other uses for the drug including treating things like crohn's disease. that stock is up by 3.5%. andrew ross sorkin is in washington to mark the tenth anniversary of the financial crisis commemorate, does that imply sort of not celebrate -- i don't think we're celebrating it >> marking it. >> we did come out of it some great things done back then by the guys you will talk about. >> we have come quite far. as joe mentioned, this week mrashgs t marks the tenth anniversary of the financial crisis a new cnbc documentary tells the story. i sat down with those who tried to save lehman brothers and its ceo, dick fuld, only to see the bank's last chance slip away >> they collected us all and

said the barclays deal had fallen through and that he would she prepare for a lehman bankruptcy later in the day. >> they all wanted to know why, what happened? that was the place to start. right away you say where do we go next. >> we felt it alleviated us from having to take on those assets no one said oh [ bleep ] no one said thank god. they just said next play >> it was almost for some people a sense of relief? >> in my case it was >> there is no sense of relief for paulson. >> i remember stepping out of the room, calling my wife telling, wendy, i'm afraid this is something very bad. i don't know how bad it is but i feel like i failed and pray for me. she went to this first to second timothy which meant a lot for us, god has not given us the

sense of fear, but power, love and a sound mind i went on from there >> our next guest has been at the heart of almost every major banking transaction the last three decades. he represented jpmorgan, aig and fannie mae to name a few and lehman brothers. he was in the midst of all of it he plays a central role in the documentary. rodgin cohen is here there is a moment when we were speaking and you'll see it in the documentary this evening where you were told -- i think it must have been the worst moment for you in i crisis that you were told lehman brothers is going to file for bankruptcy do you remember that moment? >> i do, indeed, in the halls of the federal reserve bank of new york it was the worst moment. >> what happened >> i tried probably foolishly to persuade the government

officials we should give it one more effort. they told me go ahead and try, but there is no likelihood and this dealt with the willingness of the british government to support barclays what was it like having to call dick fuld to tell him that news? you were the one who did it. >> i did it was the most difficult call i'm sure i've ever made in my life in a business sense to tell somebody that everything he had built, dreamed about, lived for was no more. >> so ten years later, do you think there's a lesson in all of this >> absolutely. when we were talking earlier about commemorate, mark, the real verb is learning lessons. there are lessons that we need a banking system and a regulatory

system that are robust to begin with and resilient when the inevitable crisis hits >> are we safer today? we'll have mick mulvaney on later. one thing he wanted to do was upend the consumer protection bureau is that a good idea? >> i think the consumer protection bureau as originally structured was not a good idea but do we need consumer protection protection, is the concept correct? absolutely i would have much preferred a commission than a single-headed agency but the idea of consumer protection as we saw in the next three years it was desperately needed >> one thing you talked about, paulson, bernanke, geithner wrote an op-ed about, if we run into another crisis, the hands of lawmakers and policymakers and regulators are in some ways more tied than they were ten

years ago. >> unfortunately that is correct. dodd-frank had far more good aspects than bad, but there were a number of foolish provisions in dodd-frank, one of those does restrict the federal reserve's ability to assist a troubled institution. >> what do you worry about in terms of the next crisis, when you think about the banks that are your clients >> i would think the one existential threat remains cybersecurity. all the capital and all the liquidity, all the resolution plans in the world do not work if the customers cannot access their money, if the bank cannot access its systems so cyberis one, two, and three among the worries. >> given what you know about the cybersecurity plans, if you will, or strategies around security, do you feel like we're safe >> i do not. the banks actually have done an

excellent job. they may be better prepared than any industry to deal with cyber. because they do recognize the threat but we still need so much more in the way of cybersecurity in terms of what i would call the peripheral players, those who interact with the banks. >> there's a big policy question people look at the res queue cu the banks and say it worked. but politically, even ten years later it clearly didn't. so it continues to be one of the most unpopular things that has happened in this country do you think there would have been a way for policymakers to communicate, explain or pursue different policies that would have landed us in the same place but would have been more politically acceptable >> i do not think it was primarily a matter of communication. it's always easy in retrospect to criticize how it was

communicated i think the only policy that would have made a difference was more concern about the homeowners and effecting that concern into action with programs for the homeowners. >> do you think those programs would have been effective? one thing you hear from people like timothy geithner is they looked at those programs from a financial efficiency perspective and they didn't think you could spend the money in an efficient, economic way >> it may not been financially efficient, but politically would it have made a difference i think it would have. >> i'll sit down with paulson, geithner and bernanke, you talked to them many times over the years. anything you're genuinely curious about still? any mystery in this crisis you wish you understood better and the way they thought about this? >> not really. i thought they were quite transparent throughout if there's one mystery and since

we started with lehman, why did the communications not occur between the british government and the u.s. government? >> just to put a fine point on that, do you believe that they didn't have the authority to save lehman brothers >> i think there was the authority to save lehman assuming and the banks i believe were there, the banks were willing to take out 50 billion, $60 billio in bad assets. whether that would have been successful or not remains to be seen >> how much of it do you think was political or was about personality? brian sullivan asked me in the 5:00 hour of "worldwide exchange," was this about long-term capital? was this about paulson or others not liking dick fuld >> i have incredible admiration for hank paulson and whether he liked dick or not would not have

factored into his decision i think there was a decision made, it may have been wrong, but legitimate that lehman at the end could not have been successful >> rodgin cohen, thanks. coming up we have a lot more our special coverage of the anniversary of the crisis continues throughout the morning. we'll talk to former senator chris dodd at 8:15 eastern time. co-author of the dodd-frank financial reform bill and the documentary "crisis on wall street: the week that shook the world" is 10:00 tonight on cnbc. also coming up in the next hour on "squawk box," our guest host is former yum brands ceo david novak. and we'll talk about round two of tax reform with mick mulvaney then former secretary of state john kerry will join us to talk about his new memoir

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welcome back right now it's time for the executive edge today we are talking drug prices the ceo of a small missouri-based drugmaker is defending a 400% price hike arguing there's a moral requirement to sell the product at highest price possible. last month nordstrom laboratories more than quadru e quadrupled the price of an antibiotic mixture that antibiotic is used to treat bladder infections and is considered to be an essential medicine by the world health organizati organization the ceo said he priced the product according to market dynamics and said it is a moral requirement to make money when you can. to sell the product for the highest price. he said he was responding to a price hike from rival casper pharmaceuticals which raised its

price per bottle to $2800. in the interview, mulye also defended smartensmarten -- mart shkreli to raise the price of his drug he said this is a capitalist economy, if you can't make money, you probably can't stay in business. somebody should point out to him that shkreli is also in prison now serving seven years. >> when they said we will find the price at the intersection of demand -- we need to talk to the other company, too, that went to $2800. >> i don't know the details on that one if everybody is doing it, it

doesn't make it okay to price gouge. >> it's not a free market. you're not allowing market forces to determine price. >> i would like to see scott gottlieb's answer to this. >> you need competition. >> let somebody else come in and undercut you >> maximizing profits in a pure capitalist where there's competition, that's what you try to do. >> like standing after a hurricane saying to somebody you will pay me $25 for a bottle of water. >> like stub hub, either you can't get the tickets or you find the price where you can get them pulse pricing with uber. >> i wouldn't use it with the tickers, in that situation people have gamed the system and figured out how to buy them all. there's all kinds of places where the markets are manipulated. >> i understand how it works, adam smith is right --

>> i question the judgment of anybody who is using martin shkreli for why this is okay >> okay. coming up when we return, it's been ten years since the fall of lehman brothers. the flash point of the financial crisis, but would lehman fall under today's rules? that's next. and at 8:15 a.m. eastern we'll talk to former senator chris dodd, co-author of the ddra fanal regulations. at&t provides edge-to-edge intelligence, covering virtually every part of your manufacturing business. & so this won't happen. because you've made sure this sensor and this machine are integrated. & she can talk to him, & yes... atta, boy. some people assign genders to machines. and you can be sure you won't have any problems. except for the daily theft of your danish. not cool!

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as we mark the tenth anniversary of the financial crisis, steve liesman is here with a look at whether lehman brothers could have been saved and maybe the most common look back question there is >> it is and another question worth asking is whether or not it could be saved today all conversations as joe suggested about the financial crisis, you could start over here in left field you're going to end up discussing whether the investment bank could have been saved by the government and the federal reserve. our cnbc documentary tonight

will show top wall street executives arguing it could have and should have been saved with the history told as by ben bernanke, tim geithner, and hank paulson. listen here. >> this argument that they didn't have the legal authority was never brought up that weekend. this argument that they didn't have the legal authority was created after the fact i believe and they said at the time that there was no political will to rescue lehman. >> they had the power. that was a decision. a decision they made to let lehman go. and i think the reason was that they thought the country could withstand it it was a judgment they made. >> i know they feel that they didn't have the power to, but long ago some fed chairman told me whatever the fed thinks it can do, it can do. >> so no less than warren buffett making the case.

geithner rejects the claims saying they couldn't say at the time a bailout was possible or it would have caused panic >> i don't think that's true hank and ben have written about this openly. they publicly in the initial days after lehman's failure did not want to say that we had no option to save them on our own they thought for them to declare at that point that we had no options to protect people from the panic would make the panic worse. >> not only the single event that sparked it, but also what happens next time? rules have been tightened to make it harder to bail out an investment bank. if bailing out lehman was right then, does it make sense that it's harder to do now? those new rules were passed in part by a very -- well, adopted by the fed from proposed legislation so that shows this bipartisan opposition of bailout. it's both political and -- look.

i don't remember at the time whether or not we couldn't do it because it wasn't legal. explanation was ex-post. but i remember -- >> i remember them saying it right after. >> they said it right afterwards is andrew there? >> we're talking about perfect capitalism we were talking about it earlier. >> i heard >> and you're not supposed to have moral hazard. you're supposed to let things fail when they deserve to fail there are some people that said maybe we should have guaranteed the money market. >> we did that >> but maybe we should have done something shorter than what was done you heard rick talk about price discovery. maybe we didn't have price discovery for the last ten years like we should have in all these markets and maybe that's why maybe it wasn't the last administration's fault >> but what happens? >> you know how you flush the toilet all at once >> yeah, i know that story >> i don't know what -- i'm saying -- >> let me ask you a question though is perfect capitalism worth pursuing if average people can't get money out of their atms?

>> no. >> no. you'd have to -- short of what was done, there could have been -- >> that's the thing. you're saying they went too far. these guys are saying they didn't go far enough that's really the big issue. that's the thing i'm most interested in. >> joe, i just wanted to say -- >> oh, andrew's there. >> i don't know of any economist who believes that somehow letting all of these institutions fail and flushing the toilet as you suggest -- >> it's a philosophical point, andrew if you're going to put money down with the hope of making profits that it doesn't work if you don't lose when you take the bad risk >> they should do that, joe. it's harder to do a bailout. >> it's like the water utility if you cut off the water, nobody can drink the water. >> no, but are the utilities -- why are they allowed to profit so much?

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hurricane florence a powerful category 4 storm is heading directly for the carolinas. a live report from the ground straight ahead crisis on wall street. we're looking ahead to the biggest risks that's facing the financial system right now and all star lineup of news makers ready to join us this hour including mick mulvaney and former senator and secretary of state john kerry as the second hour of "squawk box" begins right now. ♪ live from the beating heart

of business, new york, this is "squawk box. good morning, everybody. welcome back to "squawk box" here on cnbc we are live from the nasdaq market site in times square. i'm becky quick along with joe kernen andrew is in washington, d.c. this morning he's been bringing us some great interviews ahead of his documentary tonight. that documentary will debut here on cnbc at 10:00 p.m. eastern time and pacific joining us for the hour is david novak, the founder of ogo lead we'll talk more about the podcast, other things he's doing. but meantime, let's look at the u.s. equity futures this morning. they have been in the green this afternoon after a big day for the markets yesterday. this morning it's indicated up by another 38 points s&p futures indicated up by 3.5, the nasdaq up by 18. here's what's in our headlines at this hour

apple is expected to introduce new iphones today at an event at apple's california headquarters. that's coming up at 1:00 p.m. eastern time analysts are expecting the top model to push further past the $1,000 price barrier however, apple is also seen with a lower cost model as well beige book by the fed will be released today. that beige book will be issued at 2:00 p.m. eastern time. and china-based electric vehicle start-up nio goes public today its ipo was priced at the low end of its projected range at $6.25 a share. that gives nio a valuation of $6.4 billion it will begin trading today on the new york stock exchange. all right. the carolinas right now bracing for hurricane florence it could be the strongest storm to hit the region in decades jackie deangelis joins us now from carolina beach in north carolina you've changed loer ed location

little bit good morning again >> good morning to you we wanted to show you something a little bit different we wanted to show you another structure that's boarded up here a couple of sandbags, completely but as the sun has been coming up and we're moving down this main strip of the coastal area here, i can tell you from storms aye covered in the past, the preparation in the boarding and the sandbags is not really up to par with what i've seen. and that may be because the carolinas have braced for storms before they've been hit pretty hard but they're not as used to it, say, as the residents and the businesses in florida, for example, when they were preparing for irma last year but still this is going to be a catastrophic storm whether these buildings are secure or not. the president tweeting within the last minute saying hurricane florence is looking even bigger than anticipated it will be arriving soon fema, first responders, and law enforcement are supplied and ready. be safe. and of course that is the message across the board

that lives come first before anything else. and that people who are on the coastal areas should try to move around, move inland as much as possible but moving inland doesn't guarantee your safety either the national weather service tweeting this morning saying we cannot stress this enough. florence poses a very serious threat to people who live far away from the coast. heavy and long-lasting rainfall can lead to catastrophic flooding and of course there's a triple threat here. that triple threat is the wind wind gusts up to 150 miles the flooding, the rain accumulation and the storm surge of maybe 10 to 20 feet that could add to the flooding problems as well. so that's what the folks here are facing as they wake up and the sun is rising today. it is wednesday morning. this storm not expected now until friday, maybe even possibly saturday. so there's still time. but that doesn't mean that people shouldn't be acting, guys >> right

hopefully that will be used to prepare them more for everything that is kwuquite a bit of time. now, we're going to talk to someone who probably had to deal with this as a ceo of a global company. our guest host the rest of the morning, david novak of ogo lead he's now a cnbc contributor. would you be down in the area right now if you were still running yum? you definitely -- it would be front and center >> well, i think, you know, everybody right now is being told to get out of the area. i think what we would do and i think what every responsible company would do is first of all, you'd tell everybody to take every major you can take to get safe then the second thing you do as a company is make sure you have a recovery plan. for example, in the food business, you would put supply into the distribution centers. >> somebody has to be down there. home depot has people down there. >> then what you do, joe, is you want to help the first

responders you know, we have taco trucks and pizza trucks and chicken trucks so they'll be down in the area providing food, helping the community get back up and running. it's very -- obviously it's a very challenging time. our thoughts and prayers go out to everybody there in the carolinas. >> yeah. do you -- i just wonder, if you have three or four extra days, you can only do so much. >> for preparations? >> yeah. now we're talking saturday >> you know, it's a major league balancing act in things like this you want to stay from a business you want to keep your business operating as long as you can and you got to keep people as safe as you can. you know, i think we always err on safety. we'll make a buck another day. >> you prepare when you want to come in. are the things front and center for you that you'd like to -- because you lead now you're not the ceo of yum anymore, but you try to help

cultivate other leaders. >> i'm really focused on developing leaders i mean, that's my passion for the rest of my life. i think we need better leadership there's too much toxic leadership in our country today. so one of the ways how i do this, joe, is i've got many, many contacts. and i really enjoy doing podcasts i do podcasts every two weeks. you know, recently i just did one with gary kelly. >> with elon musk? oh, no that wasn't you. >> i posted one this week with tom brady. >> you did >> so i really try to find different kinds of leaders from different vocations and really go back and -- a lot of people understand, boy, this person is really successful. but they don't know how they got there. what i try to do is go back through their life, talk about their successes, the failures they might have had and get insights to help leaders grow. and the podcasts are really growing. people are really enjoying listening to these and i think it's adding a lot of

value and look forward to doing that i also have a leadership development program called hard wiring your success. it's leading your success, leading yourself and doing what it takes to really be an effective leader. >> david, what's toxic leadership what do you consider toxic >> i think you see a lot of what's going on right now. people who don't treat people with respect i think it boils down to that. you know, great leaders create cultures where everyone counts and they feel respected. toxic leadership is when you think you're the only person that really matters. the decision that you make is based on how it's going to effect you versus the rest of the organization it's very self-centered versus externally oriented. >> are you speaking in code? are you talking about trump? >> no. i think -- listen. i think what donald trump has done is he's done everything he said he'd do when he was elected president. how he's done it, i think, everybody would like to see it be done a little bit

differently. >> could it have been done differently? >> i don't know. i don't know but i think when you have good ideas, you can take people with you. you can still go out what i really do think that trump has done well is most reform happens when you have to have it happen the pain is so great that you've got to take those measures okay he's going out and attacking things that don't necessarily have to be attacked. you know, the pain isn't that great. you could push it aside like maybe other leaders have done. he's going out and he's doing that that's the good side of him. the bad side is he's the bully everybody knows he's a bully the way he goes about doing it is not what the rest of the country would really like. even the 36% -- the 36% that love him wish he would be a little bit different >> it might be more than 36%, but if it was a kind and gentler donald trump that wasn't a bully that didn't have results, you'd prefer that? >> i think it has to be a tough minded >> right

that's a theoretical question. just a theoretical question. >> i think there's a way to do it so that people can feel proud of the president of the united states i think that's one of our big challenges i think people want to be proud -- >> so you think 36% of the people are proud of him? >> maybe 36% are >> he's got 90% approval of the republican party are these bad people that like bullies? >> hey, listen i don't think they're bad people, joe. >> well, if -- okay. so what's wrong with the republican party if 90% are approving of the -- >> there's nothing wrong with them except for i would say a great percentage of that 90% who might approve of what he's doing, it's his policies, not the way he's doing it people would want a president that would take the higher ground when you have power, you have a lot of power >> spider-man said it. absolutely power makes -- with

great responsibility >> i think you have to have ideas. what i like about what he's done is he's taken the ideas that he thought would turn this country around and he's made major headway. he reduced the taxes he lowered regulation. he's taking on trade he's doing everything he said he would do when he was elected the way he's doing it, i think, is more toxic, to use your phrase or the phrase that i use, than it needs to be. >> i guess some would say we didn't elect a minister. we didn't elect a pope we didn't -- these people didn't elect someone that wasn't going to crack some eggs and the political correctness that's overtaken society -- on a college campus, i don't know if you'd be welcome >> political correctness and politeness are two different things >> i think the people saying that going to a minister, that's polarizing the subject i'm not saying you need a minister in the presidency of the united states. i'm saying you need a decisive

leader that uses power in the right way that drives his action and the fact he came from the outside and is attacking basically the status quo i think is very, very good >> i'm just saying, we'd all like certain things in all of our leaders. >> yeah, but you don't have to like every aspect of a leader. >> you don't and it's hard to argue with results. when i hear about how we're in the most challenging times for democracy. then every day i report on the nfib, the nasdaq, on business confidence, consumer confidence, unemployment for a minority group or any of those things i'm looking around thinking, okay you wanted perfect i don't know jimmy carter was a really good man. he was >> one of the worst presidents we ever had. >> but he was a very good man. >> i agree >> he wasn't toxic at all. he was so nice so i just -- you're a business guy that likes results and you're certainly enjoying

the benefits of the consumer and the consumer confidence and everything i'm not saying the ends justify the means either and that you let anything go, obviously. >> i think one of the things, joe -- i agree with everything you said about all the good things that are happening, okay? >> how could you disagree with that >> i'm not >> okay. >> but one thing i think you may be discounting is the potential effect of the washington chaos that i don't think anybody is banking on you know, and i think that chaos that's being created could have a negative impact down the road that we can't see right now. >> that remains to be seen listen i'm very happy to see most of what's happening right now so i don't think you should cast me as some flower child. >> i'm not then i ask, okay, we had a binear election. do you regret that hillary

clinton isn't president? >> i'm happy donald trump is the president of the united states >> let's get to andrew on that >> hopefully i'll get to jump in in a bit but when we return, mick mulvaney is going to join us as we reflect on the financial crisis today he'll tell us why he wants to roll back a lot of post-crisis regulation we're going to talk about it after the break. stay tedun you're watching "squawk" right here on cnbc obvious. sometimes, they just drop in. cme group can help you navigate risks and capture opportunities. we enable you to reach global markets and drive forward with broader possibilities. cme group - how the world advances. ♪

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zbrnchs welcome back to "squawk box" this morning. we're in washington, d.c in the wake of the crisis, dodd/frank created the protection bureau. although the bureau dodged major changes at the hands of the rollback in may, acting director has slowly implemented changes of his own we want to talk about those and ten years later how he thinks about the crisis mick mulvaney is here acting cfp director and office of management and budget director good morning to you. >> can't get anybody to call it the bureau of financial -- >> i want to get there in a minute because you have tried to change the name of this if nothing else, you want to change the name. >> other things, as well, but yeah that's a start. since i looked at the statute the first day i got there. i read pieces of it. the name is the bureau of consumer financial protection.

if we're going to enforce the law, we'll start calling it what the statute calls it >> you have talked about the idea of, quote, burning down the bureau >> sure. >> why >> i did that when i was in the house. okay and you can't -- a good bureaucrat can't do that i can't legislate from the bureaucracy. it's not right, it's not constitutional if you're a lawmaker you say i want to undo that, i want to pass a bill that changes that. that's great and that's what you do when you run it, you can't get inside and say the law says this place has to exist, but i'm going to ignore the law. i have to follow the law that's what i hope bureaucrats do >> but speak to this after the financial crisis and given the political criticism after the crisis, so many people said that they weren't protected whether it was mortgages that people felt were fraudulently sold to them or even not necessarily fraudulently to them push them in ways that they felt

shouldn't have been. that there should be some part of the u.s. government that's focused on that. should there not be? >> there was in the past a question of whether or not we had the right laws on the books. i think we probably did. they weren't well enforced there was the case there was a lot of other larger contributing factors to the meltdown. you look at fannie and freddie particularly it's what we continue to do. one of the things i've tried to focus on, however, is that dodd/frank gave us several different things to do not just for tech consumers. we're supposed to protect them, yes, against bad actors which we continue to do also educate them. get rid of unduly and overly burdensome regulations that's in the statute. same section, it said thou shall get rid of bad regs. >> we're going to be talking to christopher dodd in just a moment you want to undo other parts of dodd/frank as well >> that would be okay with me, sure. >> what parts?

>> here's where i struggle with dodd/frank supposedly we're going to try to prevent the next crisis. but what we've got now is a situation where banks are bigger they're more concentrated. new bank formation is down dramatically since dodd/frank was passed i think we've gone from six banks to nine banks. the banks that were too big to fail are bigger now than they were before. >> would you want to break them up >> i don't want to get into that i say that, i make news. if the goal was to stabilize the industry, it succeeded in some places more capital in the banking system is a great idea there's other ways to do that. >> speak to the big bank issue and do make news if your view ultimately is the banks are too big. >> here's the issue i have it goes to regulation as a way to accomplish an end goal which is that regulation is a competitive advantage for large institutions because it's a fixed cost. so big banks in many ways, they're okay with more regulation because they can

afford to go through the hoops and the smaller banks can't. >> that would suggest that breaking them up under your -- it's an interesting view of regulate on one side, maybe not on the other >> leave that to the lawmakers you talked to mr. hensarling it was a good way to get more capital into the system. bring safety through capital opposed to safety through regulation i think that's a fair market way to get to it >> let me ask you about the cfpb with the newer name. >> it's hard to do, i can tell >> one of the things you said is you don't believe it should be an enforcement agency. what do you mean by that >> i didn't say that we continue to bring enforcement actions. so we continue our enforcement work what i meant to say is that we're simply -- we're going to focus on the bad actors. i think that makes us better able to protect consumers. it used to be the bureau would go after all three actors in a row and not make a good determination as to which one

was a bad actor. we'll find out who's really abusing consumers and focusing all of our efforts on the bad affecters. >> there is a view in the public this is dan frontman he was the ombudsman at the cfpb on student loan debt he wrote a letter to you he wrote unfortunately under your leadership they've abandoned those who they claim to protect instead you look to serve the most financial companies in america. >> i saw that letter i saw that letter for the first time on, i think it was on "usa today. i never met the gentleman. don't know who he is in fact, you just told me his name i don't think that's his right name maybe it is. but anyway, i talked to his supervisor who met with him. never complained about anything at the bureau. i think he was more interested on getting his name in the paper. here's what we did at the student loan operations. the statute gives us responsibility for private student loans.

okay that represents about 8% of the market under a hand shake agreement within the obama administration, the bureau was going after and regulating public student loans. which was at most 92% of them. the statute says we're going to be responsible for private student loans, that's what we're going to do. and he apparently didn't like that >> if there's another crisis that you need to worry about today, what is it? >> what do you worry about >> that's a good question. i don't want to imply that i do worry about the growth in the student loans. i worry about the disconnect between the making of -- we had private student loans, people would worry about you paying it back once the government nationalized that industry, people don't worry as much about paying the loan back. that worries me from a financial and moral standpoint if we teach an entire generation

the first loan they take they don't have to pay back, i worry about that >> thanks for being with us. >> great to see you. >> mick mulvaney, want to thank you for joining us i want to send it back to new york actually, i'm not. i'm going to stay here when we do come back, one-half of the duo behind the dodd/frank bill, former senator chris dodd is going to join us from washington might have some views on the conversation we just had plus the news makers keep coming you don't want to miss john kerry. he's going to be live at 7:30 eastern time you're watching "squawk box" on cnbc broke my personal record. aflac!? no-good break. gooood break. i'm so sorry we can't make your barbecue. i'm just sick about it.

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good morning welcome back to "squawk box" here on cnbc i'm andrew ross sorkin live in washington today joe kernen and becky quick are live in times square mortgage applications falling 1.8% last week the drop due entirely to a decline in refinancing the mortgage rate was up four basis points to the week to 4.8% a group representing major internet companies saying it backs modernizing privacy rules. but wants a national approach. says more than 40 companies including netflix, microsoft, and twitter. they want new rules to apply to all sectors equally. also we're getting fresh inflation data in about an hour.

economists think that both the headline number and the ex-food and emergency rate rose by 0.2% last month that's the news, guys. beck y i, back to you. >> thank you very much our next guest ran for president in 2004 and worked to negotiate both the iran nuclear deal and the paris climate agreement. he has just released his memoir called "every day is extra." joining us now is john kerry also a former senator. and sir, thanks for being here today. >> happy to be with you. thank you for having me. >> this book is a collection of stories. it goes back and tells a lot of different anecdotes. >> it's not a policy book. >> no. it's a story telling book. >> it is a journey of an american citizen who engaged in public service and i think had a very interesting set of experiences. so i try to -- what i think as we look at the woodward book that's out which is interesting and it's a summary of a lot of the problems in the white house, this book is really a narrative about how we deal with this problem we have today.

how citizens can be involved how we push back and reclaim the fullness of our own democracy. you know, i had a lot of fun doing it mostly it's hard work >> you often don't hear authors saying things like that. >> no. it's hard. i'll tell you. it's a lot of work but i'm proud of it. and thus far people have said it's a good read >> you have had a lot of people ask you if you were going to run for president because that's what they look at this book that this is a setup for that >> honestly, this has nothing to do -- this is a journey. i go way back into my early family, my life as a kid i examine faith and the senate and what's happened to the senate, how it's changed the problem we have in our own political system in the country today. and there arantidotes.

nixon was attacking -- and he obviously broke the law. he was particularly, obviously, the tapes now show a guy who was considerably bigoted he had a southern strategy there were a lot of things happening. in america you had an enemies list so i think there are parallels to some degree with the churning that's going on in washss tod--. washington today >> are you not running for president? ruling that out completely >> i said innocently that i hadn't ruled things out. but immediately took that as oh -- you know what i'm really focused on 2018 right now. in two months we have an election in the country. that's the most important course

correction moment the people have >> do you think impeachment? >> no. i think it's a mistake >> so you won't be able to get rid of trump until 2020. who do you think has the best chance >> that's not where my head is honest will i. >> the center of the democratic party, do you think it's too far left given some of the elections we've seen where socialists are taking the spot of more mainstream candidates? >> i think what you hear right now is an enormous amount of upset over the challenge that a lot of americans have in order to make good decisions >> it's challenging to make ends meet with gdp growing more and unemployment down to 3.9 and consumer confidence up much more >> the last job figures and the last numbers indicated the first uptick in earnings that we've seen but -- and i think most observers and you're hearing

from them, too, would say to you that what's happening in the trade war does not go well for the sustainability of that so i think we're going to see -- i mean, if this next round of tariffs is put in place with respect to china, the chinese i know are prepared to come back and slam us just as hard >> but at this point in time just in terms of -- if you were to freeze frame it right now, there are positive things happening in the economy right now? >> this is a good economy right now. but it's better for people who are already doing well than it is for average americans and the average american right now is still working harder, maybe working several jobs to make ends meet, and they don't see the benefits and i think there's a -- i mean, look there's a -- i'm a democrat who has always believed you've got to create jobs, let me private sector move. there is some over-regulation,

but not to the degree that we're now seeing people move to put more, you know, more pollutants in the air or to allow coal dust to fill up your lakes and streams again. >> do you have an answer -- if you were to advise the trump administration on how to deal with syria at this point, it's front and center again if it's possible that -- if he were to use chlorine gas on this last rebel stronghold, what would you -- would that be crossing the red line where we actually have to do something this time? >> sure. i supported president trump doing something the last time and the time after but -- and here's an important but. i don't believe we should be doing one off attacks that aren't followed up by competent diplomacy. there is a framework that we put together with the global community. and russia and iran and china and all of the neighbors in the

region supported it. it was a framework for a political solution to syria. it involved having a cease fire, an election ultimately bring it into governance. allow them to be part of the future but assad would continually ignore the cease-fire. as did the extremists. i thought there was an opportunity to work with russia and others there will be no solution to syria without russia and iran at the table. that's just a reality. and niche who doesn't work diplomatically to implement something around that. so we had a framework that was accepted at the united nations unanimously. it's called resolution 2254. it is a framework for moving towards an internationally supervised election, having a global cease-fire, all working against the extremists and beginning to work to put syria

back together again. but now you have really almost zero major diplomatic effort i saw there was a meeting in tehran meeting in tehran hosted by rouhani which is attended by the russians and iranians. but no western representation. it's not going to work. >> mr. secretary, you look around the globe what do you think is the biggest threat right now is it putin in russia? is it china? is it north korea? is it syria? is it iran >> i think it's a mistake to start to categorize the biggest threats. we have a conglomeration of major challenges that we need to face there is no longer -- and this is the danger of the trump administration's approach of america first. every president puts america first. but you have to do it in a way that isn't alienating other people that brings people to the table in order to work in an engaged, global way

the key is there are about 2 billion young people between the ages of 15 and 24. many of them in south central asia and northern africa in the middle east. and there are about 1.8 billion who are 15 years old or younger. 400 million of whom are not going to go to school. that is a challenge for us too it's not just a problem that's over there because it's future refugees it's future immigration. it's future challenges to borders. it's future challenges to extremism. we were investing in those kind of efforts that's not happening now >> do you think the trump administration is trying to effect regime change in iran >> yes >> they are trying to do that in. >> i believe so. >> is that the wrong strategy? if it were to turn out you saw some type of arab spring, would that end up having been -- >> so let me tell you where i think we are there it is not inappropriate to wish

for a regime that is open -- >> right for the people of iran right. >> but to unilaterally move to pull out of an agreement which the chinese, russians, french, british, and iranians are still trying to keep isolates us from the rest of the world. there are legitimate issues with respect to yemen, respect to arms trafficking, with respect to hezbollah, israel, iraq all of those are legitimate issues but we would have been far stronger if the president had said, you know what? i don't like this deal, but i'm going to stay in it for the next two years because it keeps you from having a nuclear weapon >> and they already had the money. >> but we're giving you those two years to change what you're doing and we're going to sit down at the table and work with you to deal with yemen, iraq, hezbollah, et cetera that's legit but what the president's done is just pulled america out,

actually anger our allies, and isolate ourselves. if something did happen there, i can guarantee you they're not going to be there to support us at the united nations and elsewhere, whatever it is. more importantly, he has made it impossible for an iranian leader politically to sit down with him. no iranian leader can come in now and look like he's kowtowing, caving into the president. and the hard-liners have been strengthened if you were to have a regime change in iran, guess what you're going to end up with another ahmadinejad or another we do not do regime change very well we saw that frequently >> mr. secretary -- >> andrew, just a second andrew's got a question, but you're going to have to put your ifb back in for andrew to hear you. >> mr. secretary, i just wanted to get your assessment of where

you think our relationship with north korea is today and also to get an idea around what did you think when president trump met with kim jong-un was there any element of you that marvelled at that meeting >> i thought it was good for the president to have a meeting. i believe in engagement. we worked to try to get a meeting. we were rebuffed again and again. because at the time, the sanctions weren't inviting i went to china several times. we elevated the sanctions several times. and the trump administration continued that and we applauded that. i applauded it, anyway they had another ratcheting up of the sanctions then the summit took place in principle, a summit is a good thing but you have to prepare for it and you have to have a communique which leads you to the next step. there was no such communique there was no such preparation. there is a huge difference in

interpretation of what was meant by denuclearization. and you've got to have, obviously, an agreement on that. >> will you ultimately look back at that meeting five years from now and think it's success or a mistake? >> well, i think it was -- i think it already can be assessed to have been a mistake in the way it was carried out because you didn't come out with a communique that had specific next steps and then made it clear how to account for the existing arsenal of weapons, how you would access them, how you would begin the process of denuclearization moreover, denuclearization means the u.s. retreats and denuclearizes. japan and south korea and the u.s. security blanket become a different entity all of this could still happen and we want it to happen

i want this process to be -- every american should want this process to be successful because this is an enormous challenge for all of us. but we had sanctions against iran which did not have a nuclear weapon that are still tougher than the sanctions we have against north korea which does have nuclear weapons. so it's always been backwards. and what we need to do now is get on track i hope a subsequent conversation or the next round will produce the precision that is necessary. but i think the president rushed into a glitzy kind of summit with a lot of flags and a lot of hoopla but not a lot of substance. >> joe touched on this before. just who you think the democratic party is at this point. obviously republicans are struggling to figure out what's in their party since -- >> well, i think our party is very clear we have different voices coming from different segments of the party that will articulate a

vision but i think the party is very clear that we believe that you've got to have an immigration policy that is fair and sensible, that resolves the problems of borders and enforcement which is critical and is a first step to gaining credibility in the process but also has a path. that we should do away with i.c.e., that's a crazy idea. you can fix i.c.e. you can reform it. but the idea of just willy-nilly doing it away with it doesn't make sense >> it sounds like if you were king and you could dictate what was going on, is it fair to say you'd pull your party back a little bit closer to the center right now? >> i think what we need is just talk common sense to the american people. >> so that's a yes, then >> i believe our party --

really, i know this. because we're fighting for health care for all americans the way that makes sense we're spending more money. our friends in europe and other countries, it doesn't make sense. we still have people that are uncovered. we have an uneven distribution of risk of being sick. that doesn't make sense from a business insurance point of view so there are better ways to do it but our party believes every american ought to have access to insurance. although president trump is trying to undo obamacare. >> we hear cuomo is running against "sex and the city" actress cynthia nixon. then we heard about universal health care. it would exclude every other penny that the state spends on anything else would be spent on granting that. >> depends on how you're implementing obviously you have to pay for things

>> right >> that obviously doesn't work but look let me finish on our party because i think this is important. i think we also you cannot have a system, a country where you have such a divide in people's ability to be able to make money, to earn money, to pay for their families, to do better in life that is not a sustainable political equation it doesn't work. and that's what we have. and it's getting worse people need to think about that. when you -- i mean, everybody loves a tax cut, sure. but we need to think about what is happening to people that -- >> if we were to grow at 3% and we could do it in a sustained way and i know that people disagree with that, i think that -- wouldn't that free up more resources for edge, more

resources for job creation >> not under the current government >> you have to have a framework within which you're making sure that people can hold onto some of that money at the bottom end and be able to make ends meet for whatever the price of goods are. the rise of populism you're seeing in different places and here in america, the anger that was expressed on the political right is also on the political left and even in the center. people know the system isn't working. >> but we're talking about the ten-year anniversary of the financial crisis how much of what you're describing, that populism, comes as an aftereffect of the -- >> we still have a hangover from 2008 i can remember hank paulson coming into our meeting in the

senate trembling and pale and looking at us saying the system isn't to implode and you guys have to save it. well, guess what it came close to imploding and we sat there and had to bite the bullet and come up with major infusion of funds. the stimulus package, the loan everybody objected to. it saved the auto industry and the fact is -- i don't want to make this completely partisan but it turns out to be that way. our party, the democrats, stepped up for george w. bush and the administration and we turned around and voted for that and almost every single republican did not arlen specter voted for it and he lost his seat >> right do you think the congress would do something like that again an extreme measure of like that if we were in a similar situation? >> if the situation is so extreme that the system is about to implode, i suspect any congress is going to try to find

a way to get it done but there is still a lingering sense of irresponsibility as to who had the step up to pull us out of that problem. now, john mccain and i worked very, very closely together. as did a number of other colleagues in the senate found a way to do that there are senators on the democrat side and republican side who want to work together but the orthodoxy of the party that has settled into both houses of congress is preventing an awful lot of people from being able to get things done. that's got to change because it's not serving our nation we have a polarization that is stealing our own democracy in this country now they don't pass budgets. not much is happening in washington, d.c. and i must tell you, i spent 28 years in the senate. and i never thought i'd say this

i miss not being there right now. >> mr. secretary, you've got this book "every day is extra". >> hold it up. show it. >> i thought i'd help you out. i want to ask you a question >> who is that young guy >> where'd he go >> what would be a personal failure that you had that really turned into being a success and help you become an even better leader >> oh, boy i mean, i talk about failures in this book. some on a personal level one a failed marriage which i thought was one of the most horrible things in the world i think that there were moments in my career i made beautiful mistakes early on when i was in a myrrh hurry and later on when i believed the pronouncements being made about iraq.

and unfortunately they proved not to be true that they were going to do certain things before we went to war. i regret that moment it was unfortunate but i feel all in all and the book makes it clear that i kept faith that you use your life to be purposeful. you try to get things done and i loved being a public servant. that was a great job getting things done. >> you actually looked like that picture back then. >> i did some truth in packaging here this is a picture of me today on the back >> the front one's better. no, no, no >> what's a good extra day for

you? >> good extra day -- >> "squawk box." >> today "squawk box," yeah >> mr. secretary -- >> the best extra day is time with my grand kids best of all. >> i agree with that >> until they start to cry then the parents become very useful >> right i don't have any grand kids, but kids family >> secretary kerry, i want to thank you for your time today. >> my pleasure >> again, the book is called "every day is extra. >> he looks like robert redford. i don't know who that guy is >> that's john kerry andrew, back over to you it was ten years ago this week that lehman brothers went bankrupt in a cnbc documentary i spoke with hank paulson, the man at the center of the storm. paulson described his efforts to get dick fuld to save the bank lehman's books are loaded with subprime mortgages

>> i had 60 calls with dick fuld from the time bear stearns went down i said you should be raising capital and you shoulded be looking for a corner stone strategic investor or working to sell the business. >> and what did he tell you? >> well, he's an optimist, so he basically said i've got plenty of capital we don't have a significant risk >> but lehman's falling stock price is telling a different story. >> financials took a big beating. lehman down almost 20% >> in just a few months, lehman has lost nearly half its value fuld is enraged and blames those betting against his company, the short sellers. >> i am soft i'm lovable. but what i really want to do is i want to reach in, rip out their heart, and eat it before they die >> for more from the key players

who made efforts to stem the tide of the lehman collapse, be sure to watch "crisis on wall street: the week that shook the world" right here on cnbc. it airs tonight at 10:00 eastern and pacific. when we come back, in the next hour of "squawk box" former yum china ceo mickey pant is going to join us plus chris dodd. he'll be reflecting on the financial crisis ten years later and talk bank regulation then and now. stay tuned yore wchu'ating "squawk box" on cnbc a big hour just ahead.

evacuation orders are in place for the coast. we have the latest path of hurricane florence and a live report from the evacuation zone. lessons of leadership. our guest host this morning is david novak, former ceo of yum brands and leader of the ogo lead podcast >> there's too much toxic leadership today >> we'll get his thoughts from jamie dimon to tom brady it's been ten years since the financial crisis we're going to talk to half the team behind the bill chris dodd the final hour of "squawk box" begins right now ♪

live from the most powerful city in the world, new york, this is "squawk box. >> good morning and welcome back to "squawk box" here on cnbc live from the nasdaq market site in times square. i'm joe kernen along with becky quick and andrew ross sorkin who is live in washington. we are marking the tenth anniversary of the financial crisis he's going to join us with former senator chris dodd in just a couple minutes. and what a trio of guests you have for that other show, sorkin that's huge. >> that takes place with policy makers all from the financial crisis trying to assess and have some perspective on what took place ten years ago.

>> i thought i was going to watch a -- the new is season of "the deuce" at 11:00, but i'm not. this, i'm actually going to watch you, sorkin. i'll be watching you make me proud. anyway, the futures right now are indicated lower. down a point they were up earlier, i think. the s&p down less than -- it's basically unchanged in the nasdaq up a little there's the 10-year creeping higher 2.96% at this point. maybe this is it, becky. this is the time >> 3 pr%? >> 3.25% >> are we talking about 3.5% and 2.75%? >> we're going to move the range up but the 2-year is maybe forcing this can you believe rates have stayed this low for so long as a business guy

>> it's been a long time >> is it europe? >> you've got other guys to come on the show to tell you about that >> come on >> it's been a agreement environment for money. there's no question about it. >> but do you feel like it's just too good to be true that we've got our interest rates based on economic conditions in other parts of the world, not on our own. >> i think it has been a too good to be true. but it continues to be that. and, you know, i don't think there's anything that says right now that things are going to change >> yeah. do you think taco bell would have been voted best mexican restaurant even if rates were higher >> i think -- i never really considered taco bell to be a mexican restaurant i considered it to be taco bell. it's like kleenex. it's a generic >> is that not something we share? our love for taco bell >> one of the only things. >> and you'll always have paris.

with jeff sessions reportedly exploring a potential investigation of social media companies, internet giants are facing growing scrutiny on multiple fronts. now the lobbying organization that represents them is trying to get ahead of privacy regulation julia boorstin joins us from los angeles. she has more on this story julia, good morning. this looks like it's going to be a mess >> well, becky, good morning to you. the internet association is releasing proposals to guide privacy legislation to avoid the confusion of a patchwork of state privacy rules. and to get aid head of california's comprehensive privacy laws that go into effect in 2020. this group of 45 companies include amazon and uber and is pushing for legislation that it controls transparency, consumer access to the data that consumers have provided, and the ability to delete or correct personal information or transfer it to other companies.

the internet social is advocating for a national data breach notification laws which would preempt the state rules to create a new standard for clear breach notifications also saying that privacy protections should apply equally to all different kinds of tech companies as well as offline companies. such as retailers or credit card companies recommending the ftc enforce these laws at a federal level. data helps tech companies deliver a better experience and they're working with the white house and also with congress to craft rules that will protect consumers without stifling innovation >> julia, we've heard from so many of these ceos and companies to this point that if we were to follow -- if the u.s. were to follow europe's lead with some of these privacy laws, that would not be a big deal. you think that's really the case or has that been a bluff >> i think what they're trying to do right now and part of the companies that are part of it are submitting recommendations

is because they want to get ahead of the issue they want to make sure they're not regulated with 50 different laws in each state and it's really impossible to create new products or to actually improve what they're doing for consumers. i think they understand it's going to be inevitable but they want to do it in a way they're okay with it there's no question it's going to happen. it's just a question of how. >> julia, thank you very much. julia boorstin shares of yum china taking a hit on tuesday a chinese consortium of bidders has ratheredly dropped its pursuit of the firm. the stock falling 13% on the news our next guest, formerly led yum china. let's welcome micky pant it's a different world than when you were actually ceo, i guess, given donald trump and what

we've done with china. has it made it more difficult for current management over there? >> you know, not at the moment i'd say there's been no real impact of what has been talked about. but a tremendous amount of uncertainty. opposed to the u.s. being up 7%. it's quite a contrast. people are worried and waiting to see what happens. >> people argue about who will bear the brunt of the problems and i think president trump thinks that china has more to lose others say that china has a lot of tools in how they can respond. not just trade tools do you get the idea that there's some dissent in china on the way president xi is handling it at this point >> the easiest thing for the chinese gft to say boycott american brands. they've not done that. trade conditions for us is good. the economy is still growing

i think it's 6% gdp growth but everyone knows every country protects itself through tariffs. tariffs are generally very bad so if this is a play to get eventually tariffs to come down to, like, zero and have fictionless trade, that would be outstanding. you got to be careful what you wish for that actually helps them long-term build their economy. they've been dropping tariffs a bit. but it's a very contentious topic because of some political sensitive areas on tariff sbl supply >> are you in favor of challenging countries that have levied tariffs on the united states by levying tariffs on them do you think trump's policies/should he have done this or not? a lot of people think it's insane >> i don't think you have to do it all the time. it all depends on the results

what happens but it's a slightly high risk play you know, sometimes a little sneeze can set off a whole chain of events. >> then there's the intellectual property >> yeah. that's also complicated. i don't think the chinese at all are dishonest in any way they operate. i don't think so it's true they have certain different way of operating politically. for example, if you want to be a social media platform in china, you've got to give them the right to monitor the communication. but companies such as ours, we've been at 30 years now we built in 1300 cities. in fact, there are millions of chinese restaurants. it's a level playing field i think we'vedone well i think it's a little more complicated than just intellectual property. every country copies intellectual properties eventually i would say china is very sophisticated in the way they think. some of the phrases like currency manipulator, et cetera,

et cetera. i don't think they do. and some accuse them of having very strong rmb. i hope this thing -- and that's the art of the deal. take the tariffs up and eventually bring them down if it comes down, it's good for everyone >> do you think that the transformation from a producing country to a consuming country, is it manageable will there be bumps along the road obviously consumers are -- >> i think it's going fabulously >> it's not easy >> it's not. our industry at least in the restaurant business is by far the biggest growth opportunity in the world we are only a third of the way there at the moment. i say that because of the high speed rail stations coming up. that infrastructure is growing faster and better than anywhere else in the world.

and primary is very strong >> this year you'll build close to 700 stores. your same storesales has been down the last quarter or two are you going to have to take the pedal off the metal? >> i think we can grow fast. last year we built 691 restaurants. that's by far bigger and better than anybody else. we've crossed 8,000 restaurants now. we have 460,000 employees in china. so we believe there's still 2/3 of the runway is still empty so i think it'll do very well. i don't see any bottle necks in the supply chain the amazing thing is digital the growth of digital platforms. we did not accept credit cards at kfc until a few years ago people spent a lot of time

counting the cash. and now it's got to the stage where over half, approaching 2/3 are on our cell phone. they just flash the code and pay and move on. it's an indication of how rapidly they're able to adjust >> what's your perspective just on the stock price i know it's down as a shareholder, toi have to a this you're up close to $50 now $33. >> for people who haven'tbeen following along, it dropped sharply as a takeover deal had come off the table let's talk about stock valuation. >> we were very young. we just reported six quarters so far. the company spun off in 2016 prior to that, it was part of yum brands people find it difficult to value because it was intertwined. plus on top of that, there's the other complications because of the chinese currency with all our revenues in.

and then there's the uncertainty with regard to china itself. so given all of that, i think it's entirely understandable the anxiety the shareholders have. but like i said at the start, i can't see a bigger longer term growth opportunity than being successful in china. >> do you see an independent future or do you see a future where there is some sort of combination? >> i think we've got at the moment a wide base of shareholders we have the same as yum. on the first day, 80 million shares got traded. it changed completely. i think public companies are fine it's come down in half so i don't think it matters that much whether the ownership is public or private. >> so 8,100 restaurants. what would saturation be in china? >> we're thinking for our business, like 20,000. which is about what we have in the u.s. so i think that we have somewhere between 15,000 and

20,000 in the u.s. taco bell has just gotten going in china >> i would think you could have a lot more in china than the united states. >> i would agree with you 100% but we have 8,000 at the moment. it's a lot but quite little. >> and how many are kfc? >> about 5,500 about 2,000 pizza huts >> how many are taco bell? >> i think two at the moment we just opened >> that is a growth -- >> how many cities are you in in china now? >> 1,200-plus. >> how many mcdonald's would be in >> i don't want to misquote a major competitor, but i think about half of that >> how would the average volumes differ >> i think we're bigger. you know, we are definitely very profitable i think we told our shareholders when we build a kfc, we get our cash back in two years we own all our own stores. 460,000 employees. >> even with your sales declining a little bit, you're

still able to open these up. >> sales are hard to predict you know better than anyone else franchise is more predictable. but i think we're -- if you look at year on year. >> all right micky pant, thank you. >> thank you andrew is in washington. what breaking news, andrew what is it >> i have some wall street news that could come from where you're sitting given it is the nasdaq interactive brokers will become the first company to list its stock on iex iex, of course, the stock exchange built by brad kutsyama. he was the star, if you will, of "flash boys" about high frequency trading. almost a democratic kind of stock exchange much lower prices and really tries to end the idea of high

frequency trading. this is the first company to move to that exchange. we're going to keep an eye on iex as a result. probably a lot to talk about with this decision meantime, when we come back here, chris dodd is here to talk about the financial regulation that bears his very name and the lessons from the crisis ten years ago. and a programming note you don't want to miss this. an interview with david tepper that's tomorrow at noon eastern. u'ay tuned yore watching "squawk box" on cnbc we're back with christopher dodd in a moment. on the planet. ♪ hawaii is the first state in the u.s. to have 100% renewable energy goal. we're a very small electric utility. but, if we don't make this move we're going to have changes in our environment,

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and millions of wifi hotspots to help you stay connected. and this is moving day with reliable service appointments in a two-hour window so you're up and running in no time. show me decorating shows. this is staying connected with xfinity to make moving... simple. easy. awesome. stay connected while you move with the best wifi experience and two-hour appointment windows. click, call or visit a store today. ♪ welcome back to "squawk box. wi we are live from washington, d.c. my next guest, co-authored the dodd/frank wall street reform and consumer protection act. joining us now is chris dodd

he is former chairman of the senate banking committee we thank you for being here. there's a lot to talk about. ten years later. i want to talk about the bill and the conversation we actually had with mick mulvaney clearly there is efforts to upend at least parts of this legislation. >> no question about it, yeah. >> but i want to go back ten years for a moment we were with hank paulson last night and ben bernanke and tim geithner at a brookings event. what was the worst moment for you? when you were taking calls at 1:00 in the morning. right? >> yeah. that was -- we had a meeting on september 18th which was that meeting in nancy pelosi's office when i think either bernanke said unless you act, the entire financial system of this world will meltdown. and so several days went by, or time, not too long we received at 1:30 in the

morning, shawn maher called me saying we just received a bill that says give me $700 billion no court, no regulator could intervene. had we floated that, of course the country when they heard about it reacted typically so the republican senator from new hampshire, we worked on that proposal over the next few days and wrote a hundred-page bill that did a lot of things one, we got rid of the notion of purchasing toxic assets. we came up with how to do this instead of all at one time assistance from foreclosure assistance for consumers along the way. which there was a great resistance for that. and hank was worried that too many restrictions would not participate. turned out to be false they did participate >> i have two questions. one is, do you think today in

this washington we live in t.a.r.p. ultimately turned out to be bipartisan after the first vote didn't work do you think that could happen today? >> you think of it this was 40 days before election to this day people think it was a bailout. they don't forget or don't know we made billions of dollars off the t.a.r.p. program, stabilized financial institutions and the absence of which i'm not sure we could have had a recovery. >> then the question is even today it is one of the most politically unpopular bills. and people don't think of it as a success. >> they don't. >> people continue to say to this day didn't help the homeowners didn't help the public out there. it was still about the bankers >> well, it was.

no question that was part of it. one of the pieces we included in the t.a.r.p. lgs was assistance. i agree with you i think to this day it's considered a bailout for banks i'll go to my grave believing it was one of those unpopular things >> if you could do any part of it over, what would it be? >> well, i would have liked to see less acrimony in the idea of providing more assistance for consumers. i don't think we talked about that enough. the ultimate goal is to get them back on their feet and we didn't do a good job of that. >> you look at the bill today. we had this conversation earlier. he would love to upend large parts of the bill, mick

mulvaney does that concern you? >> it does it always happens this way what we did with the dodd/frank legislation was to try to provide tools that would allow the regulators to look over the horizon and see if product lines or institutions would pose systemic risk. and so worrying about the industry began initially, two thing they were objecting to the consumer protection bureau and executive compensation those were the two biggest issues that came out of the financial services industry. again, with the issue obviously of consumer protection this is $12 billion that we returned to consumers in the last several years 1.1 million complaints filed with the consumer protection bureau it's been doing a great job today it's getting money back. >> fair or unfair to say that

sometimes people would argue that after a crisis, the pendulum swings too far in one direction or another >> it can be, yeah >> did dodd/frank swing too? >> i had to write a bill that produced 60 votes. if i lost one vote, the bill would have died. so you're always taking -- when you're trying to manage a bill -- it wasn't all my idea. i had to make sure i had votes. >> do you think it ultimately slowed the growth of the economy? >> no. >> do you believe that >> no. last month $60 billion in profits, up $12 billion. >> in the immediate aftermath of the crisis when the pain was at its most severe place, there's an argument that by default, by putting regulation in at that moment, it made it more complicated for banks and other institutions >> i find that to be a weak argument long-term today, u.s. banks are the envy of the world. the leiquidity last night, it was pointed out

the european banks envy what we've done strengthening financial institutions yeah, there was a period to begin with people were uncertain where it was going but long-term, we not only saved the moment but i think built far stronger institutions. >> if you look over at dare i say the next crisis, what do you worry about? >> i think the big one is debt you say student loans, i don't disagree with that but the amount of debt at the state and local level. we didn't deal with that obviously in the financial reform bill. but those are the issues that i think are going to become huge and of course many fear there'll be an effort to pair back substantially in the entitlement area that the people count on in this world as a way of compensating for the debt problem. >> senator dodd, thank you appreciate it. good to see you. becky, back to you guys. >> thank you very much when we come back this morning, we have some breaking inflation data the producer price index just a few minutes away and later, we'll be talking to ey ceo mark weinberger about the

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click, call or visit a store today. ♪ welcome back to "squawk box," everyone we've been watching some stocks this morning one of them is gilead sciences shares of that company rising in premarket trading. that comes after the drug maker reported for an experimental treatment in a phase three study. stock now looks like it's up 4%. then there's nxp conductors. nxp hadn't held quarterly conference calls for nearly two

years. the stock is off by 1.3% elf beauty shares also under pressure according to "the wall street journal." the paper cites a draft of a letter that will be sent to the cos m cosmetic retailer. that pressure actually is pushing shares higher this morning up by about 2.7% the august read on ppi is out. rick santelli standing by. rick, what is it >> it is less than expected. down 0.1% headline down 0.1% core these are each 0.3 away from the up 0.2% we expected for both categories no revisions in the rearview mirror to july let's take some of the exes away ex-food/energy on the trade number, that was up 0.1% year over year, final demand, 2.8%. that is a back track couple months ago we were at 3.4% which was the highest read

since december so that's now under 3% at 2.8% we're expecting 3.2% if you look at ex-food and energy year over year, 2.3%. that's about 0.4% cooler than both expectations and rearview mirror and on the trade year over year, 2.9% that's on par. no matter how you slice this one up, it's coming in less. of course, we always try to pay close attention to ppi to see how it funnels into cpi which will resonate more in either direction. if it's weaker than expected or stronger dollar index giving up a little ground the surge towards 3% if you could call it that it's kind of a slow surge. back and away just a bit and of course we continue to monitor all the issues of the day especially the notion that mario draghi may be hinting at

growth in europe slowing a bit in the ecb meeting coming up tomorrow >> what do you think about that? >> i think it's pretty obvious it is. and i also believe that contrary to what the early and -- believe me everybody's talking about something that hasn't really been thrown out there yet. but all in all, i think mario draghi, you know, the taper and how hooe's going to deal with negative interest rates and with regard to the economy, these are all big deals. they go to my big theme for 2018 for divergence many investors don't believe it's possible for the u.s. to continue to do well. and others around the globe not do well. but that's exactly what's been happening. >> your ears were burning. i mentioned you earlier. we're marking the ten-year anniversary. i'm still trying to figure out i agree with you to a certain extent that a lot of things

didn't clear we don't know where prices really were. the consensus is that needed to be done to save the system do you think there was a way to do things that would have let things clear and flush out the system do you still hold to that notion >> absolutely. absolutely without a doubt. i know the counterfactual theme is always out there right at the tip of this conversation but i don't care how many mr. dodd, ex-senator, whoever you drag out they're all going to put fresh potted plants on what they had buried what they buried was the economy in this country no matter who's in the white house, no matter who's in congress, it's like a loco motive. it has a lot of speed and takes a lot of time to slow and speed up again this country would have healed

better without the big hand of government and the bailouts and the checks. >> if you risk money to make money and you're rewarded with it, if you do something wrong in terms of risking the money, you should lose or else the whole -- you know, you can't have it halfway. >> we ban losing you can't -- i get it. we all want to be really nice people, treat everybody well and have people treat us that way. >> all right >> but when it comes to business, profit has to be the motive if you risk something and you lose it, it's gone >> well, you're a great analyst down there at the cme and i'm giving you a participation award. you're not first or second or anything, but you're getting a participation award, rick. congratulations. >> i'll mail it back i either get first or i don't want it. our guest host this morning knows a thing or two about the financial crisis too he was a board member at jpmorgan chase back in 2008 when this was happened. we're going to talk to david novak about that in a moment

he is the former chairman of yum brands he's the founder of ogo lead that regularly puts out fresh podcasts with some of the world's top leaders. in fact, last week when i talked to warren buffett about what he does with technology, he admitted he had just finished listening to a podcast it was a podcast completed by none other than david himself. this was an interview that david did with tom murphy who was the former chairman and ceo of cap cities abc >> podcasts are normally, you know, they take awhile i can read faster than i can listen to one. but i recommend that it was done with david novak it's a 28-minute podcast any time you get to listen to tom murphy, it's terrific. >> that's pretty high praise warren buffett admits he doesn't do much with technology. but he listens to your podcast >> that was a huge honor to learn that fantastic. >> let's talk about the financial crisis we have been doing remembrances

this week. you had a seat at the table. you saw what happened. what can you tell us from a leadership perspective about what was happening there and what you dealt with. >> well, i thought that jay see dimon showed why he is renowned for the type of leader he is if you talk to jamie and i did in one of my podcasts, he said and i truly saw it in action what made jpmorgan chase so successful during this crisis was the processes in discipline and the transparency that was put in place before it so when the crisis happened, hundreds of people went into the office on friday night and thousands were there over the weekend and they used the culture and the trust and the belief they had in each other to make decisions very. quickly. i remember the board going into the war room and just watching them make the decisions that needed to be made. and they had to be made quickly. what i really learned from that whole experience is number one, you got to have the right work environment and the right people

in place number two, you as a leader, you've got to be able to make decisions and you've got to know your business cold i don't think anybody knows the financial business better than jamie dimon. then we got into the situation where, you know, we were asked to take the t.a.r.p. money there are nine banks, probably two that didn't need it. we were definitely a bank that did not need it. we had the capital -- exceeded the capital requirements you know, we talked about that but for the good of the country, jamie stepped up and said this is what we have to do for the country. >> and took over some troubling institutions that the government didn't have to do it then you got rewarded with getting shaken down by the new york attorney general and spending billions -- >> then, you know, for years you'd see as many regulators as employees in the jpmorgan chase. >> i don't think jamie thinks he was really rewarded fully for -- >> well, i don't think that he necessarily was. but, you know, the company's

doing fantastically well the stock is performing at record levels. he said it will over time. he's always taken a long-term perspective. i think the important thing is here when you have a crisis, you can't automatically create what you need to really address it. you have to be ready beforehand. you know, i talked to gary kelly at southwest airlines. they have the best safety record in the industry, but they had an issue earlier on in the year he was having a teamo offsite they went together, got together, huddled up they immediately thought about their passengers, what they needed to do, how they needed to communicate. this didn't happen by accident they already had the culture they were ready to go. and they had the team that would make the right actions >> it's kind of amazing watching how this has played out. you ever deal with stuff like this as ceo of yum brands. >> our biggest shoes were --

what you always have to do is acknowledge you have the problem. you have to apologize. we're going to find out what the issue is we're going to fix it and make sure it never happens again. you have to be right out front you have to talk to people very clearly and directly about what you're doing to take the action. and you have to be apologetic. >> that is huge advice i can't believe how people -- >> people try to defend themselves in these times and why the process is so good and why this would never happen to them that's when the consumer and i think they say b.s >> yeah. >> you lose, you lose whatever credibility you need to have but i really feel like -- i've done these podcasts. i've learned so much one of the things i always did when i was running yum was to do these practice visits. i could always learn so much from everybody else. even jamie dimon, he said

leaders need to spend 80% of their time learning. i'm trying to go out and talk great leaders. then you as a listener, you can say this could work in my business that's what i did. not everything would work when i'd visit general electric at the time or coca-cola or you name the company, target. i'd always pick up one or two i could use and take back to business clearly all these people i've talked to -- tom brady there's nobody that goes outside his own basic industry to try to seek knowledge that's going help him be better. he brought in outside consultants on his body coaching, how to throw i'm sure he has -- you know, he's got -- he's constantly looking for that thing that will give him the competitive edge. >> and the podcasts are like a masters degree in leadership >> and i love doing it at

ogolead.com, putting in my plug. i'm going to do some more. i'm going to be doing a podcast with lania ali talk about her role in the ali center and what she's learned from m e mohamed. i learn a lot every time that's why i think i enjoy it so much >> i get it. david novak is with us for the rest of the program. coming up, we're going to talk to ey ceo mark weinberger about the lessons from the financial crisis and the next round of tax cuts proposed by the gop. and tonight, don't miss the new prices on wall street. "crisis on wall street: the week that shook the world." each day our planet awakens with signs of opportunity.

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ten years ago the world financial system nearly came to a devastating halt in a new cnbc documentary, andrew ross sorkin speaks to the ceos and washington leaders about their efforts to pull the economy back from the brink and what they saw on the other side of that abyss. >> it looked as if people were going to stop doing business with each other. atms were going to shut down people were not going to lend

each other money >> would people have rioted? probably you get wiped out, you worked all your life, your savings are gone, you lost your house, you can't borrow money there's no financial system to help support you it'd have been devastating >> tuesday and wednesday of that week were probably the tensest days i could ever imagine. the number of alarm bells going off all around us was almost numbing. >> i'm on the phone continually. i've got one team coming in to brief me as soon as they leave, another one comes out. you can never take an issue aside and say we're going to work on something as higher priority because all of them are higher priority. in the middle of the night, i would think about armrmageddon i was envisioning food lines in the middle of the night. i was saying to myself, if we don't have the authorities and we get a couple of other institutions to go down, how do we put the system back together again?

>> for more of the first person accounts of the events of 2008, watch "crisis on wall street: the week that shook the world. it premieres tonight at 10:00 p.m. eastern and pacific here on cnbc joining us now on "squawk" to talk about lessons learned from the crisis is mark weinberger. the chairman and ceo of ey you have a broad view of what happened because of the many clients and customers ey has what would you say ten years later, what were some of the biggest lessons learned and how prepared do you think we are right now to try and put off something like that from happening again? >> hi, becky thanks i'd agree with david and the clip you just saw. there was some great leadership back then. in government and jamie dimon and others i think what you recognize from that crisis is how important the financial system is to the world economy. just how contagion could happen immediately and spread across the world.

the importance of regulators to work together across the world because you can't stop something in one place from spreading. you need to know what's going on innovation is great for productivity it front ends risk, you have problems we have those products that were financial instruments, meant to diffuse risk people didn't truly understand them boards didn't understand them. and the risk just was unknown. and the great debt that was out there masked the underlying problem in the economy before you knew it, we were trying to catch up and manage that risk. so i think really when you look at innovation and see all the positive sides of it back then, it was financial back then today it's technology and cyber. how are boards really analyzing and understanding the solutions businesses are coming up with and what could be the next problem? those are things to focus on >> let's talk about that you don't think it would necessarily happen the same way, but you think there are plenty of risks that could creep up and have a catastrophic event? >> yeah.

obviously right now the economy's strong everything's going well. but i think it was david or somebody who said you really need to prepare for the next crisis before it happens and i think that's true. we don't know what it's going to be but what you do need is a strong government who's going to step in and be able to act immediately. it will be contagious across the world. technology and cyber and what can happen in that space, the innovation we're seeing, the digital knowledge shared across companies, we don't know how that can be attacked or what can happen there i think we really have to dig into that and understand some of those issues but i don't think we could prevent it i think we have to be preparing to address whatever the risk is. >> where you sit at ey, did dodd/frank and some of the other regulations overshoot? did your clients, were they negatively effected in terms of what they were able to do? was it hurt by overshooting? or was it just right or not enough >> so, my answer would be yes. it overshot.

but that's not a criticism or a judgment of the people who put it together. at that time they were addressing a problem that did it in the past. they had to stop the risk from happening and fix the economy. they did what they thought was right quickly. as dodd said, i worked in two administrations. you need to get the votes. it's not going to be perfect >> he wanted more. he was saying i had to get republicans on board he probably thinks it didn't go far enough where everybody else thinks it went probably too far. >> yeah, he may have that's right but again, they're trying to fix a crisis at that point what you have to be willing to do after that's over, any regulation is written in a moment in time you cannot predict how it's going to affect the economy, players in the economy as we saw what happened and the over-regulation is stymie investment it wasn't just the technical rules. some things did increase liquidity and capital. but the many agencies that were created and having an input on

overseeing businesses made it impossible to the people in the past >> i remember seeing a chart where there were four or five different groups invading on one particular issue when you look at the whole financial industry in terms of issues how do you feel of the balance do you think the balance is correct or how do you feel >> tax reform and deregulations were major components in the united states. i do think the banks are more stable than it has been. the $169 trillion in debt more than we have in 2008 across the world and owned by businesses and government is a problem. as far as the regulation concerned, it is finally a balance. it is the regulators who are in

place and the mindset they have not viewing business is bad. trying to help them to be successful as oppose to punishing them >> the tax reform act is more unpopular than obamacare was at its lows whose fault is that? and has it helped the economy or business or lined the pockets of the rich has cmy figured it out yet >> there is a lot of regulations coming out on that tax bill. there is no doubt when we have more jobs then we have people who are able to fill the roles when we have 75% corporations increase in profits and money coming back in oversees. foreign companies looking to directly invest in the united states that'll take time. it is not happening yet. they are absolutely looking at helping hundreds of companies around the world to invest u.s. businesses on the margin of

not being afraid to invest and positive for economy jobs and growth >> mark, great to see you. >> mathank you, beck. >> we'll be right back

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let's get down to jim cramer joining us now on the debut of the big special night. we go back and forth, i was just talking to rick about whether there is something to that i know we hear the counter factual would have been riding in the streets i wonder if there is a way to let things clear to flush the toilet more quickly with the whole thing. we are feeling the after effects of some of the bail outs and stuff but it had to be out >> there is a new legality there is a sense like our grandparents and my case and my parents of what happen is you can't be the same.

the loan value is incredible and the amount of cash people use to may homes are amazing. the mindset is changed the banks are all over capitalized and it is other places that are under capit capitaliz capitalized. we don't talk enough about what tim guyer did. the timing was right to make sure the country is strong i think it is a change of mindset and that's not going away >> i guess if things were not systematic, you can let them fail but as long as they are, you can't let them fail. in capitalism, if you can win you got to be able to lose >> look at story of the time, people want to nationalize the banks. >> thanks jim, coming up on "squawk on the street," don't miss david faber interview with

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and thanks to our guest host this morning, when you took over yum it was tiny and that was one

of the great success and that was not something -- your college education had nothing to do with taking a company like this the way you did >> it was unbelievable opportunity, i call it a gigantic do over because we are able to create our own coverage. great to have you today david novak. >> "squawk on the street" is next, watch andy tonight at 10:00. ♪ >> "squawk on the street," i am james quintanilla with jim cramer and david faber t