andcapie i heather mcdonald on law enforcement and how to make everyone safe. "washington journal and clip comes away at 7:00 a.m. tomorrow. we will see you then. ♪ [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2016] captioning performed by the national captioning institute, which is responsible for its caption contents and accuracy. visit ncicap.org >> next newsmakersers with jeb hence erling, chair of the services committee. then discussing how to counter the group's influence in the region. after that republican presidential candidate donald trump talks about the british decision to leave the european

union. congressman, as we get started, yesterday financial services spending package was due to make its way to the house floor preempted by the democrats' sit-in on gun legislation. that contained some reform packages that you supported. what's the next stop for that piece of legislation? >> i expect that to be up probably on one of the next available legislative days. and it includes provisions that are supported to make some of

the washington bureaucracy more accountable to we the people, for example, putting the consumer financial protection bureau on budget subjected to the power of the purse of congress, to make sure they have a bipartisan commission instead of one partisan director. so there's some good provisions in the bill. i expect it to be up in fairly short order in the next few legislative days. >> as we're taping this program on this thursday morning the house democrats are still on the floor in the house of representatives. what is your view of the action that they've been taking? >> well, personally i think it's a little disturbing when i see members of congress holding up names or images of the deceased and exhortling on the house floor. i find it to be very unseemly. number one. number two i think it's a huge disrespect to the american people and democracy. to see so many democrats acting in such an undemocratic

fashion. just because barack obama became president and i didn't support him i would not counsel those trying to occupy his office and shut down business. so this was an attempt by the zracts so, frankly, shut down the government. we managed to get needed funding for the zika virus done not withstanding their particular protest. and i guess last i find it somewhat ironic they're calling for votes. they've had votes. the senate voted down one of their provisions. on the the house side an appropriations committee it's been voted down. there's a procedure, kind of an inside baseball but known as a motion to recommit any time they want to. it's the one vote that the minority in the house is always guaranteed. i've been in the minority, i've been in the majority. frankly it's a bit more satisfying to be in the majority but at any time they could have brought up this provision. instead, i wish they would come together to work with us to make sure that we can more

effectively conduct this war against terror. so far they are trying to change the subject. >> thank you for taking the time. you want to talk to you a little bit. ultimately consumers are figuring out the economy hasn't improved. dodd-frank, the supporters told us it would lift the economy. it hasn't. instead we have the single most weakest most tepid recovery we've had. the economy is not working for working americans.

so that's one of the reasons you have banks small lending at about a 20-year low. you have entrepreneurship, the creation of new business, at about a generational low. and much of that has to do with the sheer weight and volume, complexity, cost, uncertainty of the dodd-frank bill on our capital markets. i-can't have capitalism without capital. so number one to answer your question i think the timing is good to go to the american people and say, hey, we tried the democrats' way. we tried this thing called dodd-frank. and is the economy working for you? most americans are going to say no the economy is not working for us. second, i think it is important to tell the american people what your plans are. speaker ryan has challenged us to be a party to tell the american people if you would entrust us here is the bill we would have. our bill is simple. economic growth for all, bank bailouts for none.

most didn't realize didn't end to big to fail. it cotfid it into law. it has a bailout fund. the american people are very suspicious of washington. they do not want wall street bailouts. and so we have a piece of legislation that i think they can embrace that will give them and help grow the economy. >> when i talk to wall street bankers and bank executives on this question of why now, so many have spent millions and hired thousands to implement things. so having at this point having this alternative path after they've spent billions of dollars, what's the incentive there for them to move over to an alternate path that you're proposing? >> number one, i didn't necessarily write it for wall

street. but i know this much. we are losing a community financial institution a day on main street and they're not dying of natural causes. we're losing credit unions, we're lowsing community banks. some of our key resources for small businesses and entrepreneurs. we're losing that funding channel. so when you ask about the timing they're scrying out for this particular piece of legislation. with respect to those who have had to invest lots of money into compliance for dodd-frank, i understand that. frankly, some consider it a competitive advantage which is not good for our economy, it's not good for working people. but some of the heads of the largest wall street banks have essentially said this is a competitive advantage because we're the only ones who can afford to deal with the mind-numbing complexities. the last point i would make is the financial choice act is just that. it's choice. we're not forcing banks into a new system. they can opt into it if it makes sense. if they want to stay with the

current regulatory low where essentially washington comes in and tells them how to run their bank and where politicians and bureaucrats will politically allocate credit they can stick with that system. my guess is a lot of their shareholders will say there's a better system. we will use more private capital. we will put private capital in front of taxpayer capital and then we can go out and help build our banks and grow the economy. >> after you rolled out this bill you met briefly with donald trump your party's presumptive nominee. at the same time, trump indicated that he is going to be putting forward a plan as he described as dismantling dodd-frank. i'm curious how your conversation went and should with expect an alternative approach from him? >> one, i don't speak for the man. i did have an occasion to meet with him. all i can say is i think that he received the briefing well.

i wanted him to understand that house republicans have worked on an alternative plan to understand the basics of the plan. again, to ensure that washington is held accountable, that wall street is held accountable, that we increase basically a trade-off between a whole lot more private capital for a whole lot less federal control. and again, i didn't ask him to endorse the plan but i think that he was pleased with what he heard and should he be elected president i think we have a lot to work on together and ultimately creating greater economic opportunity for working americans. and that means you do have to dismantle dodd-frank. there's no two ways about it. one of the greatest burdens on the economy today. if we would have fundamental t tax reform, repeal and replace dodd-frank and allow there to be economic growth for all and bank bailouts for none this economy would absolutely take off. no doubt about it. >> one of the points that was asked repeatedly yesterday

during janet yellen's hearing before your committee was on this idea of the supplemental leverage ratio. one, it seems to me that -- and to what you were speaking to earlier really this relief plan is directed to those mid sized and smaller community banks. democrats agree those should be released and janet yellen said to simplify the rules for these institutions. why not take an approach, a, how much effort have you put fords in trying to reach bipartisan support and specifically on this issue? and why not doit as a stand-alone? >> number one, i'm very proud of the fact that as chairman we've managed to get 40 different bipartisan bills out of our committee signed into law. we probably do more bipartisan work than just about any other committee in the united states house. but having said that, democrats tend to have a religious

loyalty to dodd-frank. they view it as something that came down from mt. sinai inscreebd in tone tab let's. and so it's very difficult to work with them. behind closed doors they will tell you they know it's hurting credit opportunities for working americans. but it seems to be kind of a political brand protection. you've got people like elizabeth warren on the senate side who has elevated this to some kind of liberal cause to celebrate and don't let the facts get in the way. does it matter how many working people are hurt? does it matter how many credit opportunities are denied? so unfortunately i haven't seen a whole lot of opportunity to work with them on this. so in this particular case, their bark for reform is a whole lot louder than their bite. not putting their votes where their mouths are when it comes to this. having said this i don't know what the next congress holds.

if there are opportunities to work on a simplified leveraged ratio, a trade-off between again high levels of private capital in exchange for great levels of economic freedom. i would be glad to work with any democrat at any time. so far there's not exactly a line around the hallway to do that. >> at your hearing the other day with chairwoman yellen, one of the frequent questions that she got from democrats on the panel is this idea of insufficient diversity at the federal reserve. >> i could not agree more. there's absolutely an insufficiency of diversity. every single fed governor has been appointed by president obama. there's no diversity of opinion at all which is the most important diversity that counts. so because of that the federal reserve has become the highly highly partisan institution. it has lost a lot of its independence. it has lost a lot of its respect. it has lost a lot of its credibility.

in so many ways the independence of the fed has been compromised. and indeed, there's no a diversity of opinion. it is a partisan institution. and so in that respect i couldn't agree more. >> but obviously the campaign coming from democrats is on ethnic diversity gender diversity et cetera. i was wondering what you think on that point. >> i want to live in a society that believes in equality of opportunity. i want to live in a society and i want to raise my children to appreciate people for the content of their character not the color of their skin. so the question is, really, where does the lack of diversity come from? is it the presence of discrimination? is it the absence of discrimination? but the diversity that counts particularly at the federal reserve is the diversity of onomic opinion that is not represented when the fed is morphed into one more barack obama bureaucracy. >> i want to hone in on the

mechanics of the bill. on the 10% supplemental leverage ratio. can you talk u us through your thinking in terms how you arrived at 10%? why 10%? you mentioned initially in the first piece the vice chairman. how much did his views influence the final proposal? >> well, we did a lot of study. and i think it would be very difficult -- i have yet to find a single bank that anyone has ever heard of that failed in 2008, the seconds worst economic crisis in america's history i've yet to find a single bank that anybody heard of that failed at a 10% leveraged ratio. i'm not saying it is impossible for a bank to fail at that lemplingd ratio but it is being prepared for essentially a 200 year flood. so we do think it is important to try to avoid the mistakes of the past. but too often what we see with a so-called risk-based leveraged ratio is that the

regulators have gotten this absolutely completely wrong. they not only were complacent in what happened. they helped cause the financial crisis by essentially requiring little or no capitol to be reserved against sovereign debt and against morged-backed securities. think fannie, freddie and bonds. -- erybody piled into the simple leveraged ratio to replace complexity with simple policety. i'm not saying any of these people backed our bill but it is clear that the fed has a similar idea this trade yafe between a simple leverage ratio and regulatory relief. alan greenspan has written on this as well. federal fed governor, a number

of prominent economists. already three different noble laur yet have endorsed our approach. so i think there is a growing consensus that there needs to be kind of a new regulatory paradigm in banking and in capital markets. and it all surrounds having high levels of private capital to absorb losses so that we don't have systemic events, so we don't -- so we minimize the opportunities for financial panics. and again, i'm not going to have enough arrogance or hubris to say that if this bill was passed there would never be another financial incident in america. but i think they would be a whole lot less severe and less frequent if we have high levels of private capital. >> if i could follow up on that. how do you respond -- fed chairwoman yellen was asked this question and sort of explained that it's a backstop to the capital measure. and you have a debate that's

happening now in terms of reorienting a slew of capital rules in order to remove that variability so that banks are all on the same level playing field but yet banks are pushing back because they argue that -- >> well, if the banks were all on the same level playing field we wouldn't be losing a community bank a day in america. that would be my first point. my second point is that with all due respect to the good people they got it wrong. they helped cause the financial crisis by getting financial institutions to crowd in to things like risky subprime mortgages. and to mortgage -- and to sovereign debt places like greece and spain. so these were the people who got it wrong. and it is again a volume of mind-numbing complexity under the basel risk-based capital

rules. i think you could make the case that the levels of capital are insufficient. but now cannot make the case that they were insufficiently complex. they don't work. we've seen it. so why would we want to repeat that? we don't. that's why we have proposed the financial choice act. >> you touch on this a little earlier but the idea that some of the ideas in your bill are not new ones for republicans. for example, the language rarppeding the cfpb, replacing the director with commissioner, et cetera. these are ideas the republicans have put forth for years but have gotten nowhere. but you mentioned as you described a religious deal to not touching dodd franks among democrats. so i'm wondering what you think the path forward looks like? does it require strong majorities? >> there are some democrats at least behind closed doors who believe that it makes sense to have a regulatory commission. that there's just too much

power for one individual. there's some democrats who believe one individual in america should not be the ultimate decider -- decisionmaker on whether or not a working family gets a credit card, gets a mortgage, gets an auto loan. so we'll have to see what happens after the next election. my critya ball is a little -- crystal ball is a little fuzzy. but if donald trump is president he understands this is impeding economic growth. he wants to ensure that the economy works for working americans. i'm afraid hillary clinton is simply going to double down and take dodd-frank to even a worst place. so that would be harmful to working americans. but i don't know. we're going to have to see after the election. again, i just want to get the idea out there. putt it into the public realm to vit debated. and to let the american people know we have a better idea. we've got a better way forward that would allow greater

economic growth, it would allow you to keep the banker that you want to keep. it would allow you to decide in a competitive, innovative, free enterprise market which credit cards and auto loans and mortgages are best for you and your family. and that washington wouldn't control your finances. because increasingly i think people are waking up to the fact that what obamacare is to namly health care, dodd-frank is to family finances. >> speaking of the upcoming election, how concerned are you at this point about the house potentially losing g.o.p. losing the majority? >> i'm not losing a lot of sleep over that one. we have a lot of good candidates. under speaker paul ryan we have put forward plans, a better way forward when it comes to economic growth, health care, to tax reform, to regulatory reform. i think it's a very bold agenda for our candidates to run on. so i'm optimistic in that

regard. and i've long since ceased trying to figure out what's going on in the presidential race. >> are you planning to go to cleveland this summer and also will you campaign with mr. trump? >> well, cleveland rocks so i've always wanted to see that rock and roll hall of fame. so i'm intending on going. >> will you campaign for mr. trump and with him this year? >> listen, i've endorsed him like some republicans there's a number of things that he has said i disagree with. there's a number of things that he has proposed that i disagree with. but what i do agree with as chairman of the house financial services committee is that the economy is not working and it's got to twork and it's got to give greater economic opportunity for all. and that means getting rid of dodd-frank. so i'm very enthusiastic about that. and hillary clinton on the other hand is going to make it more difficult to get an auto loan, even more difficult to get a mortgage loan, more community banks will go out of business, more small businesses

will fail. so the contrast at least with respect to dodd-frank and economic opportunity could not be more stark. >> i guess we have four minutes left. >> sticking with the -- i just want to get your reaction to the report that elizabeth warren was on hillary clinton's short list for vipetial pick and is being vetted as a vice president. >> my guess is that it is the long and short list in american history because this is probably about the 50th name that i've heard. so i think i will let hillary clinton choose her own vice president nominee. i am passionately indifferent at the moment as to who she chooses. >> so much of the political debate around financial regulation is centered around pro wall street or anti-wall street. i know you've tried f a middle pads. your talk about how your bill is talking about helping small

banks get out of dodd-frank. but yet critics are quick to describe it as a wall street wish list. >> the "new york times" reports the big banks don't like my legislation. so i don't know. we'll talk to the reporters at the "new york times." what i'm trying to do again is create economic opportunity for all. you can't have capitalism without capital and we have tons of capital sitting on the sideline and the major reason is because we have washington bureaucrats who are unelected, unaccountable trying to allocate credit along political lines to their friends and cronies. it's too much of an insider's game. so we need to democrat ties little d capital markets and the way to do that is to hold both washington and wall street accountable. like most americans i never wanted to occupy wall street. i just want to quit bailing it out. elizabeth warren wants to bail it out. she support as taxpayer bailout

fund. she supports designating institutions as too big to fail so that again she can take it sover. she and i suppose the sortsdze washington eloots who may or may not have been professors at harvard to take away the fundamental economic freedoms of americans to choose their credit cards, their auto loans and to even get a small business loan in the first place. so again, i know she spent a number of years in her ivory tower at harvard but i think she is a little too far removed from small business people who are really the ones who create the new jobs and help make america work. >> shifting gears just slightly. one of the big stories today is brexit and a lot of the u.k. is going to cast their vote. your thoughts on the matter and are you concerned at all in terms of the economic ramifications on the u.s. economy? >> well, it has not made the top ten list of things that i toss and turn on at night.

and i am to some extent trying to figure out why so many u.s. officials are trying to get involved in a matter dealing ith the e.u. and great britain . i think that is a decision for the british people not for the american people. so i have my sone private views about it but i believe at the end of the day it is not going to have a huge impact on the world economy one way or the other. >> as we close here, twice you've referred to the thing that is keep you awake at night. if we haven't hit on the top ones what are the top one or two that do keep you awake? >> i think it probably has to do with a 14-year-old daughter and a 12-year-old son. but i will keep those to myself. >> well, thank you very much. we know you're going to have a break and have an opportunity to spend time with those children at home. thanks for being with us this week. > thank you for having me.

let's start with the political feature. start with your question. this is the year when populous candidates have had a lot of resonance. talk about the pluses and minuss? >> i think anybody who has been following the political debate knows that wall street remains very unpopular since the financial crisis even though coming up on eight years. but we see senator bernie sanders, donald trump taking that tone to the voters and hitting home with it. so we have this broad bill put forward from the chairman. it does include a number of provisions amente at relieving smaller banks. that is the main thrust that they want to emphasize. there are some provisions that larger banks would enjoy but they're mixed on it. and at the same time they want to put forward a meaty proposal. the entire things house republicans are try to do is put forward a number of very robust policy proposals.

we're not just against things. here is what our plan forward is. that's what they're trying to do. meanwhile critics are going to describe it as a wall street wish list. others try to find out a little bit of a nuanced in there and try to sell it as something different. >> but you suggested that large banks are concerned because of all the hiring that they've done, the billions actually they've invested in compliance. so what about selling this as a bill that is really oriented towards community banks and savings and loans? >> in talking to bankers, i'm not surprised to hear about the "new york times" reporting the story that wall street executives are upset about this. i understand that really it seems like there's very little that -- access or in terms of lobbying that the wall street banks are able to do on this bill. i find it interesting that it is swept up in this bigger anti-wall street bill as opposed to targeting things.

i think it almost ends up undermining different areas where perhaps the banks would actually like to get some relief. because it's passed in this way. >> but in terms of the political reality, i ask the question about this. unless there are larger majorities in the senate and a republican president, this and paul ryan's other planks of this plan, what are the future for them? >> i think obviously if republicans want to advance their policy proposals they're going to need a republican in the white house. and i think that's one of the main thrusts behind this initiative is we want to put forward a comprehensive plan that we can present to voters and say if you give us the republican that is we need in both chambers and a republican in the white house we can move forward. if you think the path forward, with hillary clinton in the white house it's hard to believe that she is going to grab and go run with it. so they're really counteding on getting donald trump into the white house. >> let's spend our closing two minutes on janet yellen's

testimony. how was it received among others on the committee and also and wall street and financial markets this week? >> i think once again, it was republicans grilling janet yellen as to be expected. it's hard to say just how wall street took her remarks. i think that she's been very consistent in terms of trying to establish the fact that the fed is not on a preset course. they'll look into the data and make decisions when they think is appropriate. they're very afraid of dialing it up too quickly and then having to dial down fast and perhaps exasperating the situation. so i think -- >>. >> are there frustrations? >> i think if you listen to the lawmakers some are angry that they think they are too optimistic. the fed has consistently had to scale back how much they think the economy is going to grow coming forward as the numbers come in below. that's been a simmering

undercurrent. the fed has said we're doing what we can, we're moving forward and the economy continues to limp along that has left people dissatisfied. >> which once again sort of echoing her predecessor, said fiscal policy is needed and we need a helping hand from congress which has obviously not happened so far. so the fed is on its own trying to navigate and improve the economy. >> and does history tell us that at this point in a presidential cycle, especially one this year that until the outcome is known the financial markets are going to be in a state of wait and see? >> absolutely. wall street, i think this election has been nothing but uncertain. so i think they're bracing themselves as much as everyone else is. prr final comments? >> absolutely right. if anybody would have predicted we would be here right now six months ago, that would be impressive. i think where we'll be six months from nowas