may glory surround you. i won't be here monday. i'm going to be snowboarding behind a boat. good-bye. uce. thanks for being with us. we'll see you monday. good night from new york. >> announcer: the new "wall street week." [♪] gary: welcome to "wall street week," the show record for long-term investing. liz: the markets rallying to new highs. billions of dollars in obama-era federal regulations have been slashed by the new administration and by republicans in congress. gary: one of the biggest regulatory changes could be to dodd-frank. the former federal deposit tins corporation chair sheila bair

joining us right now. i think you are in favor of simplifying dodd-frank but you think the industry needs to continue to have this regulation. explain to us. >> i do think there are areas that could be simplified. there is a lot of complexity in dodd-frank. i think it it hurt the smaller banks. simplification could be helpful as long as that's not a rules for weakening -- not a ruse for weakening. it's important not to weaken on capital requirements. all the bank share prices is more anticipating the capital requirements will be reduced. and that won't do much to help the economy. gary: did you say you think dodd-frank benefited the big banks?

>> i think the unnecessary complexity has benefited the big banks. you look how complex some of the liquidity rules are. the volcker rule. compliance offices and teams of lawyers can handle it. regional banks and smaller banks cannot. it disproportionately impacts them. simplify kaig can ease the burden on the smaller banks. and make it more effective. the rules are hard to enforce. we could have a good deal of simplify kaig around dodd-frank. liz: it seems like college students should look into simplify casings dodd-frank. it's a bear of a law. 2,300 pages.

donald trump has already started to try and trim where he is aloud. there is one area -- where he is allowed. public companies that extract natural oil and gas from having to disclose annual reports and paiments whed andpayments when s with foreign governments. that's a small percentage. what else would you remove from dodd-frank to help the market and help stock. >> well, i think again a lot of the apparatus on stress testing is geared more toward the larger banks. we expand the net too broadly on who should be stress tested. i simplifying liquidity

rules would be helpful. the ability of a bank to access funding in times of stress. during the crisis it was a function of the market perception they were insolvent. so prioritizing capital and simplifying some of these areas i think would make sense. i don't agree with everything in jeb's plan because i think on what we call ola which is designed to prevent bailouts. he want to repeal that. but the concept with stronger capital you can ease the complex rules. if i were mr. trump in want to go ease regulatory -- unnecessary regulatory burden in a smart way i would be looking at that approach. >> clearly the market is not

listening to anything other than the fact not just wall street regulation, but regulation across the economy has hurt this economy. it's amazing to me as a long-term investor who watched the markets for 30 years, is the market correct that once all these regulatory burdens are unleashed, that we'll see regulatory growth or is the market ahead of itself? >> the market is ahead of itself. i think probably more important in terms of his agenda to boost the economy would be meaningful and smart tax reform and infrastructure spending which we need which would get the cost of doing business down. that would create jobs to begin with. liz: on that point of tax reform, you saw the market act like pavlov's dogs he time

president trump mentioned tax reform. but he talked about getting rid of -- you would have to figure charitable deductions. the mort gaining deduction. what must the tax reform look like to really spur the market? >> that's been an overarching concern with this administration. did they come in with clarity of purpose and a plan that could get a majority support in both houses? there are a lot of questions. but i do think even if you do tax reform in a revenue-neutral way, getting rid of a lot of special loopholes abductions and lowering the brackets for everyone, you can stimulate the economy. so it's traditional conservative republican, i hope he goes in that direction and doesn't blow a hole in the budget with more tax giveaways.

but there is not a lot of clarity about what he has in mind. but he can stimulate the economy by cleaning out the tax code and lowering the bracket. we did it in 1986 when i was working in the senate. and i hope he will look back to what was going on with the reagan administration and putting his own plan together. gary: we need to talk to you about the student debt crisis. we'll be right back and address that. >> announcer: student debt is a trillion dollar crisis in america. but could the administration demand changes to education

liz: with the cost of college skyrocketing it seems student debt loads have only grown worse. $1.3 trillion is owned to the government and other student loan lenders. president trump's plan would let their debts be foregiven if they adhere to a 15-year plan. door * if you pay for 15 years and around good borrower, you will get a good benefit. is this a solution? >> i think it's a step in the right direction. i think we should concert income share agreements so you scrap the idea of debt and debt forgiveness completely. students who attend college who get help from the government, they sign a contract with the government that when they graduate they will pay a certain

percentage of their income for a certain period of time up to a cap. so i think it many a step in the right direction it's still debt, though. there is a tax liability at the end when you get the debt forgiveness which may or may not helpful if the borrower hasn't planned for it. it raises issues of equity. which is why i think scrapping debt and going to an income share contract. this is something purdue is pioneering. ultimately i would like to see the government go in that direction as well. >> it seems as though we are rolling towards the edge of a shy cliff. we have inden tiewrd servitude when it comes to some -- we have indentured servitude people in their 50s and 60s has grown

and they can't get out from under it. do you see a kri is coming? >> i'm not exactly saying that. i'm saying just scrap the whole idea of debt. problem the income-driven repayment plan we have now, and i don't know if in trump wants to build on those. you are paying a percentage of your income. but frequently the payment is so low that principal amount on your loan is getting bigger. no debt, no principal, no interest it's the difference between buying a share of stock in ibm and lending money to ibm. you take a share of the student's income up to a cap

it's an obligation that evenly applied to everybody who gets financing from the government to pay back a certain percent average their income over a certain period of years to taxpayers. gary: do you want the private sector to basically do that? >> i think private investors can do it. colleges can do it as well. we are looking that trying to fund a program with philanthropy. but i do think, and purdue has used a combination of funding sources. i think it many a great program. we are setting it carefully thinking about how we might design our own program. if you have private investment there needs to be strong control air. smart, simple oversight. you are dealing with a vulnerable population so students know what they are signing. i think colleges have a role in

signing this. gary: i want to invest as well. liz: it's nice to see you. sheila bair. more "wall street week" after this. >> announcer: stocks keep racing ahead. but are investors about to be left in the dust? now may be the time to sell. now may be the time to sell. when "wall s s s s s

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gary: another week and another record upon squall street. the dow and the nasdaq and s & p all hitting record highs. liz: joining us now, steve kroll and shelley bergman. i them it an obvious question to say how much longer does this rally last. but markets too exuberant or right on the money? >> it depends on what market you are talking about. in the united states certain second towards are being prices for perfection. overseas in the emerging markets you could find a lot of stocks trading that larger multiples with better dividends. there are second towards in the

u.s. market that are fully. we haven't had a correction in five months. you have need to have cash on the side and be fully diversified. gary: we were talking about the old show and how we have been in the business for so long. i had wch theress conference thursday and i got to si of d i id i can set up my position before that trump press conference, i would have thought the market would have had a violent reaction. what is going on that the market seems immune to everything that the market usually cares about. >> the honeymoon is starting to wear thin. but i think we are due for a 5% correction. it probably started yesterday. but, you know, valuations are

okay but a little bit stretched. a couple of months ago we were worried about earnings and brexit. now we are worrying about north korea, and russia and chinese currency. obviously some of the trump situation is a worry. if you look at his program. first two, immigration and regulations, i think he can take care of. the healthcare will be harder, and most important tax reform, in going around the country, i think it delayed a lot of projects because they don't know what the numbers are going to be. if tax reform doesn't get done until 2018, we may go through a couple of quarters of slower gdp. the bonds rates came down a lot? yesterday. liz: you have consumer confidence at a 12-year high. people and investors dish you

have got a sophisticated audience watching that bet against an increasingly stronger market has gone the hurt. you saw the future strategies funds. they last $600 million in the blink of an eye. what signs are you looking for for that moment of tipping points to the other side? >> as long as you are properly diversified, you -- you can't time this market. last january-february you had a 10% correction. people said the bear market is upon us. right back to new highs. buying opportunity. then right into the election everybody worried about trump getting elected. you had nine straight days down. 4.9% in 20 years. then the market ripped. people have been uninvested in

stocks the last 5-10 years. they are afraid of missing this rally. and that's what's going on here more than anything. stay globally diversified. go in places that haven't moved. keep some cash on the side and don't try to time this. gary: shelley did join us last year on the show when everybody was hating the market. you talked about the fact there that there were publicly traded equity firms that were under trade. i know you are a holder of fort rirks s. what do you think of the publicly traded private equity firms now? >> we like them. they have had big substantial moves and pay big dividend yields. tough see some of the policies -- if you are going to

see some of the policies trump has telegraphed. you saw an announcement that kraft was going after union labor. you will see more cash in the system. interest rates will remain lower for longer which will keep cheap noney around. >> your best ideas right now, knowing what you know about a few question marks. and whether the fed is less powerful than president trump is. >> i think the fed will raise rates in march because the numbers have been good, and it may leave to the 5% correction that may come. but the big issue of is there is only one place in the world to go. our rates are low. they are going to crime. earnings are pretty good. you stay with the stocks that are doing well. i love the airlines, the housing, the banks on a pullback. after the fed increase in march you may have two quarters where

they take a holiday. gary: i can't see the fed moving in march. dee nation is still being exported around the world. >> i don't know if the fed is going in march, april, may. yellen telegraphed she'll do two or three rate hikes. pave attention to the 10 year and 30 year. gary: what is the bond market telling you? it's telling me they way ahead of themselves. >> the bond market is telling you based on where the 10-year is today and the 30-year. growth will be subpar. no matter what policies trump puts in place you won't get that 3% or 4% gdp growth. consumer spending is different than it was before. technology, job creation, all of these things are changing the way that the economy moves.

and, you know, once again, it's going to be very, very, very hard, okay? to see an economy take off. my concern is if the fed goes too fast and the dollar starts coming under -- if the dollar gets significantly stronger, i think that's going to be a problem. liz: that would be tough to work with. steve you like to look at price to earnings ratios. there is wisdom that we are at a perfectly priced market or two expensive. what is your level you don't like to breach? >> the two numbers are 17 times on this year's numbers. but it's 23 times on a gap basis. so you have to be fair whether you are doing apples to apples. a lot of companies are using non-gap numbers. it makes the market slightly overvalues.

gary: thanks for joining us on "wall street week." liz: thank you so much for joining us. we'll see you next time.

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to help block six key inflammatory substances that cause your symptoms. most allergy pills only block one. and six is greater than one. break through your allergies. new flonase sensimist. ♪ thanks for being with us. we'll see you monday. good night from new york. >> announcer: the new "wall street week." [♪] gary: welcome to "wall street week," the show record for long-term investing. liz: the markets rallying to new highs. billions of dollars in obama-era federal regulations have been slashed by the new administration and by republicans in congress. gary: one of the biggest regulatory changes could be to dodd-frank. the former federal deposit tins