will be here none day. i know you will spend most of sunday awaight that wonderful hour. have a good weekend. good night from new york. >> announcer: from the salt conference in las vegas, the new "wall street week." here is maria bartiromo. maria: welcome to "wall street week," the show that's analyzes the week tha was and helps position you for the week ahead. former federal reserve chairman ben bernanke is my special guest today. first weave have the big headlines from wall street to main street and of course it was a busy week. reporter:ed dow had its worst day in 8 months, dropping 400 points to wednesday. and the worst day during the trump presidency. stocks did bounce back at the

ends of the week. sr the a & p and nasdaq all -- the s & p also finishing down. political turmoil in washington can delay the president's plans for tax reform. the white house disclosing a plan that would balance the tbhijt a decade, but it would entail deep cuts to many programs including food stamps and medicaid. a global cyber attack left businesses, banks, scrambling to protect its files. one company caught up in this, the media giant disney. the hackers threatening to

release "pay roots of the caribbean." the ceo says they refuse to pay ransom. maria: some investors are wondering if the economy will be strong enough for the federal reserve to raise interest rates two more times this year. joining me is the former federal reserve chairman and the author of "courage to act." there is an expectation the federal reserve will continue raising interest rates. but what's your sense of the economy. a lot of people are wondering and questioning whether this is strong enough to see a spring of interest rate hikes, and will the fed stomp out the growth just as it's gaining traction?

been report recovery has been been are been: the recovery has been pretty consistent. maria: how would you characterize the economy. i feel like the auto industry polling over in the first quarter. what are you have seeing? ben: what the fed is looking at is the fundamentals for consumption. housing is up, unemployment down, consumer confidence is good. all those things indicate the consumer will be okay. that's a big part of the story about why the fed thinks the recovery will continue and they want to continue the tightening

process. maria: would you say it's more the business side of the economy pressured the lasteveral years other consumer? i feel the business sector has been sitting on cash for quite some time. ben: a disappointing aspect has been capital investment. to the extent that businesses are optimistic about upcoming policy changes maybe we'll see improvement there as well. maria: a lot of are wondering if that will be the catalyst that gets business moving again. let me ask you about something one of your predecessors used to speak about. that's the wealth effect. allen greenspan would look at

the so called wealth effect. do you think the markets are showing some nervousness, and will that be and derailment? ben: i write in my book that the markets overdid the trump train. i think the politics will be much tougher than it looks. the fiscal changes, tax cuts and the like will be smaller than initially thought, and markets are adjusting to that. but i don't think you need a big fiscal package to keep the economy moving forward. there is a lot of progress being made and i don't think we need a big tax cut right now. maria: i was reading some of your commentary about what the president was talking about. you say the idea that the economy was so weak during the

campaign when donald trump was running as candidate was not what you were seeing at all. you write that in the new foreword in your book. ben: the u.s. economy is doing quite well. unemployment rate 4.4%. stock market is up. job creation. i have to give candidate trump credit, he did identify some real dissatisfaction in the country. a lot of inequality, slow wage growth, particularly in the middle part of country with people with less education that has held them back and made them dissatisfied. maria: you are saying things are looking better and we are seeing a good situation. but one of the economists i speak with a lot looks at tax receipts and income. she says when you look at the

tax receipts, you can see americans aren't making enough money to put back into the economy in terms of consumer spending. do you worry about that? >> i think if you look at the job keyation and the fact that wages are not going gang bus%, between more jobs and higher wages, we are seeing more income. when you ask consumers in the consumer con any dense surveys, they are more upbeat about that than they have been in quite a few years. i think it engine of the recovery will continue to be consumers and households. maria: don't go anywhere, we have a lot more to discuss when we come right back on "wall street week." >> announcer: former fed chair ben bernanke breaks it down whed

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>> you are saying you are in favor of siegel which breaks apart the two arms of banking, except you don't want to break apart the two parts of bank. this is like something straight out of george orwell. >> i never said we are in favor of break up the banks. >> this is bizarre. >> we never said we were in favor of glass stegall. we said we were in favor of a 1st century glass stegall. maria: that was treasury secretary steven mnuchin having a bit of a back and forth with elizabeth warren. let's talk about dodd-frank and

what you would like to see in terms of deregulation. do you think that's necessary or do you think it's welcome in terms of economic growth as well? >> it's always a good idea to look at regulations. there are a lot of regulations out there. it's always a good idea to look at them and say are they accomplishing what they are supposed to accomplish? can we make them smarter and repeal those regulations that are not carrying their weight. that being said, i think that it's very important that we not forget what a bad experience the financial crisis was and how much damage it did to our economy. so a lot of things in dodd-frank have the purpose of making sure we don't have. >> the situation like that. i think it's very, very important that as we try to reduce the regulatory burden on

smaller and medium size institutions that we not lose sight of the fact that we don't have another financial crisis the kind we had 9 years ago. >> one of the issues bankers say is the fact that dodd-frank, some of the rule making, they stopped lending the way they were learning. do you see that happening and do you see you that loosening up? >> i don't see that. capital is real why it best way to make things safe. if you have enough capital you can absorb losses without coming close to failing. and their incentives are better. when they have capital they are investing their own money so they will have incentives to do it better. having capital, adequate level of capital is very important. one of the best things that happened to us here in the

united states, we had our banks get better capitalized. they are safer and sounder than they were before. compare us to europe. their economy is not doing that well. in terms of lending. i don't think there is any evidence that higher capital defeated lending. lending has been solid. there are few areas that has taken time. standards are pretty high for mortgage borrowers. small business lending has been a bit of a problem because large banks don't want to take the evident to make a loan to a corner pizza sto or other small business. but generally speaking, overa lending has been solid and growing faster than the economy. i don't see any signs high capital is choke off the economy. maria: what would you like to

see changed in dodd-frank? ben: i would start with small to medium sized institutions. the goal of dodd-frank was to reduce the risk of the large institutions and the smallest institutions were hit by as collateral damage from some of those changes. that's clearly an area to look at. a number of regulators including outgoing fed governor talked about problems with the local rule that's intended to prevent banks from doing pro pry terribly lending. there are problems with that rule. maybe there are ways to make the stress testing of banks during a particularly tough period is important. and maybe they can make that less onerous for banks. a lot of ways and small rules

and regulations can be modified to reduce the costs. maria: "wall street week" will be right back. >> announcer: white house chaos causing chaos in our markets. former fed chair ben bernanke breaks it down. are allergies holding you back? break through your allergies. try new flonase sensimist allergy relief instead of allergy pills. it's more complete allergy relief in a gentle mist experience you'll barely feel. using unique mistpro technology, new flonase sensimist delivers a gentle mist to help block six key inflammatory substances that cause your symptoms. most allergy pills only block one. and six is greater than one. new flonase sensimist changes everything.

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true. but investors are questioning whether all of this drama will stop or derail the president's pledge to reform taxes. we are back with federal reserve chairman ben bernanke. what your take on fiscal policy. what would you lik t see and what do you think of the president's proposals so far. he's talk about a 15% corporate tax rate. i doubt that will happen. he's talking about a 15% business tax rate and lower taxes for most americans. what's your take on that? ben: we are at a point in the business cycle where we are almost up to full employment. we don't need to stimulate spending. what we need is fiscal reforms that increase the supply side of the economy to allow us to grow faster in a sustainable way.

the two that have the most potential pore supply side growth, one would be tax reform on the corporate side to make that more efficient. and the second would be smart infrastructure investment to make us more productive. we lose a lot of time on busy roads and inadequate bridges. and good infrastructure to make us more productive over the long term. maria: do you worry about the debt with all that. obviously cutting taxes will cost in the trillions. what about the debt and the deficits? what's your take on the debt and the impact of all that? >> that's the reason why i don't think we can do all this. i think we have to prioritize. the higher priority would be to reform the corporate tax code and make it more efficient.

infrastructure spending if it's good can partially pay for itself. if you do good maintenance today you don't have to do that maintenance tomorrow. if you make the ecomy more productive, that increases your ref flews to some extent. if you prioritize you can have the most effect on the economy. maria: do you think that will dictate corporate behavior? if you see a repatriation tax down to 8% to 10%, he says there is $5 trillion overseas. an said if he can put in a repatriation tax of 8% or 10% or 12%, companies will bring it home, do you agree with that? >> they will bring some of it home. there will be a one- windfall of hundreds of billions

of dollars which will smooth the way for corporate tax reform. but it's a one-time thing. it's not a permanent source of revenue. there is a one-time benefit that can be gotten by the repatriation. maria: we had a week of debate and criticisms about what went on over the jim comey affair and why the president fired jim comey when he did. do you think that's the kinds of situation that could stall the senate? the senate is focused on jim comey, this russia investigation, and they are not talking about tax reform and healthcare reform. what's your take? ben: i live washington, but i'm not really a political prognosticator. paul ryan and mitch mcconnell said they will continue to pursue their program notwithstanding all the noise coming out of the

administration. we'll see if they can do that. they will pursue their various programs. but clearly it does create more distraction and will require more time on the floor in the house and the senate. whether it will derail it is difficult to tell. maria: i think people feel tax tree form is so necessary to most neeld on economic growth, why has it been so hard to do? >> it's very contentious. most economists would suggest you should try to reduce the rate on the tax profits, and pay for that by eliminating loopholes and exemptions and making the tax code flatter and more fair. the trouble is your exemption and my loophole, we defend those if we possibly can.

every change proposed will have defenders and antagonists. politically it's difficult. there has been a lot of talk in congress about tax reform going back into the last administration. but it's difficult to get agreement on how to do it. that's the challenge. maria: the book is "the courage to act." don't go anywhere, more "wall street week" after this. [vo] when it comes to investing,

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for. earnings starting to slow down. hewlett-packard, l sorks we's, lion's gate. james comey will be testifying as well. the president is traveling alot. he will meet with the palestinians and he will go to the vatican where he will meet with the pope. the president will head to brussels to meet with our mean council president. he will meet with the newly elected french president. and he wraps up the trip in sicily at g-7 summit. james comey testifying wednesday. coming up next week. larry summers my special guest. i'l see you sunday morning 10:00 a.m. eastern.

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