mary shapiro, chairman of the securities and exchange commission.oins me now for a rare interview. mrs. chairman, it's great to have you on the program. thanks for joining us. >> thank you, a pleasure to be here. >> i want to start with a piece you contributed to for "the wall street journal" this week after lehman brothers collapsed in wait, the $62 billion money market fund, the reserve fund collapsed along with it. you recently fought for new rules to regulate that $2.5 trillion money market industry, but didn't have enough support from other s.e.c. commissioners. tell us about this. in your editorial you said "all who care about financial stability must act to prevent another run on money market funds." how critical is this fear? >> oh, i think it's very critical. when the reserve primary fund broke the buck four years ago this week, the american taxpayer had to step in and backstop the multi-trillion dollar money market fund industry. four years ago, that froze the short-term credit markets, run spread to other money market funds. as i said, th

liz: oh, yes, yes. >> mary shapiro is not a reagan republican.worked under his sec and bush's too. >> she was appointed by president obama. that means a lot. who appoints the head of the department of justice? i'm telling you all these guys get appointed by obama. why would they want to charge his big wall street fund-raiser? it's not that far out there. i mean, you know, i'm not saying that mary shapiro is the worst person in the world but she would be essentially kicking her boss in the you know what, you know, two months before the election. kind of not the smart thing you want to do, generally. liz: charlie gasparino, thank you very much. closing bell ringing in 29 minutes. so we were asking this, what large u.s. city, 1 million plus in population has the lowest unemployment rate? really low? half of what we're seeing here in the u.s.? you've got a guess? >> dallas? liz: no, but other people guessed that. >> i love dallas, austin texas? liz: twitter us -- tweet us @ fbn countdown. other top cities, minneapolis, st. paul -- i think austin was

the sec, i think with the right funding, okay, i know mary shapiro, i have known her a long time, a terrificator, a smart woman imus if she the right funding, these markets would invite the public back in and, you know what, the public would benefit because of those rates of return. gerri: people have said this forever. that they are underfunded. undermanned. people do not have the experience they need. this was said, not by me, but by a senator. the capital markets are a public good. much like a highway. we need to have clear rules about the speed limits and who can use the hov lanes. we need to make it clear what the rules of the road are. do you agree with that? >> i agree with that. i have a couple of caveats to it. when you are on the highway and doing 200 miles per hour in your ferrari and you hit a hospital zone, you have to slow down even though that ferrari can do 200 miles an hour. it is about rules. it is about common sense. it is about a very simple test, gerri. what we are about to do with a rule, a piece of technology, is it right for the most sophisticated ruler. take care of

this comes a month after sec chair mary shapiro announced that she had failed to win enough assume at her agency to advance reforms. what's amazing about it? >> amazing that this is like a big if you could say initials on the show, if key give the finger to the sec. >> because you can't get it done? >> basically mary shapiro couldn't get it done, he says screw you, i have this other thing going on here. aim taking over. basically is what's happened here. so there's this whole sort of -- >> what's the real problem with the money market funds? >> there's no collateral. it's one of the most und underregulated businesses out there. and a run can happen much quicker than anything else. >> people think it's fdic insured. >> i thought it was after the last crash. >> that's a component of the problem. long term, the issue is that if you make it as costly as it probably ultimately will need to be to be a sort of safer system, probably put them out of business. it's barely worth it now. so you have the entire mutual fund industry just at the throat of the schtec. >> good for him for pushing ahe

and sec chair mary shapiro talking about high frequency trading and what can be done to protect investorsof technology in our markets, and entities seeking to get new technologies into the marketplace faster, and that's one of the issues we'll focus on october 2nd is what kind of controls can be put in place to assure that technology, there will always be mistakes, to assure those mistakes don't hurt innocent investors and bystandards in our markets. >> the sec probing whether high frequency firms can use prototypes to jump in, in front of other investors. >>> when we come back, both political parties talking tough on the fiscal cliff but is there more political capital to be gained by letting america go over the edge? cnbc's eamon javers will join us next with more on that. >>> then a political strategy session with kellyanne conway and jimmy williams. "squawk" will be back in two minutes. >>> are you suffering from market fatigue? do you feel confused and out of touch with today's markets? you may be suffering from a serious condition known as information deficit disorder. >> it may be

. >> how would you grade mary shapiro, head of the sec? ec was in deep trouble when mary took over so you have to consider the baseline she started from and i think she has accomplished a lot. i think she's had a difficult commission to manage, staff difficulties, too, and a hostile congress in some respects. one of the things that impairs the sec and sfdc is they have no ability to plan long-term to manage their operations, and government agency just like a business they need some budget, some ability to plan for the long-term and instead they go through these constant cycles of the pope police stations committees whether you have enough money to operate. >> i don't know if you saw the story in the "wall street journal," this is about bank executives and compensation. >> i did see that. >> earlier today. >> yes. >> get a little light on that, maybe that will help, banks rethinking pay for executives, talking about lowering pay, but interestingly they were talking about how jamie dimon, 93% of his pay is in the form of restricted stock. is