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Becky Quick: Meantime, Congress is getting ready to tackle financial reform again. Yesterday we checked in with HFC Chairman Barney Frank.

Chairman Barney Frank: We took the model of what we do with a bank that's failing in which we put it out of business and we've applied that to other financial institutions. And that's the key part of the bill. It says to the financial regulatory council, you have to monitor what's happening. And if there is either a large institution or an activity such as sub prime loans, which is threatening us, you have to put the breaks brakes on.

Becky Quick: Joining us now is Rob Nichols, President and COO of the Financial Services Forum. Rob, it's great to see you. Thanks for coming in.

Rob Nichols: Thank you. Happy New Year to you.

Becky Quick: What do you think of what Chairman Frank is saying?

Rob Nichols: We actually are largely in agreement with much of what Chairman Frank is proposing.  We’re very supportive of supervisory reform of our financial sector and our supervisory architecture. In fact, there are probably the two most important pieces where there is a large degree of -- a lot of agreement is on, one, the need for a systemic supervisor so that we're looking out over the entire system and making it less likely for a crisis that just happened to never happened again. And secondly, the need to a resolution authority, a wind down authority, then if heaven forbid we are ever in a problem like last fall, there will be a way to wind down one of these large financial institutions.

Becky Quick: Chairman Frank has already moved that legislation through the house. It's still in front of the Senate, though, with Senator Christopher Dodd who is announcing that he's stepping down. Between that and between what we've seen with the focus on terror again, after the potential -- you know the close call with the guy with the bomb in the underwear, what do you think we'll see?

Rob Nichols: I think you'll see as soon as Health Care Reform is done, the body politic return to financial sector reform. And it's interesting. We'll talk about Chairman Dodd in a moment. But there is the goal, timeline in the Senate. I talked to some of the Senate staff just yesterday, they're going to try to get a new bipartisan mark through the Committee or drafted in the next couple of weeks and perhaps something through the Committee at the end of February which could set up floor time to talk about reg reform perhaps in March.

Becky Quick: What are the big differences we know the bills in the Senate and the House version?

Rob Nichols: There's going to be a new Senate bill very soon, but a couple of things that we flagged as areas of concern that are emerging as issues that could be brought up in potentially a conference, number one is the treatment of large financial institutions. You know, we've talked before about there is a provision in the House bill that would call for the preemptive break-up of large financial institutions. We don't think that's an advisable idea.

Becky Quick: Obviously because he represents the large financial institutions.

Rob Nichols: I do indeed.

Rob Nichols: There is also, within the Senate, two Senators who are not on the Committee are proposing rolling back Graham Leach Bliley and returning to Glass Steagall. We think there is a -- I would say, a misdiagnosis of some of the problem. And the role of the Fed. Should the Fed retain its supervisory authority, that's something we strongly believe and that we think will emerge as a difference between the two bills.

Becky Quick: These calls for break-ups, the return to Glass Steagall, how much of a hot button topic is that? With the idea of too big to fail, it was running rampant for quite some time. How big of a concern is this for your members?

Rob Nichols: You know it is a concern. There's been a lot of frustration that, you know, facing -- that the industry has been facing as a result of the crisis. There are obviously a lot of failures. There is some on the part of industry, some on the part of regulators. Lack of mortgage origination standards. There’s a lot of blame to go around for the crisis. We’re trying to go out of our way to say, listen, there's an important role that these large institutions can play. So we're taking a lot of time with the policymakers both the House and the Senate took to walk them through.

Joe Kernen: Politico says that the announcement of Dodd’s retirement means you can get a stronger bipartisan Shelby/Dodd bill, since Dodd won’t be posturing for the support of the left that will allow for the death of the Consumer Protection Financial Agency and that that will be out of the bill.

Rob Nichols: First of all, on chairman Dodd, I think just -- we'll see his announcement comments today about his retirement. I think someone who spent 30 years in the senate warrants kudos for years of public service. I will say one thing, too, on the foreign investment reform, that was a very political issue and he --

Joe Kernen: We like the dirt, though. We don't want to congratulate people. This means Blumenthal is going to run and he has a much better chance to holding on to the seat for the democrats.

Rob Nichols: That could very well be the case.

Joe Kernen: This is like poor David Patterson but Rahm probably told Dodd to leave soon

Carl Quintanilla:  I don't think they wanted to take their chances.

Joe Kernen: You’re a dead man walking as far as re-election goes. And it's probably --

Rob Nichols: To directly answer your question about the CFPA and how it's treated in the senate, I’ll tell you, we've talked to a lot of Senators on both sides of the aisle who have seen what Walt Minnick has done. He is a conservative democrat from Idaho and he proposed an amendment to the house bill that instead of having a CFPA would have a council within each regulator, would have an office of consumer protection and education that would get together, talk about best practices, talk about what they're seeing in the marketplace.

Becky Quick: Who is in charge of it, though?

Rob Nichols: it would marry consumer protection with the regulator.

Becky Quick: but it would be recommendations that would come from the council and no real teeth in terms of being able to implement anything?

Rob Nichols: No. he would stand up a new office in each of the current regulators, strengthening consumer protection and education within each and then having those offices get together periodically to share best practices.

Becky Quick: I know. But to sit around and talk or --

Rob Nichols: No. they would report to congress.

Becky Quick: could they make any of those institutions go back and do anything, though?

Rob Nichols: well, that would be the point is to do that. But the point is, we think marrying consumer protection with the prudential regulator, overseeing safety and soundness is probably a good idea.

Joe Kernen: Are you actually on K Street? Is your office on K Street?

Rob Nichols: no, it is not.

Joe Kernen: I have never -- you know, when I leave, I can never go do this.

Carl Quintanilla: If you were in financial services, you would so -- you would need Rob on that wall.

Joe Kernen: I love this and I love that.

Rob Nichols: Listen, there are --

Joe Kernen: Do you have to sit and think about it? I couldn't do it.

Rob Nichols: When we have sharp policy differences, we'll share them. We’re not afraid of doing that. But at the same time, we're reasonably -- you know, the house process is done. The senate, they're just sitting down to develop a new proposal. And so we're talking to the folks on the Dodd team and the Shelby team and obviously today's announcement will be significantly --

Carl Quintanilla: You see, I would think you would be somewhat in his camp, because republicans are comparing the CFPA to the EPA

Joe Kernen: I know. But I’m trying to figure out what I could say to get him to just snap and say really nasty things about someone or --

Carl Quintanilla: Small banks.

Joe Kernen: Say something really incendiary and attack your enemies of the people you represent. Attack them. Attack! No?

Rob Nichols:  No.

Becky Quick: I like it when you said, Joe, I couldn't do that. He’s so nice.

Rob Nichols: I’ve listened.

Joe Kernen: Wait until he goes back to the green room and talks to his people.

Becky Quick: Rob, thank you for coming in.