Im tyler mathisen. Three hours left in the trading session. Stocks are really holding in the red, but really not by much. Look at the numbers. Very minor moves. Checking the names you might own, apple the only one on this list here in the green. And it by half a percent. Alphabet or google, microsoft and jpmorgan off fractionally. Im michelle carusocabrera. The imf says it is lowering the 2016 u. S. Growth forecast again, blaming economic setbacks in the first half of the year. Twitter shares under pressure following a downgrade at loop capital. More on that call ahead. Durable goods orders Holding Steady in august. Economists were expecting a drop. Brian . We have a big two hours ahead. Hi, everybody. Im brian sullivan. Lets start with the banks. Steve liesman and woolford frost are here. Lets listen to what fed chair janet yellen just said about u. S. Banks. We are undertaking a look, comprehensively, not only in the consumer area, but compliance generally because there have been a very disturbing pattern of violations, they occurred in the mortgage area in Foreign Exchange trading, in many different areas. Sanctions violations, libor. So steve liesman, i put it to you, steve, is this a thinly veiled or not so thinly veiled basic messager signal to lawmakers, hey, start digging into banks . You mean lawmakers or regulators . Janet yellen at the recent News Conference said that it is go to be a new focus of the fed supervisory work it does. It is because of all of the violations that are out there and their concern is that Senior Management is not well informed as to what is going on at the banks, not prepared. She just actually said another thing, brian, we havent had a chance to cut yet, but in the hearing still ongoing, she said that Senior Management should be held accountable when asked about wells fargo. Yeah, exactly. That was something a lot of people picked up on. The question is whether it is more than just accountable. We heard there will be forfeit of pay. Thats with Senior Management. Is there something more the oversight of these banks should be on the oversight committees. Even though the ceo is giving out pay this took five years to be noticed and stamped out. Thats a long time. It questions the overall size of the bank. The one caveat is it is a different issue when we talk about too big for the banks than in the past. In the past, it has been should there be investment banks and retail banks . Wells is largely just the retail bank, so it is absolute size of it. Being held accountable sounds like send somebody to jail. What is that code for in regulator speak . Does that mean giving up pay . Does it mean i believe the it sounds to me like giving up pay more than it does. But also, look, i talked to dan tarullo, the fed governor, and i asked him about this notion of banks being let off the hook essentially by being able to plead no contest or not admit guilt and pay a fine. This is a matter for the justice department, but in general he said when it gets to that point, he supports the idea of holding individual managers responsible. To see if banks can hold up it a massive financial crisis. The stress tests were first put into place to test to see if the banks could withstand a financial crisis. What do you think the fed has in mind when they say massive financial crisis . This is going to lead to a significant amount more in capital on their balance sheets. Right. So theyre seeing if the banks can withstand it and a question of whether or not they have enough capital on hand. A slight relaxation as well, theyre going to incorporate the notion that in a crisis, the banks would be slashing dividends and some other things. Holding up a pink card there. Is that like a stop talking thing or no, if only it was that easy. Thats like soccer. The next question, garrett gave janet yellen a hard time about Lael Brainard having donated to the campaign. Delivering alpha, running ads from delivering alpha that show paul singer saying fed independence is basically a myth. Central Bank Independence is a myth. Their credibility under fire here. To me right now, michelle, the credibility that is under fire is of those like donald trump making accusations. As far as i can tell, he offered no evidence for the politization of the fed and Lael Brainard donated. Scott garrett went further and said there were contacts between the Clinton Administration and Lael Brainard. Thats a story were trying to run down now. Clinton administration, you mean the clinton campaign. That was not freudian. To correct himself. But the issue is that is that he has not offered evidence on this. In my world, when somebody comes forward, especially a congressman, with charges like this or republican nominee there should be evidence behind it. I would call it evidencebased accusation. Do we know of any other instances where a fed governor or a fed Bank President has been a donor . I do not. Not common practice at all. What i asked was do we know of other instances . Paul singer says it as well, right . Donald trump is one thing. This idea that theyre going to keep Interest Rates low for reasons that he doesnt think are appropriate at this point. So heres the thing, right . The guys come forward and say, we think the economy is terrible. And yet they say the fed is keeping Interest Rates low for political reasons. They think the low Interest Rates hurt they think the low Interest Rates hurt the economy. They miss allocate investment, it is holding back the economy. Thats why they say that. Not nearly as contradictory as a lot of people think. Very quickly, can we switch gears. I got to imagine, even if youre john stumpf, every ceo in the United States, you go home, you get grilled, go home, look in the mirror and you say, thank god youre not deutsche bank. How bad is the situation over at germany . Different situation. It is a profitability issue, more capital issue. Earlier in the year, Big Questions about can they really earn profits again and whether that would be selffulfilling. The most recent moves in the share price, much more focused on capital, how big is the feign going to be from the doj and can they afford it. The question of whether it will be a state bailout, people have come out very, very clearly to say thats not the case, not being discussed. And thats why we had a bit of a bounce. U. S. Government through a fine could ostensibly put them out of business. Not bankrupt, but destabilize the biggest bank in the third biggest economy. It would cost a lot of money to raise the capital. Still go to market. Yeah. I think it is not a question of putting the bankrupt outright. Fine line. Thanks. Very fine. Thank you. Are the banks getting buried under a mound of regulation . Listen during the opening remarks of the yellen testimony. The fed stands at the center of dodd frank codification of too big to fail. It occupies the board rooms of the largest Financial Institutions in our nations and decides how they can deploy the capital. Increased regulation making financials uninvestable . Lets bring in Casey Matthews with umb bank. You dont have to look far. Wells fargo ceo will return to the hill tomorrow to testify in front of congress. So lawmakers are looking carefully at the banks now. If there is a hillary Clinton Administration, there could be a tightening. A deepening of dodd frank regulation and you have the increase requirements of the tweaks of the stress test. What is the impact on the Banking Sector on top of a flat yield curve . Clearly regulation is negative to any industry. We all believe in regulation. We should have some regulation, but overregulating any industry will be negative for shareholders and stock performance. The bottom line though, i dont think this is as big of a deal as one might think. Banks are prepared for this capital constraint change. Right now, you have 12. 5 , the regulation is at 6 . In 2008 at 9 . Most of the banks are prepared for the potential change. What it might do, how it might affect investors is will hinder the way banks can deploy capital. Perhaps they cant repurchase shares or increase dividends or reinvest in capital expenditures. When you think about mobile apps, Online Banking and cybersecurity, that is paramount to the banks. That sounds look a terrible scenario. Are you invested in the banks . Are you an owner of banks at this point, even with the threat of them being handcuffed essentially in how they spend their capital . We do own some banks. One, for example, is morgan stanley. This is less asset sensitive than many other banks, capital sensitive since 50 of the revenue comes from Wealth Management business. We own Regional Banks. You heard janet yellen talk about the proposal that there might be a twotier system. One level of constraint for big banks and another level of regulation for smaller banks. So there could be an opportunity in small Regional Banks at this time. What is critical is some of this, i believe, is nothing more than noise. Because the banks as i mentioned are ready for it and the critical driver in earnings is Interest Rates. If youre in the camp that sooner or later we get some increase in Interest Rates. I think the tide will come in and the tide will lift all the votes. Casey, thanks for your time. Appreciate it. Casey matthews of umb bank. During the financial crisis, we talked about level of regulation that would happen in the Financial Sector and said theyre going to end up like utilities. And were there. Utilities or airlines. Exactly. Make you wait and then never give you your money back. The feds decide their profit margins, when they can issue dividends, what theyre allowed to charge. Just make it a utility. The big behemoth banks and the more modest sized ones. Lets be fair. No one is crying for the banks. The banks are bigger now than prefinancial crisis. And to your point, tyler, we have to distinguish between mom and pop Regional Bank and Trading Organization like Goldman Sachs which is a bank from an viewers viewpoint. The business aint what it was. Thats for sure. News alert in the bond market now. A lot of action. Seven year notes up for auction, rick santelli, how much of the government has to pay to borrow . They had to pay pay about 1. It started to move around a bit, right as the dutch auction ended. How does that fare . All the pricing was about right. All the other metrics, 2. 47 on bid to cover. Darn close ten auction average, 59. 4 on indirects. 13 is ten auction average on directs. 10. 5. A smidge light. I gave it a c in terms of grading demand. Wasnt a spectacular week for auctions. All basically average or slightly below. A lot different landscape approach into the treasury auctions by investors than we had a couple of months ago where they were falling over each other to jump in. Back to you. Rick, thank you very much. Still ahead, hes the key architect of president obamas path to the white house. And now hes in charge of ubers path to prosperity. A lot to talk about including president ial politics and ubers Surprising New partnership with david plouffe. He joins us next. I know youre my financial advisor, but are you gonna bring up that stock again . Well you need to think about selling some of it. My dad gave me those shares, you know. He ran that company. I get it. But you know i think you own too much. Gotta manage your risk. And youve gotta switch to decaf. An honest opinion, even if you disagree. With 13,000 financial advisors, its how edward jones makes sense of investing. We cant go back to the years of devastating cuts to public education. Exactly why i urge you to vote yes on prop 55. Prop 55 prevents 4 billion in new education cuts without raising taxes on anyone. And theres strict accountability in prop 55. With local control over School Funding decisions. And mandatory annual audits guaranteeing the money goes directly to our classrooms. Not to bureaucracy, not to administration. So vote yes on 55. Because it helps our children thrive. Uber raising eyebrows with two new initiatives. Uber teaming up with sears, hitching sears rewards program to benefit riders and drivers. Riders who link their uber account to sears loyalty plan will receive up to 2 in loyalty points for every trip they take. With new drivers receiving up to 1,000 worth of loyalty points at sears. Second, after acquiring the selfdriving truck startup auto, uber is in initial moves to into the long haul trucking business, fully autonomous trucks remain years away, uber and auto, i think thats funny, hope to expand their navigation and Mapping Technology as they work towards driverless trucks down the road. Because it is spelled otto. People listening think youre saying auto. Uma, oprah. Otto and uber. David plouffe is with us, key architect for both of obamas president ial campaigns. Well talk politics in a minute. First, brian wants to start with your companys path to profitability. Yeah, welcome to power lunch. Youre probably not going to touch these with a ten if the pole, but ill ask them report does ubers Capital Position allow it to sustain such losses and two can you become profitable without the advent of Driverless Cars . Youre right. Im not going to touch them with a ten foot pole. We have been very fortunate to have confidence put in us by investors. That let us experiment very aggressively in autonomous, trying to bring our Car Pooling Service to as many place s aroud the world as possible. Whats next . Thats more of what were doing. There is a lot of people in the United States and around the world who have not used uber, not sure what it is. You mentioned the sears partnership. Were experiencing with a lot of different partnerships to bring this to as many people as possible. Final question, i appreciate you going that far. Do you think you can sustain Investor Confidence you referred to with continued losses . At some point the money runs out. Everything that happened in our platform, every ride, thats a physical transaction, financial transaction. You know, the markets in this space and in other spaces have been pretty frothy. But were building towards an incredibly sustainable business. And what is interesting for my stand point is it works everywhere. Every continent there are people looking to make more money on the drivers side and on the riders side. It is fast. Our founders are the first ones to tell you they didnt realize this would work everywhere. Were still in expansion, were in investment, but it is a terrific business. Are you simply not charging enough . No, listen, i think, again, our ceo talked about this, were profitable in many of our markets. We want to get that price, something that works for the driver, but we want to bring this to as many people as possible. When uber started out, it was a black car service, but it was something that does skew more higher income and younger and what you see now is many more people, uber pool, you arent just car pooling. You take that in conjunction with Public Transportation and it is saving people time and money. Thats whats fascinating about this. Our base is starting to look like the population as a whole in every city we operate in. To politics. Your assessment of the state of the race. There are some similarities to this race to where we were in 2012 where, everybody thought it was a dead red heat. I think many republicans thought romney would win. I think heading into the debate that Hillary Clinton had a very important lead in terms of who has the best way to get to 270 electoral votes. I think she has a higher vote ceiling. I think trumps ceiling, maybe 44, 45, and i think hers is a little higher than that. She did well in first debate. No question about that. Ive been on the right side of debates and the wrong side. It is much better to be on the right side. I think given what i just said, donald trump has to do something to change the trajectory of the race. If it were held today, he wouldnt get 270 electoral votes. I think the next debate, these debates, even with technology, and data, and all the advances in politics, these debates still matter a great deal. We had on yesterday larry sabato. I didnt see it the way he saw it. Listen to what he said. Ive watched repeatedly every single president ial debate since they started in 1960. And this was the most one sided debate ever. It doesnt even come close. Doesnt even come close. Did you see it that way and you referred just a moment ago to the first debate between mr. Obama and mr. Romney, which was widely perceived as a big win for mr. Romney. Did you see it as a big win for mrs. Clinton on monday night . And what would you you had to make fixs going into the second debate for mr. Obama. What are the fixes mr. Trump needs . Well, i do think it was incredibly lopsided. I would compare it to our loss to romney in the first debate or our win against romney in the third debate, similarly lopsided. Bushs first debate with kerry was not a good one for bush. I think it was in that neighborhood. If all it did was make democrats and the members of the socalled Obama Coalition more passionate about Hillary Clinton, i would be satisfied. This next debate is fascinating. I think for the American People it is the most interesting debate because it is a town hall with their fellow citizens. Having prep