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JOHN KING, USA

Romney and Obama Talk Economy; Huge Loss for J.P. Morgan; Interview with Barney Frank

Aired May 11, 2012 - 18:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


JOHN KING, CNN ANCHOR: Good evening. I'm John King.

Tonight, President Obama in Nevada, Mitt Romney in North Carolina, both candidates in battleground states and talking the economy to close a big week in presidential politics.

Plus, we grade President Obama's record on keeping candidate Obama's major promises on the economy.

And one of America's biggest banks discloses a shocking $2 billion trading loss. We will ask an architect of those rules put in place after the 2008 financial collapse whether you could end up paying again.

A big about-face on same-sex marriage dominated the president's week. Suggestions he might have taken part in a bullying incident in high school complicated Mitt Romney's. But today, 2,500 miles apart, the two candidates got back to their central challenge, debating the economy in the nation's biggest battleground states.

The president was in Nevada, key to his big 2008 win, but a tossup now because of high unemployment and a punishing housing crisis. The president defended his record and said Governor Romney has it wrong.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: So, they want to cut more taxes, especially for the wealthiest Americans. They want to cut back on the rules that we put in place for banks and financial institutions.

They have said that they want to let the housing market hit bottom and just hope for the best. That's it. We have heard those ideas before. That's their economic agenda. And I will be honest with you. I don't buy it. I think they are wrong.

(END VIDEO CLIP)

KING: It was battleground North Carolina for Governor Romney. The president also won there four years ago. But it's a tossup or leaning Republican maybe even this time.

And as he made his economic case, Governor Romney also suggested President Obama was far from the unifying figure of his hopeful 2008 campaign. (BEGIN VIDEO CLIP)

MITT ROMNEY (R), PRESIDENTIAL CANDIDATE: One of the things I object to the most in the president's policies, not just his foreign policies that I think, by and large, have been -- failed, not just his domestic policies, which also have, by and large, failed but something else which has been very disappointing is to watch the president engage in this divisiveness, this pitting of one American against another American.

(END VIDEO CLIP)

KING: Virginia is also a toss-up this time. And as Governor Romney tries to return it to the red column, he will deliver tomorrow's commencement address at Liberty University, the institution founded by the late Reverend Jerry Falwell.

CNN national political correspondent Jim Acosta has just gotten off a call with Romney advisers.

Jim, this is a major evangelical university. How much of the speech will be geared to the social conservatives?

JIM ACOSTA, CNN CORRESPONDENT: Not much, John.

I have to tell you, earlier this morning, the Romney campaign sent out excerpts of this speech that Mitt Romney is going to give. And it is primarily going to be about jobs and the economy. This is their bread and butter issue of the campaign. It's their sweet spot. So why vary from that sweet spot.

But I have to tell you, myself and other reporters who cover this campaign were peppering the staff with questions all day long. Will he talk about some of these issues that matter a lot to social conservatives?

And they said, well, hang on a second. Listen to this conference call that is coming up at 4:30 this afternoon. It was a background briefing where they talked to reporters about what to expect from the Romney speech. And they did say that he will touch on the issue of marriage. He won't specifically get out there and talk a lot about same-sex marriage and the reversal on the part of the president earlier this week.

But they said that Mitt Romney will talk about marriage as an institution which deserves to be defended. But, by and large, John, this will be a speech about jobs and the economy.

Here is an excerpt you can expect to hear from Mitt Romney tomorrow. If you want to throw it up on screen, he is going to say in his speech: "For you and so many young Americans, our current troubles can be discouraging. You are ready for jobs that were supposed to be ready for you. Millions wait on the day when there are jobs for everyone willing to work and opportunities to match your hopes and your goals. But don't lose heart because that day is coming." John, it is a crowd that is going to be, yes, socially conservative, but also a lot of graduates and their families. They think -- they think at the Romney campaign that the best message is on jobs, not the socially conservative issues.

KING: That speech tomorrow at Liberty University.

Our national political correspondent, Jim Acosta, tonight -- Jim, thank you.

Now, evangelical Christians, you will remember, were not a great source of strength for Mitt Romney during the Republican primary season. But evangelicals, will they rally for Governor Romney now in the general election?

Tony Perkins is president of the Family Research Council and a graduate of Liberty University. He joins me now.

You heard Jim Acosta, mostly about jobs, a reference to marriage. The question is, is that enough for this part of the base? And, as you answer, it just want to put some statistics up.

The Public Religion Research Institute just polled Romney and Obama among evangelicals. Governor Romney gets 68 percent among those who say they're evangelicals. President Obama gets 19 percent. These are CNN exit polls. In 2008, John McCain got 74 percent of the evangelical vote, President Obama 24, then Senator Obama.

And in 2004, the last Republican victory, George W. Bush gets 78 percent, to 21 percent for John Kerry.

So how does Mitt Romney, if he's at 68 percent now, get to that roughly 78 percent that George W. Bush had?

TONY PERKINS, PRESIDENT, FAMILY RESEARCH COUNCIL: Well, John, I think the president helped him this week. Those numbers actually I think were taken last week before the president made his announcement that he is in support of redefining marriage.

KING: That's right.

PERKINS: So I think this is a great opportunity for Mitt Romney. This is the largest evangelical college. Having been a graduate there, actually, I was there 20 years ago there when Pat Buchanan made the graduation speech.

So they are accustomed to politics. They are accustomed controversy. I think he has to hit, though, on those core values, social issues. And I think he will. I have talked to the campaign. I think they understand the importance of this speech.

KING: One of the other issues -- as you know, there was a protest. And I want to say it was a small protest, but some students didn't want Mitt Romney to come.

One of them, Janet Loeffler, she is 53 years old. She is an online student. She posted this on a Facebook page that has since been taken down. "My objection is religious. It is not political. Liberty trained us that Mormonism is a cult."

Does Mitt Romney have to address that tomorrow or should he ignore this very small -- I want to make clear -- small percentage of people who object?

(CROSSTALK)

PERKINS: I think that's a good question.

And my comments have been to them, look, talk about the shared values. Look, there is no question there is distinct theological differences between Christianity and Mormonism and then evangelicals there at Liberty University. But there are shared values.

We work very closely with the LDS Church on many, many issues. So I think his point of connection is on those value issues. And so that's why I think this is an opportunity for him to say, hey, we have this shared set of values. Let's work together to move America back in the right direction.

KING: It was not his base during the primary season. You just mentioned you have been in touch with the campaign.

Are the channels of communication better now than they might have been then?

PERKINS: Yes. And, again, I think the president is helping drive people that way.

I have had pastors calling me saying, hey, I was sitting on the sidelines, but no longer, and even African-American pastors who are saying the president has taken us to a bridge too far. We can't go there. We are even interested in talking to the Romney campaign.

KING: Tony Perkins, appreciate your coming in tonight. Fascinating, 179 days to go. We will watch this one to the very end. Tony, thank you.

PERKINS: Thanks, John.

KING: First lady Michelle Obama in Virginia today. Remember, it's a big battleground state. Her commencement address at Virginia Tech University paid tribute to the school's resilience after that 2007 shooting spree that claimed 33 lives.

(BEGIN VIDEO CLIP)

MICHELLE OBAMA, FIRST LADY: I have witnessed the strength and spirit of the Hokie nation. And I think that you all already learned plenty of lessons here at Virginia Tech. In fact, I feel like all of you have so much to teach all of us.

(END VIDEO CLIP) KING: Latest polling shows President Obama with a significant lead in Virginia. He leads Governor Romney by seven points -- that's 51 percent to 44 percent. But if you dig deeper, you will see why the Romney campaign thinks they could have a chance to close that gap.

Our chief political analyst, Gloria Borger, is here.

And I don't want to focus just on Virginia for Virginia's state. But it's one of those battleground states, Obama with a lead now. But it could be a tossup.

Here is what the Romney campaign thinks is the opening. Is the country going in the right direction? Thirty-one percent of Virginia voters say yes; 66 percent, two-thirds, say, wrong track. That is not good news for an incumbent.

GLORIA BORGER, CNN SENIOR POLITICAL ANALYST: However, this is what the Democrats would say, is that four years ago, the wrong-track number was 83 percent, so that even though it is still very high, maybe there are some people in that state who are giving the president some credit for the economy starting to do a little better. So they would look at that as the glass half-full, not the glass half-empty. OK, just saying.

KING: That's running the "things just aren't as bad as they were" campaign, which is tough, but...

BORGER: That's right, which -- well, it is part of what they are saying when they talk about Mitt Romney taking you backward. What do you think they are talking about? Going back to the bad old days when things were worse. It is a hard argument to make, but it may be one of their best arguments.

KING: In such a close election, do we have to score it almost every week, in the sense that president had his big announcement on same-sex marriage? Governor Romney, who wants to talk about the economy, pushes away most questions about the social issues, tries to get back to jobs, had to deal with this -- we will call it a distraction for now, allegation he might have been involved in a bullying incident in high school.

How much of that, changing away, affects the campaign?

BORGER: I think we score it day to day because we follow it in great detail.

I think most Americans score it by what's in their pocketbook. And they are going to say, do I feel better, do I feel more optimistic? Are my children able to get jobs? Am I able to keep my job? I think that's going to be the larger picture.

Presidential elections are about character, of course. This is the person who would send your kid to war, for example. So, character does matter. But, in the end, people are going to look at the person they think can turn the economy around and make you answer the question, are you better off? Will you be better off four years from now? That's the person who is going to win.

KING: Gloria Borger, appreciate your insights. Hope the kids take care of you for Mother's Day.

BORGER: You -- so do I.

(LAUGHTER)

KING: Up next here: our report card on whether President Obama kept his campaign promises about the economy.

And officials disclose what happened to the two girls who survived a kidnapping ordeal that took them from Tennessee to Mississippi.

(COMMERCIAL BREAK)

KING: The economy is this campaign's defining issue. And as he campaigns for reelection, President Obama will be judged in part on some of the big promises he made back in 2008.

Let's look at them. One of them was a promise to repeal the Bush tax cuts for the wealthy.

(BEGIN VIDEO CLIP)

OBAMA: I will roll back the Bush tax cuts on the wealthiest Americans, people making more than a quarter million dollars a year.

(END VIDEO CLIP)

KING: Candidate Obama also promised major financial reforms, including a new agency to protect American consumers from the abuses that contributed to the 2007-2008 financial collapse.

(BEGIN VIDEO CLIP)

OBAMA: Rules that will keep our market free and fair and honest, rules that will restore accountability and responsibility in our corporate boardrooms.

(END VIDEO CLIP)

KING: And trying to shake the label of a tax-and-spend Democrat, the president early on promised he would cut the deficit in half in his first term.

(BEGIN VIDEO CLIP)

OBAMA: Now, this will not be easy. It will require us to make difficult decisions and face challenges we have long neglected. But I refuse to leave our children with a debt that they cannot repay.

(END VIDEO CLIP)

KING: And so how did he do? Repealing the Bush tax cuts, well, that's a promise broken. The president has repeatedly said he would like to do that. But in the deals with Congress, he has left the Bush tax cuts in place.

The president did keep his promise to pass major financial reforms, including that new Consumer Protection Agency, but promise broken, that would have to be the verdict on the president's pledge to cut the deficit in half by 2012. The government spent $1.4 trillion more than it took in when he made that promise in 2009.

But this fiscal year, the deficit is still above $1 trillion. And the Congressional Budget Office projects it will be just shy of $1 trillion next year.

And when voters grade the president on the economy, this less specific promise will be in play.

(BEGIN VIDEO CLIP)

OBAMA: I will be held accountable. I have got four years. A year from now, I think people are going to see that we are starting to make some progress. But there is still going to be some pain out there. If I don't have this done in three years, then this is going to be a one-term proposition.

(END VIDEO CLIP)

KING: Joining me now to dive deeper is Stephen Moore, senior economics writer for "The Wall Street Journal." And Ed Kleinbard, he is the former chief of staff for the nonpartisan Joint Committee on Taxation, now a professor at the University of Southern California's Law School.

Ed, let me start with you. When voters make their assessment come October, the president on the economy, will they go through that list, deficit reduction, financial reform, Bush tax cuts, or is it a broader test?

EDWARD KLEINBARD, UNIVERSITY OF SOUTHERN CALIFORNIA SCHOOL OF LAW: Well, it is simultaneously a narrower test and a broader test.

People can't help but frame the question from the point of view of their own personal situation. And, obviously, lots of people are still hurting. We all understand that. The broader question, though, is, who has got the better plan for the economy and for the kind of America that we all want to live in over the next decade or more?

And there, I think, the president makes a much more persuasive case than does Governor Romney.

KING: Ed Kleinbard just hit, Steve, on the question, is it a referendum or is it a choice, in the sense that if you go back to George H.W. Bush, just like this president in 1992, he could point to some statistics and say, hey, things are getting better. But the data was mixed, but it was more the psychology. People didn't feel it.

STEPHEN MOORE, SENIOR ECONOMIC WRITER, "THE WALL STREET JOURNAL": John, I have been in politics for 25 years. I have always believed that elections are always referendum -- a referendum on the incumbent. And this election will be a referendum on whether people think Barack Obama has turned this economy around.

Now, I will give you another statistic that you didn't cite that I think is really harmful to the president, which is the polls are now showing 70 percent to 80 percent of Americans still think the United States is in a recession. Now, you and I know that it is not true. We are growing, albeit it at a low rate. But Americans don't feel this expansion.

The way I feel it, they are kind of like a drowning man who feels like he is just treading water.

KING: And, Ed, to that point, is there a communications for the president to get to that psychology, to get the tired legs treading water feeling?

KLEINBARD: I think, frankly, that there is.

The president needs to communicate not that people in fact are doing better. They can judge that for themselves. And I have to agree that many people don't feel that they are doing better. But, rather, he has to hit on the theme of who has the better path going forward.

KING: Part of this economic argument, if it is a referendum, maybe the president doesn't get a chance to make it. But if he can make it a choice, part of his argument is fairness.

And he did not repeal the Bush tax cuts. That was one of his ways in his view to be more fair to the middle class, to make the wealthy pay more. Now he promotes what he calls the Buffett rule. Let's listen to the president.

(BEGIN VIDEO CLIP)

OBAMA: This is an idea that was supported by a strong majority of the American people, including nearly half of Republicans. A majority of millionaires supported it. And the Senate Republicans didn't listen. They refused to even let it come up for a vote.

(END VIDEO CLIP)

KING: Now, the president's call, Ed, is for millionaires to pay at least roughly 30 percent in income taxes, like he says most working- class Americans do.

How much is the, "I'm on your side," the fairness argument critical to a president who, as we have been discussing -- his opponent can use some other statistics against him?

KLEINBARD: I think it is going to be very important in this election, because he is running against a man who stands for privilege, who has, in fact, endorsed the continuation of the very tax loophole that has made him wealthy.

MOORE: Yes, but, Ed, you know. You used to work for and run the Joint Tax Committee. You know those numbers. The Buffett plan the president is talking about, guess how much that reduces the budget deficit by over the next 10 years, John? One percent. One percent. So why are we even having this argument?

How are we going to cut the other 99 percent of the debt? I think Ed has a point.

(CROSSTALK)

MOORE: Go ahead.

KLEINBARD: I'm sorry.

You know, the amount of money raised by the Buffett rule depends, as you understand, on the baseline, what are we starting with by way of a baseline. If we start with current policy as a baseline, it raises about $162 billion a year. That's -- sorry -- $162 billion a year over 10 years. That's not a small amount of money.

MOORE: Yes, but it is out of...

(CROSSTALK)

KLEINBARD: Let's remember that the Congress right now is stymied on the student loans, on -- which is a $6 billion issue. So, on the one hand, we can't afford to extend the student loans discount, but we have $160 billion that we think is trivial. That doesn't make sense to me.

(CROSSTALK)

MOORE: My only point is, it is kind of a facade to say to the American people, we can balance this budget by just taxing people like Warren Buffett and Bill Gates. We can't.

And everyone knows that. I mean, even if you take every penny from every millionaire in this country, you only reduce the deficit by a very little amount. I do agree with that.

(CROSSTALK)

MOORE: I think Republicans need to have a strategy of basically saying, look, this tax code doesn't work anymore. It's -- we have the highest corporate tax in the world. We are losing jobs as a result of it.

I would like to see Mitt Romney be much more ambitious in terms of really calling for blow this tax system up. Let's make something competitive, because Ed is partly right. This is going to be a choice between the Obama strategy, which is one of income redistribution and wealth redistribution, and one of whether we can create jobs and wealth by growing the economy.

KING: And we're going to look at the Romney proposals next week, as we continue this discussion on both -- both candidates' records and promises.

Stephen Moore, Ed Kleinbard, appreciate your help tonight.

MOORE: Thank you.

KLEINBARD: Thank you.

KING: Mitt Romney is about to follow in the footsteps of the man who beat him for the 2008 Republican nomination. Coming up: a "Truth" worth remembering from John McCain's visit to Liberty University.

And 70 years after a British fighter plan disappeared over the Egyptian desert, look at that, mystery solved.

(COMMERCIAL BREAK)

KING: Welcome back.

(NEWS BREAK)

KING: A short time ago, authorities gave us more details about the two girls who survived a kidnapping ordeal, but then saw their abductor die.

Also, one of the architects of the country's new rules for banks discussing the staggering, staggering $2 billion loss at J.P. Morgan Chase.

(BEGIN VIDEO CLIP)

REP. BARNEY FRANK (D), MASSACHUSETTS: When one of the best-run institutions, presided over by very intelligent people, can make a mistake of this sort, that's a sign of why you need regulation. That's a sign of why you need a safety net.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

KING: This half-hour" The kidnapper on the FBI's most wanted list kills himself in front of his young captives as authorities move in. and we have exclusive video of where it all ended.

Plus, $2 billion gone -- the admission from J.P. Morgan Chase that has a lot of people asking, how did this happen again?

And congratulations on graduating. Now vote for me. See where the candidates are giving commencement speeches and why.

The hunt for one of America's most wanted fugitives is over tonight. Adam Mayes, a wanted killer and kidnapper is dead. And this, right there, you are seeing CNN exclusive video of where it all ended. You can see the blood on the leaves.

Authorities say Mayes killed the mother and her oldest daughter and kidnapped the two younger daughters. Both girls are safe tonight but the FBI says they watched their captor commit suicide.

George Howell is in Tennessee where it all started.

George, I understand you just talked to one of the family members.

GEORGE HOWELL, CNN CORRESPONDENT: John, I just spoke to the man that says he is the biological grandfather of the two oldest girls, Roger Johnson. And Johnson admits there is some estrangement between he and Gary Bain's, since his son that divorced Joan & married Gary.

But he came to our cameras today and he wanted to share what it was like these last few weeks waiting and wondering. Take a listen.

(BEGIN VIDEO CLIP)

ROGER JOHNSON, GRANDFATHER: It is hard not knowing. I know her mother of the girls is --

HOWELL: Tell me about Adam Mayes.

JOHNSON: Well, I have been knowing him a long time. I never dreamed he would do anything like that.

(END VIDEO CLIP)

HOWELL: Roger says that he has not seen the girls since they were released from the hospital. And again, as you heard there, he never would have imagined that Adam would be capable of this.

KING: And George, Adam Mayes is dead, of course. He killed himself. But there have been some other arrests in this case that may give us some additional clues about what happened, right?

HOWELL: There were. There were three new arrests today. The U.S. marshals arrested three more people. One person arrested for filing a false report. Two others arrested for illegal possession of a firearm. We learn that this is a husband/wife duo. And apparently, they gave the firearm to Adam Mayes. John, the same firearm he used to kill himself.

KING: George Howell, checking this bizarre and very sad case for us in Wrightsville, Tennessee.

George, thank you.

Shares in JPMorgan dropped more than nine percent today after the investment bank announced they lost more than $2 billion in the last six weeks because of some risky trades. Sounds familiar?

Our chief business correspondent, Ali Velshi, joins us to explain.

Ali, a lot of people are going to think, oh, no, not again.

ALI VELSHI, CNN CHEF BUSINESS CORRESPONDENT: Yes. And they made some of the money back they lost earlier in the day. But, this is a very strange thing. And for those who have blacked out what happened in 2008, mainly with AIG, but with some investment banks. Remember, the investment bank's general business is to match up investors who have money with companies who need to borrow that money to expand. This is a different business. That thing called proprietary trading is where - you are not dealing with the customers' money. The bank is dealing with its own cash loads, own money that it has on hand. And it is making directional bets on the economy or on companies or on bonds and things like that.

This is a new business for the investment banks, only been around for about 15 years. But has become much of their business these days and that's what JPMorgan chase got in trouble for.

Now, let me just explain this to you. Very much like what happened with AIG. You have people that place a bet that a loan will default. Let's say you owe me money. I want to be extra safe. So I place - I buy insurance on the fact that you are going to pay me that loan. And if you default, I get the money from the person I buy the insurance from.

So, investors are buying insurance from JPMorgan chase, that certain loans wouldn't default. As those loans started defaulting, JPMorgan had to pay out lots and lots of money. So, they made a directional bet on something and the bet went wrong.

Here is the rub. JPMorgan was being a bookie. Neither JPMorgan nor the investors who are buying that so-called insurance type of policy had anything to do with the underlying investment. Me, buying insurance on you owing me money might be relevant. These investors were buying insurance on some unrelated loan. JPMorgan had nothing to do with that loan. They were placing bets and that's how they lost $2.3 billion. And that's worrisome.

KING: And it's a stunning figure. So, folks at home are going to ask, does it affect me? Does it affect my bottom line or it was just JPMorgan and should they be worried other banks are up to the same shenanigans?

VELSHI: Well, that's -- number one, are other banks up to the same shenanigans? Because JPMorgan is supposed to be one of the better ones. Jamie Dimon, the head of the company is well-respected. So, number one, how much of this is going on?

Number two, you talked about how the stock took a nose dive this morning. That's your 401(k). You are invested in banking stocks.

And number three, this almost took the world to the brink of economic collapse in 2008. These very banks that are too big to fail are engaging in this risky behavior.

So Yes. I heard people, had people tweeting me all day saying, who cares. The big banks take too much risk. Better they lose money. Don't think of it that way. If this kind of activity is going on, it endangers the entire economy, John.

KING: Sober, sober, sober. Our chief business correspondent, Ali Velshi.

Thanks, Ali.

VELSHI: All right. KING: So the question is, did JPMorgan break any rules? After all, it has been nearly two years since the major Wall Street reform law notice Dodd-Frank became law. CEO, Jamie Dimon, says no.

(BEGIN VIDEO CLIP)

JAMIE DIMON, CEO, JPMORGAN CHASE: This trading may not violate the Volcker rule but it violates the Dimon principle, just because we are stupid doesn't mean everybody else was.

(END VIDEO CLIP)

KING: Joining me is the architect of that legislation, one of the architects, the Democratic congressman Barney Frank of Massachusetts.

Now, Congressman. Let me just start there. If you go through the many pages of Dodd-Frank, is there something in there that should have caught this is this.

REP. BARNEY FRANK (D), MASSACHUSETTS: There may well be. He is premature saying it doesn't violate the Volcker rule. You pass a complex piece of legislation. And then, there is a process by which it has to be flashed out.

The rules of the federal government call for a proposal to come out. And then, for there to be come in. So, the Volcker rule, which was part of the law, hasn't yet taken effect. It will take effect later this year.

So, technically, no. It didn't violate the rule but Mr. Dimon is pre- mature in saying it wouldn't violate the Volcker rule. It depends on the nature of the trade and the nature of the rule. And frankly, I think the fact that this is happening, is going to be an argument for tighter rule.

And Jamie Dimon too much as he said, just because we are stupid, Jamie Dimon isn't stupid. He is a very able guy and with a very well-run bank. And that's precisely the point. When one of the best run- institutions presided over by very intelligent people can make a mistake of this sort, that's a sign of why you need regulation. That's a sign of why you need a safety net. So, I think this is an argument for the Volcker rule when this promulgated.

KING: And some would say though, can you regulate that greed then combined with stupidity?

FRANK: Yes. You can regulate in this sense. You can, in the first place say, we don't want you to get so over your head that you are not going to be able to pay what you owe other people. You know, the old story is, if somebody owes you -- if you owe somebody $1,000, he can tell you what to do. If you owe him $100 million, he has to worry about you.

We do have rules that say we don't want you to get indebted to the point where they are years ago where we have to worry about your collapse, because you hurt other people. KING: As you know, this is playing out in the middle of a campaign year in which the other side, your critics -- the critics of your legislation say, not only let's have tighter legislation as you just said, they want to repeal the thing all together.

Do you think this maybe will give them pop?

FRANK: Well, I don't think it will change their opinion. There is a theological concept. I am not a great theologian. I know there is a theological concept called invincible ignorance in which a strong enough faith binds you to any facts to the contrary. I think that's where I got with some of my colleagues. But it will certainly weaken their credibility.

Let me give you one specific thing, John. The Republicans are trying to put a bill through the house who tries very hard to pack, although they have the majority, which would say that if an American institution through a foreign subsidiary engages in derivative transactions, it is not subject to our regulations. That's what we are talking about here.

JPMorgan chase and American institution doing things through a foreign subsidiary. We are saying that might have an impact. I think frankly they are going to have a harder time pushing this bill than they did before. And it just discredits their whole notion that these institutions don't need any regulation.

Again, I stress, JPMorgan chase, this isn't countrywide. This is in a rogue institution. It's a well running institution and shows you the inherent riskiness and danger in what they do.

KING: Well, people who have memories of 2007 and 2008, Congressman might be asking themselves this question.

Is it just JPMorgan Chase? Or if it is happening there, is it happening elsewhere and might be go through all that all over again?

FRANK: Well, the answer is, it may very well be happening elsewhere. But, we won't go through that all over again. Because we do have rules in place that will prevent that. For one thing, even JPMorgan chased to, the Volker rule hasn't gone into effect but requirements that they have a bigger capital base are there. That is the banks today, thanks to the rules imposed on them, are better able to withstand losses because they have more money set aside.

KING: Congressman Barney Frank, democrat from Massachusetts, I appreciate your time tonight, sir.

FRANK: Thank you.

KING: Graduations, time for caps and gowns and for those graduating in battleground state today like Virginia, time for courting by political heavy hitters. The truth about presidential campaigning hitting college campuses next.

(COMMERCIAL BREAK) KING: It's college commencement season and it is the presidential campaign year. Yes, Virginia, you are high on the list of battleground states.

(BEGIN VIDEO CLIP)

MICHELLE OBAMA, FIRST LADY OF THE UNITED STATES: I have witnessed the strength and spirit of the hooky nation. And I think that you all already learn plenty of lessons here at Virginia tech. In fact, I feel like all of you have so much to teach all of us.

(END VIDEO CLIP)

KING: That's Michelle Obama at vary Virginia tech earlier today. Mitt Romney will be at Virginia's Liberty University on Saturday, tomorrow. Truth is, a bit of deja vu in the Romney speech.

Liberty was founded by lady of evangelical preacher Jerry Falwell of moral majority fan. John McCain delivered the liberty commencement speech in 2006 as he was gearing up to run in 2008. McCain then like Romney now was viewed suspiciously by some social conservatives.

(BEGIN VIDEO CLIP)

SEN. JOHN MCCAIN (R), ARIZONA: We have nothing to fear from each other. We are arguing over the means to better secure our freedom, promote general welfare and defend our ideals. It should remain an argument among friends.

(END VIDEO CLIP)

KING: Now, Reverend Falwell, despite had fused with McCain, decided to help and I visited the campus back then to better understand why.

(BEGIN VIDEO CLIP)

JERRY FALWELL, FOUNDER, LIBERTY UNIVERSITY: For those of us social conservatives, he at this moment is by far the strongest candidate we could field against Hillary Clinton.

(END VIDEO CLIP)

KING: Now, McCain went on to win the Republican nomination. And of course, it was Barack Obama, not Hillary Clinton, who became the democratic nominee. But it is worth remembering.

Falwell was hardly alone at that point in placing his bet on Clinton. There is a valuable lesson there. Campaigns often surprise us. We know Virginia will be one of the hardest fought battle grounds. We know at the moment, this shapes up as a very competitive election. But, if history is any guide, and it usually is, there are quite a few surprises in store in the 179 days ahead.

Here to talk to us Ryan Lizza, Washington correspondent from New York, Rick Tyler, a former Newt Gingrich spokesman and CNN political contributor and democratic strategist, Maria Cardona. How important the campuses that you have -- part is for the youth vote, Rick, part of it is for Governor Romney and the evangelical vote. Michelle Obama out today. Governor Romney tomorrow. The president is going to commencement speeches. Joe Biden is giving commencement speeches. Do they matter?

RICK TYLER, FORMER NEWT GINGRICH SPOKESMAN: Do they matter? Absolutely. And specially in Virginia. I am thrilled they will be competing over Virginia. I think Liberty University is actually very important to Romney because Liberty University, every Wednesday, their convocation is the largest gathering of young evangelicals in the country.

KING: I mentioned campaigns surprise us. Four years ago, a democrat -- college democrat sprung up on Liberty University. It was a small group. But you had a group of people on this conservative evangelical campus that wanted to come for Barack Obama.

What are we looking for? What are our surprises?

RYAN LIZZA, WASHINGTON CORRESPONDENT, THE NEW YORKER: Well, I think for Romney, this will reignite discussions of how's he locked down the conservative base that we are talking last week? It seems the numbers are very strong among Republicans and among very conservative Republicans.

But, it will raise these religious issues about evangelicals and Mormons and the differences between the two sides. CNN write a piece last month when this was first reported that Romney is going to speak there. And some of the students showed a page from their text book that had some fairly controversial things about Mormonism. So, there are doctrinal differences between Romney's faith and the faith that is thought up Liberty University. And, you know, it would be interesting to see if Romney addresses that or not.

KING: We will see if he does that.

Here is a surprise from the Democrats. I want to play a snip here. This is an ad put up on the Obama campaign. We know that he believes that the auto bailout will help him. The president believes that in state like Michigan, number one for the auto industry and states like Ohio, number two for the auto industry. So, here is part of the pitch.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: I had a newborn baby, wife, house and I got laid off. I wasn't sure what I was going to do.

UNIDENTIFIED MALE: Under the auto restoration plan, the industry rescued saving over one million jobs.

UNIDENTIFIED MALE: Obama stuck his neck out for us, the auto industry. He wasn't going to let it just die. I am driving in this morning because of that, because of him.

(END VIDEO CLIP)

KING: Now Maria Cardona, he said he got laid off and he says he is driving in this morning because of the president. Well, the weekly standard, it's a conservative magazine. The just do some fine reporting. Look at this. They have a screen grab here on that gentleman's facebook page. It says he was hired. He has worked at the company since 2006. George W. Bush was president in 2006.

MARIA CARDONA, CNN POLITICAL CONTRIBUTOR: I think the gist of the ad continues to be a very strong case for this president, which is, and a lot of auto workers will tell you this. One million will tell you this, that they have their jobs because of what this president did and what that gentlemen said. He stuck out his neck for --.

KING: They couldn't find somebody that got hired after. Is that the new standard for the guy that promised to change the rules and not be like the other politicians, the gist of my ads is correct?

CARDONA: Well, no. I think the standard is the truth which is, that this auto industry is alive today because of what the president did. And look, Mitt Romney is trying to take credit for it which we all know that it is just laughable. And the fact of the matter is that this auto industry has one million jobs today because of what this president did. Should they have worked harder?

(CROSSTALK)

CARDONA: Maybe. But what he said is actually true. He is driving into work today because of what this president did. If this person hadn't done that, he probably wouldn't have his job today, John.

TYLER: That's why we don't know. We don't know what would GM charge outside the taxpayer structure, but it looked like. The company will go bankrupt and then they restructure. Unfortunately, you know, we don't know what GM is going to do on legislating problem.

CARDONA: Most say it would have gone under because of what --.

KING: Why can't campaigns do a better job at this?

LIZZA: They should have been look at this a little closer. My takeaway is don't do one of these ads if you are a civilian out there. You are going to get run over by the political media.

KING: All right. Everybody, hang tight. We will be right back to do more.

We are going to take a quick break.

And here, listen to this. If you own an iPod, you just might be suing apple. Maybe you don't know that, but here how millions got signed up for that lawsuit and what it is about.

And a surfer rides this gnarly wave all the way into the record books.

(COMMERCIAL BREAK) KING: We're back with Ryan Lizza, Ricky Tyler and Maria Cardona talking politics. One of the big headline, they not just financial headline. JPMorgan chase losing more than $2 billion's in questionable trading practices. We went back and looked.

Decides look Mitt Romney in every stump speech says this --

(BEGIN VIDEO CLIP)

ROMNEY: Dodd-Frank another piece of the president's agenda. It is something known as Dodd-Frank. This was the regulatory reform bill for -- for financial services. About an 848-page bill. I must admit. I don't like any bills that are that long.

Dodd-frank. This was designed apparently to try and keep the big bank, the too big to fail banks from getting bigger. Guess what's happened over the last 3.5 years. They've gotten bigger.

(END VIDEO CLIP)

KING: Guess what happened today? He talks in just about every stump speech about repealing Dodd-Frank. Today with JPMorgan the headlines ladies and gentlemen, he didn't mention it at all.

LIZZA: You know what, though? This could be an opportunity for Romney. That last quote there that he talks about the banks have gotten bigger on Obama's watch. A lot of critics on the far left and right, even in between, are saying that Dodd-Frank did not take care of too big to fail. Imagine if Romney came up with a plan like Jon Huntsman that in the primaries that addressed that and said, even though I'm a Republican, I have a plan to break these banks up and incur with the conservative plan that broke up the banks.

CARDONA: He won't.

LIZZA: He won't. I don't think he will either.

CARDONA: No way for him to do that. The problem for Romney, he hasn't mentioned it, because he's talking about the repeal of Dodd- Frank, a legislation which would actually protect consumers from this kind of loss and he wants to repeal it.

KING: But here's what his campaign did say today. They said, JPMorgan's investors not taxpayers won't incur losses from this hedging trade gone bad. As president, Governor Romney will push for common-sense regulation that gives regulations tools to do their jobs, and that gives investors more clarity.

TYLER: I think that's right. I mean, who cares about the reforms more than the shareholders themselves? They are the ones who actually took the hit. And to put this in context. If all the politicians out here today taking about JPMorgan and other, well, today the government lost $3.5 billion. They spent $3.5 billion today more than they took in. That's $3 million a minute. And yet, they have some moral authority to talk about JPMorgan? I don't think so. CARDONA: Well, I think given that the -- that voters still remember what happened in 2008, and today with the JPMorgan, it's going to remind them even more. There's a reason why Mitt Romney did not talk about repealing Dodd-Frank today.

KING: To Ryan's point though, if it reminds them again, might they say, things -- why aren't things different? I thought that's why we changed presidents?

CARDONA: Well, but the fact of the matter is, things are different. I saw your interview with Barney Frank. He talked the fact there are some rules in place, thanks to the reform that they've put in place that now makes firms like JPMorgan, make sure that they have the captain so taxpayers aren't on the hook.

TYLER: Nothing was done illegally and the shareholders took the hit. That's the free market. Romney should explain more about the free market rather than say we need more government programs to protect this from happening.

LIZZA: I talked about something else. He needs a plan. His plan is repeal what Obama did. I don't any anyone thinks that's enough.

CARDONA: And in light of this --

KING: But it was designed to be, to stop too big to fail, too big to work, the big Dodd-Frank bill.

LIZZA: I think this is a problem of him getting out of the primaries and having a primary message focused on conservatives just being against everything Obama was for. He hasn't really put forward a -- you know --

CARDONA: The reason this works for Obama is, that it lets him make that difference in vision. Obama is for protecting the consumer. Romney is for taking all these protection away.

TYLER: The Social Security system, Medicare system, Medicaid systems all fails and yet somehow they're going to fix the financial markets?

CARDONA: Put in reforms for Medicare.

KING: Maria, Rick, Ryan, thanks for coming in. It's a good debate. We'll continue it.

We got in fact Kate Bolduan is here with the latest new you need to know right now.

Hello again.

KATE BOLDUAN, CNN CORRESPONDENT: Hello again. Hello everyone. The Syrian government says it stopped a terrorist in a bombed packed minibus trying to attack Aleppo, Syria's most populated city. This comes just a day after dozens of people died in a suicide bombing in Damascus ratcheting up tensions in the midst of the uprising. And a former news corporate executive was in the hot seat again, but not for phone hacking, that scandal we have been following. Today's grilling focused on Rebekah Brooks' close relations with British politicians. Brook said made friends with politicians including Prime Minister David Cameron during her years as a journalist but that she was quote, "always aware that she was a journalist and that they were politicians."

Cameron is expected to appear before the same inquiry in the coming week.

And an Arizona sheriff who announced he was gay after a former lover accused him of abusing his power is now ending his congressional campaign. Pinal county sheriff Paul Babeu had already resigned his role on Mitt Romney's campaign amid the scandal. Now, he says he'll suspend his bid for a house seat in this gate's fourth congressional district in order to run for re-election as sheriff.

And if you own and iPod you might just be suing apple. Real Networks is gathering iPod owners to join a class action lawsuit. In 2004 it create add program which made it possible to play songs on the iPod which were downloaded from real player. Soon after apple updated the devices hardware so that it would only play songs loaded from iTunes. Consumers who bought iPods between September 2006 and March 2009 are part of the lawsuit. But they can opt out.

And new celebrity moms like Beyonce and Jessica Simpson aren't the only ones to expect generous mother's day love this year. According to the national retail federation, Americans will spend eight percent more than last year on flowers and gifts; that means an estimated $19 million for our moms.

Electronic tablets and digital cameras are expected to be the big ticket items. So an early happy mother's day to all you moms out there especially mine. Love you, mom.

KING: Into the net. Happy mother's day to all the moms out there. Now, you ready? You surf?

BOLDUAN: Don't get me started. One attempt I have this scar to show it.

KING: OK. The moment you may have miss this is Kate's dream. Would you brave this enormous wave?

BOLDUAN: Lord.

KING: Look at that. Pro surfer Gary did it. And now, he is in the record book. The 44-year-old, Hawaiian surfer at the 78-foot wave of the coast of Portugal last November. The Guinness book of records now calling it the biggest wave ever has been ridden.

Look at that. That is awesome. (INAUDIBLE) wants people to be inspired, to follow their own passions. But, you have to remember this wipeout, if he ever plans on trying that again. Ouch.

BOLDUAN: Understatement of a lifetime. To say ouch on that one.

KING: I tried once. I have pretty good balance. I can snowboard, wakeboard, but that, no. Couldn't do it. Tried one.

BOLDUAN: No, John. Surfing is so much harder than it looks. It's so beautiful. That was beautiful video, but maybe not for me.

KING: Maybe not. Kate, thank you.

Everybody have a great weekend. See you Monday. Erin Burnett with "OUTFRONT"