'GMA' Transcript: President Obama on Financial Reform, Elizabeth Warren and Shirley Sherrod

What kind of recourse do consumers have when that happens?

OBAMA: Well, one of the things that we encourage in this reform is just better information. So if you are able to shop online for the best fees and you know -- or the best deal from a credit card company, if you can go to a Web site and have somebody let you know -- I -- I get a better deal from that company than I do from this company, that's going to empower you. And -- and so much of what needs to be done in the consumer area is to empower the consumer so that they can make good choices -- they can make the best choices.

There are already good deals out there. You -- you know, you -- you make a -- a wonderful living helping people make good decisions. But what we want to do is to make that more widespread so that consumers have the information they need in order to look out for their families and their own interests.

LEAMY: You know, the law relies heavily on regulators to detect and deter problems.

OBAMA: Right.

LEAMY: But as an example, the SEC knew about Bernie Madoff. Whistleblowers had spelled it out.

OBAMA: Right.

LEAMY: And the SEC agency failed to act.

So I'd like to know, why do you think that this new agency and these new regulators will do any better?

OBAMA: Well, you're absolutely right that regulations are only as good as the regulators who are applying them. And what we have done is provided a framework in which we are assuring that the regulators have the power to scrutinize systemic risks in the financial system that could lead to another financial meltdown of the sort that we had, that are making sure that complex derivatives are in a open market, that people can see and can be monitored.

But we've got to have good regulators, people who are serious about their job, who understand that they are looking out for the public interest, that aren't subject to industry capture. And those are all things that we're going to have to spend a lot of time on, a lot of energy on and -- and some of these big systemic reforms are going to take several years to put into place.

But if we don't have this kind of framework, then what you end up having is a whole bunch of agencies splintered, not really focused, without clear lines of responsibility and, in some cases, no clear authority. And that's part of what led to the crisis that has obviously devastated ordinary families over the last two years.

LEAMY: One of the elements of the new law is this Consumer Financial Protection Bureau --

OBAMA: Right.

LEAMY: -- which, as I understand it, was the brainchild of Harvard professor, Elizabeth Warren. And people in your own party are hoping that you will nominate her to head that agency.

OBAMA: Right.

LEAMY: On the one hand, big business is adamantly opposed.

So everybody wants to know, will you nominate Elizabeth Warren to head this agency that she thought of?

OBAMA: Well, fir -- first of all, it's important to note that I've known Elizabeth Warren for a long time because I was a student at Harvard when she was a professor there. During the campaign, I actually brought in Elizabeth Warren to help design proposals for consumer protection. She is, I think, a wonderful voice making a very simple point, which is, if you've got a set of rules and standards in place to make sure your toaster doesn't blow up in your face, you should have some rules and regulations to make sure your credit card or mortgage doesn't blow up in your face.

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