'This Week' Transcript: Rep. Barney Frank and Rep. Marsha Blackburn

FRANK: And those are the rules the Republicans are fighting.

BLACKBURN: Do you have a response, Congresswoman Blackburn?

BLACKBURN: George -- well, yeah. You know, there's going to be a lot more to come out, I think, on what happened with JPMorgan. I'm one of those members that is looking forward to getting some of that information. I -- I think the Volcker rule issue -- as you rightly said -- is one that they're going to pinpoint and say, was it violated or was it not?

Bear in mind, the Dodd-Frank bill, 2,300 pages, they've already had 400 rulemaking sessions, and this is where you have so much government regulation coming in that you can't see the forest for the trees. And I -- I think that...

FRANK: That's just nonsense.

BLACKBURN: ... what we want to do is -- it is not nonsense, Barney. And you know that what we want to do is make certain that, as we look at this, that we don't enshrine this too big to fail, that we get to the root of the problem.

STEPHANOPOULOS: I'm afraid -- I'm afraid we're out of time this morning.

FRANK: George, let me be very clear.

STEPHANOPOULOS: Real quick.

FRANK: What she wants to do -- and what all the Republicans want to do -- is no regulation at all. Ms. Blackburn voted...

(CROSSTALK)

BLACKBURN: No, no, Barney. I didn't speak for you. You don't speak for me.

FRANK: Please let me...

BLACKBURN: No, you're trying to speak for me. I will not allow you to do that.

FRANK: This pattern of interruption...

BLACKBURN: Good to be with you, George.

FRANK: George, you know, the pattern of...

STEPHANOPOULOS: You know what? I'm afraid -- I'm afraid we're out of time, Congressman. I'm afraid we really have run over...

FRANK: Well, I'm sorry, but she voted against this. This pattern of interruption and filibuster is really not a good way to discuss important issues. She voted for no regulation at all in 2010. They all did.

BLACKBURN: No. No, Barney. You can't speak for me. I didn't speak for you.

FRANK: That was the vote that you took! You voted...

STEPHANOPOULOS: Thank you. I -- I got to go. I got to go.

FRANK: I'm -- I'm quoting your vote. I'm not speaking for you.

STEPHANOPOULOS: Thank you both for your time this morning.

FRANK: I'm quoting your vote.

BLACKBURN: Thank you. Good to be with you. Thanks.

STEPHANOPOULOS: And don't go anywhere. Back with our powerhouse roundtable in just 60 seconds.

STEPHANOPOULOS: George Will is off today, but we're happy to welcome in Republican strategist Mary Matalin, along with Eliot Spitzer, the former governor of New York, current TV host, Politico's Maggie Haberman, Hilary Rosen, Democratic strategist, and Ralph Reed, founder -- I almost called you the founder of the Faith and Freedom Coalition.

(LAUGHTER)

That would have been...

(CROSSTALK)

ROSEN: I have my own faith, and I believe in freedom.

STEPHANOPOULOS: You do believe in freedom.

SPITZER: And you have a coalition.

STEPHANOPOULOS: Mary Matalin, I was struck in that debate between Barney Frank and Marsha Blackburn that neither one wanted -- seemed to want to talk about gay marriage all that much, even though that is the big news of the week.

MATALIN: Well, it doesn't -- didn't look like Marsha could get a word in edgewise no matter what she wanted to talk about. I don't think that -- that may or may not have been purposeful, but the voters don't want to talk about it. They don't want to have a discussion on this.

Barney was right in that people for whom this is a determinative issue are already aligned, but voters who are going to be the determinant in the outcome of this election don't want to be distracted. They may have an opinion on this, but it's not in the top three, it's not close to their top three. And what they care about is what Congresswoman Blackburn was talking about. It's the economy, jobs, the debt, the deficit, overreach of government, and the cost of overreach of government.

STEPHANOPOULOS: But, Hilary, there was a huge reaction, of course, in the gay and lesbian community that's been waiting for this for a long time.

ROSEN: Yeah, although I agree with Mary, in terms of what people are really thinking about going forward. But I don't think we should let the moment pass. I don't think the week has let the moment pass without talking about how significant this is.

And, you know, when I think about it personally, I came out at 17. The idea that a president of the United States would ever say that I could have that kind of a relationship, when all I was trying to do was figure out how, you know, just to sort of walk down the street without worrying about it.

And -- and I think that kind of clarity, that kind of leadership, it was a politically risky move for the president to take. The fact that he did it I think is really admirable.

STEPHANOPOULOS: You say -- you say politically risky. Does that mean you think it could cost him in November?

ROSEN: Well, I think it -- whenever you say something that has sort of a lot of passion on both sides, then, you know, you're -- you're taking a political risk. And -- and I think that the president knew that, but it didn't matter, because even an election year, some things are not about politics.

STEPHANOPOULOS: Although he probably wanted to wait a little bit longer at best before he came out with that.

And, Ralph, I was struck -- you talk about passion. There was a lot of passion at Liberty University yesterday...

REED: Sure.

STEPHANOPOULOS: ... when Mitt Romney expressed his position.

REED: Yeah, I think it's really two separate questions, George. I mean, one is, what's on the front of the minds of the voters, with five-and-a-half months, six months to go? And I think it really begs the question not only of how the Obama administration handled it, but when you've got 20 million people either out of work or they're working part-time because they can't find a full-time job, unemployment has been over 8 percent for 39 months -- for 32 of those months it was over 9 percent -- that's the longest stretch of chronic, endemic unemployment since the Great Depression. Why do you as leader of the free world look like this is where your focus is? So that's the first question.

But then the second question, and I think the dispositive question, is where are the voters when they go to the polls? And if you look at Ohio, the marriage amendment passed by 62 percent. More than it did in North Carolina. Florida, swing state, 62 percent. More than North Carolina. Virginia, 57 percent. This president is going to be on the ballot in hard-fought swing states, and he's going to be out of touch and out of sync with those voters.

SPITZER: First, those are fair points, but I think wrong. And here's why. The fact is, civil rights and the discussion of civil rights does not stop merely because we have economic issues to think about as well. Of course, economics will dictate at the end of the day November's outcome. But the notion that we would stall on civil rights issues that are of enormous magnitude and how we define ourselves as a society is wrong.

And I think as a subsidiary point to that, the public has got to understand there are two components of marriage. One is the civil, defined by government; the other is the religious, where denominations, of course, have the right to recognize or not. None of this has to do with whether a denomination recognizes same-sex marriage. The president is saying, as I said as governor, others have said around the nation, two people should be able to enter a civil relationship of love that goes on forever.

STEPHANOPOULOS: And, Maggie, one of the reasons the politics have changed on this, and this has actually been driven out in the country, public opinion has had a massive shift just in the last six years.

HABERMAN: Yes, it's been incredible, actually. Pollsters say they haven't seen any other issue on which there has been such fast movement. But what's not clear is how this will be in the swing states. I mean, if that's nationally that's -- perhaps--

(CROSSTALK)

HABERMAN: Yes, that's on coast to coast. I do think, as Hilary said, it was politically risky, because neither side knows exactly how this is going to play out, but I think the president was taking on so much water, it was going against his brand of looking like he was nonpartisan.

STEPHANOPOULOS: He had no choice in the end, didn't he?

MATALIN: Exactly. It's not risky if you don't have a choice. You don't get bonus points if you're doing your job. He evolved into the position he originally had. He's not bold. He was for it before he was against it, and then he evolved back to where he started, which is to be for it.

His vice president outed him. And the gay community was holding the money up, and he was on his way to George Clooney's with an open purse.

ROSEN: Exactly not true. Barney Frank was clear about that too. The gay community was not holding its money up. This was not about money. I think the -- it was unplanned. The vice president, you know, spoke from the heart, and the president kind of followed that. But the --

STEPHANOPOULOS: Wait a second. One point actually Mary didn't include. This was going to be on the platform, a platform for gay marriage at the Democratic convention. The president had to do it before then, didn't he?

ROSEN: I said months and months ago that I thought that this election would not take place without the president having come out strongly in support of same-sex marriage. And Mitt Romney strongly reinforcing his opposition, and let's talk about sort of as the president's journey, as Maggie talked about, the movement of the last several years, the president's journey has much more closely followed the American people's. Mitt Romney has devolved. You know, in 1994 when he was running against Ted Kennedy, he was going to be better on gay rights than Ted Kennedy. Now he's against everything.

(CROSSTALK)

REED: That's not true actually. He's always believed that marriage should be defined as it's been defined for 5,000 years. When he was governor of Massachusetts -- and I'm not here as a Romney surrogate, this is just his record -- when the Massachusetts General Court redefined marriage and --

ROSEN: He did. You're right. He was always against marriage.

REED: Ordered, ordered the government to issue marriage licenses --

ROSEN: But that's not the only thing about gay and lesbian people's lives.

REED: But on this issue, on this issue, what Obama has done -- George, they've spent six months saying this guy has no core. Axelrod has gone on national television and says he doesn't really believe in anything. Now Obama --

STEPHANOPOULOS: Talking about Romney.

REED: Right. Talking about Romney. Now Obama has publicly flip-flopped after being grabbed kicking and screaming by his vice president, and he allows Romney to look like a Reaganesque conviction politician.

SPITZER: Tiny little bit. I think the interesting thing to see over the next couple of years, I think within the evangelical committee -- this is Ralph's world, not mine -- I would predict there will be the same shift in perspective. Those under 30 in the evangelical world now support same-sex marriage.

(CROSSTALK)

STEPHANOPOULOS: You had an interesting on your blog yesterday in Politico from a Republican pollster, George W. Bush's pollster, showing how Republican attitudes have changes on this issue.

HABERMAN: Absolutely. They shifted dramatically. And one of the things I was going to say, actually, counter to what Ralph said -- although you're right, that Mitt Romney has always been for traditional marriage. There's been a shift among the donors on the Republican side. It's not just Democratic donors who support Barack Obama who are in the gay community who wanted to see a move. There are a number of prominent Republicans, like hedge fund executive Paul Singer. Ken Mehlman is out there raising money for a gay marriage movement. Romney is in a sort of a rock and a hard place between his base and his donors. This is not something he wants to be talking about. I would actually disagree with you. I don't think we're going to hear him being forceful about this at all going forward.

(CROSSTALK)

MATALIN: There's one sort of -- do I agree he doesn't want to talk about it? This is -- I'm going to agree with Hilary. I think we should talk about it, and I think if the president really was bold, he would urge tolerance for the advocates, the views of advocates for either religious reasons or traditional reasons to support multi-millennial traditional definition of marriage. Why should we talk about this?

This is bigger than the economy. It's about our entire culture and where are we and the disintegration of families. Both the conversations worth having, worth having civilly, and worth hearing each other's views.

I don't think Hilary loves her children any less or any differently. I completely know what's in her heart. We should be able to talk about all that stuff, and I think he will talk about it, but I think the other side has to be -- and the president should urge a tolerance of the views of people who hold this. I say it (inaudible) whatever, instead of calling them right wing extremists, Christian evil people.

STEPHANOPOULOS: It did seem that the president was trying to signal that this week in his interview with Robin when he really did say this is going to be a states issue, not a national issue.

ROSEN: Here's one more sort of nonpolitical point, which is, you know, sorry, but straight people don't need any help tearing down the institution of marriage. You're doing just fine as it is. One in three divorces. You know, come on.

The irony is that really, gay people are looking to do the most conservative thing. They want to fight in the armed forces, you know, to protect our country, and they want to join the institution of marriage, loving committed couples raising children. That, you know, I don't know that that's a conversation that the president ought to have on the campaign trail every day, but I do think it's something we ought to recognize and acknowledge.

STEPHANOPOULOS: Absent the Supreme Court getting involved in this, gay marriage will be banned in many, many states for a long, long time.

SPITZER: Right. Which is a shame. Which is why -- but it will get to the Supreme Court, and the president will be forced to take a position --

STEPHANOPOULOS: Which he doesn't want to do.

SPITZER: He does not want to do. But the moment for him will be when pressure still comes to him, will he sign the LBGT (ph) executive order that he refused to sign a couple of weeks ago? In other words, arguably, how can he be for same-sex marriages as publicly as he has been and not now sign the order that would extend these minimal rights to individuals working for federal contractors? That will become an issue in the next couple of weeks.

REED: I think there are two things on the horizon that are going to further complicate this for President Obama. The first Eliot mentioned, which is as the Amendment 8 battle from California works its way to the Supreme Court -- and most legal observers believe it's inevitable that this will end up on the court's docket -- the Obama administration, which has already, George, come out and said that the Defense of Marriage Act is unconstitutional, is going to have to take a position on whether or not gays have a 14th Amendment right to marry everywhere.

The second thing is the Democratic platform. Is Claire McCaskill in Missouri going to say that she agrees with the Democratic platform that marriage should be redefined? Is Bill Nelson in Florida going to want to run in a state where 62 percent of his voters have said they believe it should be between a man and a woman?

(CROSSTALK)

REED: And then that takes a lot of wind out of their sails.

ROSEN: Both on the Republican side and on the Democratic side.

REED: If other elected officials in the Democratic Party say I don't agree with the president, this further complicates things.

ROSEN: And Dick Cheney does.

(CROSSTALK)

STEPHANOPOULOS: We have got to take a break right now. Lots more to come from our roundtable.

(BEGIN VIDEO CLIP)

LENO: From the bullying the kid for having long hair and then ridicule the same hair for only having an American Express gold card, not platinum.

(END VIDEO CLIP)

STEPHANOPOULOS: Was Romney a bully in high school? How much should that matter now?

(BEGIN VIDEO CLIP)

FALLON: After just one term in office, French President Nicolas Sarkozy lost his re-election bid because he was unable to fix his nation's economy, or as Obama put it, uh-oh.

(END VIDEO CLIP)

STEPHANOPOULOS: Incumbents here and abroad. Is President Obama fighting a global wave? And Time magazine asks are you mom enough? We'll debate the controversial cover.

(BEGIN VIDEO CLIP)

KIMMEL: Don't look at it as a source of future humiliation for the boy. Try to look at it as the event that helped shape him into the most fearsome cage fighter in the history of mankind.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

STEPHANOPOULOS: And there's lots more from the roundtable after this from our ABC stations.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: We're not there yet. It's still too hard for too many. But we're coming back because America's greatness comes from a strong middle class, because you don't quit and neither does he.

UNIDENTIFIED FEMALE: What does White House insider Hilary Rosen say about Ann Romney?

ROSEN: Guess what, his wife has actually never worked a day in her life.

BILL MAHER, COMEDIAN: Ann Romney has never gotten her ass out of the house.

UNIDENTIFIED FEMALE: Happy Mother's Day from Barack Obama's team.

(END VIDEO CLIP)

STEPHANOPOULOS: Super PAC ad there for the Republicans, I guess happy we're back with our roundtable. Happy Mother's Day, Hilary Rosen. Any response?

ROSEN: You know, that ad, I just think is silly. I misspoke. I never meant to say that being a mom is not hard work. I know from experience.

I apologized to Ann Romney. She accepted my apology.

And President Obama, not only had nothing to do with what I said, he actually completely disagreed with me very loudly as everyone knows, so, you know, move on.

STEPHANOPOULOS: Is this a way to close the gender gap, Mary?

MATALIN: No, the way to close the gender gap is the way it's closing now, is over this economy. At the risk of ticking Barney Frank off and talking about the economy, get -- the whole world really wants America to talk about, not just Americans, women are losing jobs at a faster rate. They're underemployed at a greater rate.

Look, everybody needs to be for the purposes of their families and our whole economy, that's how you close the gap. The gender gap that we have is not among single women and it's -- we are doing fine with all the other women

REED: Mary, let me say, I think the reason why this is going to come up is because in 2010, for the first time since modern polling began, Republican candidates won the women's vote and the gender gap closed from 8 in '00 to 4 in '04 and they're nervous and I think they think that they can break through that with these emotional social issues.

But in an economy like this, George, where 70 percent of the economic and consumer decisions in the household are made by women in that household, they're on the front lines of this economy. They know how bad it is, at the grocery store, at the gas pump, and I think they've got problems.

SPITZER: Two points. First, Hilary's comment -- and she apologized, she misspoke -- is no more relevant in my view than Mitt Romney's bullying this little (inaudible) kid from his high school. Dismiss both of them.

Let's talk about the economy. I want to talk about the economy. If we talk about the economy Barack Obama will win the gender gap by double digits. We have an answer on the economy. Mitt Romney simply does not.

STEPHANOPOULOS: We had a poll out this week that showing on the big economic issues like the stimulus package, overall economic issues, financial regulation, Obama has the majority, but it's a bare majority support.

HABERMAN: This is a real concern for the Obama team. There is not some clear marker for him to do better than Mitt Romney. To some extent some argue that he should be going after Mitt Romney's economic credentials. That's not something they're doing. Instead they are focusing on social issues. I don't think that he wanted to be talking about gay marriage last week. But that certainly is part of it. They are talking about women. They are focusing on things that are not part of his record because it's not -- there are elements of the record that are not politically popular, that are not going to make voters happy.

ROSEN: Well, first of all, two points here, one is that some of the women's -- so-called women's issues are economic issues. Mitt Romney's trying to get rid of the earned income tax credit, which overwhelmingly benefits women, particularly working, poor women.

And when we talk about reproductive health it is not just a matter of whether or not you permit birth control. When you add costs to women by denying them insurance coverage for certain things, you are adding to their economic burden.

The second piece is on job growth, we actually have a story to tell, and I think the president is going to tell it. Mitt Romney is, you know, looking at cutting Medicare benefits to give tax cuts to his rich friends, that's something that we are going to be talking about with the Romney economic policy.

(CROSSTALK)

MATALIN: If we can talk about the economy, we should talk about --

ROSEN: (Inaudible) the Ryan budget.

MATALIN: (Inaudible) --

ROSEN: That's the Ryan budget, Mary.

MATALIN: The Ryan budget is predicated on a Clinton concept, which is premium support. The Ryan budget saves --

ROSEN: (Inaudible) 20 years.

MATALIN: -- Medicare. It's the same concept. You have to infuse market forces into these -- if we don't reform these entitlements we're not going to be talking about anything. You want to talk about the economy? But I want to go back to this poll thing. Obama does not enjoy a majority on economic issues on the voters who are going to make a difference. Research Republicans, the number of focus groups and polls, independents by double digits think he made it worse or had no impact and they particularly favor Romney's positions and they don't even really know what they are yet on jobs, on the deficit, on debt.

SPITZER: Could we talk, instead of polls and focus groups, reality, what works in the economy? We have done the largest macroeconomic experiment in history. Europe tried austerity, which is Mitt Romney's. They're going to depression, recession, it has failed.

What we tried here under Barack Obama is Keynesian economics, restructure the economy, invest where you need to, it worked for 70 years, it will work in the next 100 years. That is what the public should focus on.

REED: This is the weakest recovery since World War II. It's the weakest recovery since the Depression.

ROSEN: (Inaudible) problem since the --

REED: GDP growth in the first quarter of this year was just revised down to 1.9 percent. We created 115,000 jobs in April. You know how many jobs we created in April of '84 when Reagan was president?

SPITZER: George --

REED: Four hundred and 80,000.

ROSEN: (Inaudible), Ralph.

(CROSSTALK)

REED: This is a really flat jobless economy.

ROSEN: We have finally restored all of the jobs lost under the George Bush era.

SPITZER: They want to go back to medieval medicine, the blood-letting, leeches. They want to go back to the very crazy economics that brought us over --

MATALIN: What are you talking about, Eliot?

SPITZER: -- the cliff and created a cataclysm.

(CROSSTALK)

UNIDENTIFIED FEMALE: Three consecutive years of uninterrupted growth.

UNIDENTIFIED FEMALE: -- 17 percent rise in the GDP.

ROSEN: Bill Clinton, if you want to go back to bill Clinton -- as George well knows -- bill Clinton actually increased taxes on the upper income folks and increased government spending for investment in education and technology and infrastructure. That was the largest economic growth --

REED: Yes, I was there and the next year, the next year, by the way, we took the House and the Senate, he signed the largest tax cut since the Reagan era and we balanced the budget.

STEPHANOPOULOS: The president does have a different argument because even if the recovery has begun, people aren't feeling it fully yet.

SPITZER: But that's a political issue. Of course, it's a different argument but it's a correct argument. You know, that's why I'm saying don't look at focus groups. Let's talk reality and what matters here.

MATALIN: The focus groups are talking to real people. Underemployment -- the real unemployment rate is 15 percent. You know why --

SPITZER: Mary, Mary --

MATALIN: -- (inaudible) the jobs number because three-quarters of it are people who drop out of the labor force.

SPITZER: Mary, we're talking about --

ROSEN: What is Mitt Romney going to do about that that's different?

SPITZER: I want to talk economic realities and people have to make investment decisions.

REED: This is not the mantra of --

(CROSSTALK)

SPITZER: Hold on one second.

REED: -- 15 percent of college graduates can't find a job.

SPITZER: Ralph, Ralph, you simply ignore the reality that the economic model that Romney wants to bring back gave us the cataclysm of a -- wait, it's deregulation. It's lower taxes for the wealthy, higher deficits, cutting infrastructure investment, making us less competitive, giving up our competitiveness to foreign nations, unilateral trade failure that does not serve the American public well.

STEPHANOPOULOS: I want to get to --

(CROSSTALK)

STEPHANOPOULOS: At the risk of getting my head cut off I'm going to turn to the issue that (inaudible) said he didn't want to talk about before, because there was a big story this week in "the Washington post," a look back at Mitt Romney's prep school days at the Cranbrook.

And it told a story of how he and some friends had taunted a classmate who had dyed his hair and one day had pinned the boy down and cut his hair off. And here was Romney's response.

(BEGIN VIDEO CLIP)

ROMNEY: I don't recall the incident myself, but I've seen the reports and I'm not going to argue with that. There's no question but that I did some stupid things when I was in high school and obviously if I hurt anyone by virtue of that, I would be very sorry for it and apologize for it.

(END VIDEO CLIP)

STEPHANOPOULOS: Maggie Haberman, we heard Eliot's view. He thinks it shouldn't matter, doesn't matter. Does it?

HABERMAN: It will matter with people who don't like him. I think it won't matter with people who do like him. I think that this question is a matter on the margins with the independents who are just starting to get to know him, maybe.

I think that biography of presidential candidates is interesting. I think it's relevant but ultimately I think who wants to be judged for what they did in high school? I sort of refer back to what Eliot said. I think that he apologized. I think that's the best he can do and I think democrats have a risk if they push it too far.

STEPHANOPOULOS: Risk here?

ROSEN: Yes, I actually agree. I have some compassion for Mitt Romney on this. I thought his apology seemed sincere, even though he wasn't -- it's a little fuzzy whether he remembered it or not, but I think the reason it touched a chord wasn't really just about politics. Actually bullying and youth suicide is a major issue this -- over the last several years.

I refer everyone to the "Bully" movie if you haven't seen it and I just think it was kind of a missed opportunity for Mitt Romney to say, you know what, that -- I don't remember that, but this is not something we should encourage our kids to do and this is a problem and I think that, you know, that that's something that President Obama has focused on and -- in coming -- in the last year and I think that it's relevant.

MATALIN: Because he is talking about something that didn't happen 50 years ago is absurd. It didn't happen. The sister --

ROSEN: I just defended him.

MATALIN: I'm not --

(CROSSTALK)

MATALIN: I'm saying ABC got -- the sister said it never happened.

HABERMAN: She said it was an inaccurate portrayal of her brother --

STEPHANOPOULOS: Which is different --

HABERMAN: -- which is different.

MATALIN: What Romney should say -- here's what Mitt Romney should say. I'm Mitt Romney. I'm running for president of these United States. I am not a bully. That's a politically motivated tactic to distract you and dismiss me.

You're not -- I'm not going to let that happen. I'm going to cross this country talking about my economic plan to get you working again and get the government working for you. I'm Mitt Romney. I approve this message.

REED: Well, I think the thing -- first of all, the young man in question is dead, all right, so he's not even able to speak to this, number one.

Number two, it was a half century ago. This isn't -- this doesn't involve his public record, all right.

And the other thing that it really underscores, George, is how desperate they are to try to tear this guy down. I mean this is somebody who has been faithful to the same woman for 42 years, raised a wonderful family.

Whatever you think of him politically, turning around Bain consulting, building Bain Capital into one of the most respected private equity organizations in the nation, turning around the 2002 Salt Lake Olympics, outstanding job as governor of Massachusetts. This is the kind of man that you would want your daughter to marry. This is the kind of guy you would want to be a business partner with.

STEPHANOPOULOS: Part of the reason --

REED: If I could just finish, here's my concern. If this is what we're going to do to candidates, George, who will want to serve? Who is going to want to put their name on the ballot if they know people will be dumpster diving into your high school or prep school?

HABERMAN: I don't think this is anything new in looking at candidates and I don't think things coming out is new. I think it is a warning for Romney's campaign that there will be much more to come.

But I think that the story that you just told -- and to your point, George, I think there's been a complaint among Republicans privately, Democrats talk about it more openly, that Mitt Romney has not done much in terms of his own biography and defining himself. He does it if bits and pieces. He does have a story to tell. And if you're not telling it, someone else will.

SPITZER: The reason it's not relevant, it won't have traction politically, is it doesn't fit into the narrative most people think about Mitt Romney. We can agree or disagree with him, but nobody thinks he's mean-spirited or a bully.

I disagree with you about what he's done at Bain and what its economic value it. I don't think he is a nasty guy. I like him. I don't mind saying that. I think he is a good, decent person with whom I disagree. He's not a bully, therefore, this story is out of context. It doesn't matter (inaudible).

STEPHANOPOULOS: So, yes, he will not get disqualified on personal grounds (inaudible).

SPITZER: Precisely, precisely.

STEPHANOPOULOS: Let's turn to another economic issue, because I heard you talk about before we came on, I talked a little bit to Barney Frank and Marsha Blackburn about this, JPMorgan, the story that broke at the end of the week. A $2 billion loss on Friday has reraised the entire question of financial regulation. I know this is something you have been crusading on --

SPITZER: Right.

STEPHANOPOULOS: -- as an attorney general but Jamie Dimon's point is that even the regulations, if they were put in place, would not have stopped this and JPMorgan is a huge bank and it's a (inaudible) loss.

SPITZER: Of course, the regulations as put in place after JPMorgan lobbied to eviscerate would not have precluded this because JPMorgan wants to be able to lose all the money it can so we can bail them out again. That's the problem. The incentive structure here is perverse. They can gamble with a federal backstop.

JPMorgan Chase has a federal guarantee behind it. They can borrow cheap, bet big. If they lose, we come in and we bail them out. The problem is this is not capitalism. I'm a capitalist. A capitalist says you have to be small enough to absorb your own losses. You have to be smart enough to take your own risks and measure them. They do neither. These institutions should be broken up.

There's a safe bill, 33 senators support it. This is what Warren Stevens, Stevens Bank, investment banker, extremely conservative guy from Arkansas, said, this, our financial services system these days does not function properly because of the Morgan Chases and Citibanks that are now corrupting our financial services system.

MATALIN: This also reraised how ineffective Frank-Dodd (sic) is. As Barney said, the Volcker rule, which is still being formulated, they want to enforce something that hasn't been formulated and they don't even know when it would come into effect, as is the case with all of Frank-Dodd.

What's absent from Frank-Dodd (sic) is the -- what financial institutions need and they want. And they can't function without it. It is clarity, uniformity, cohesion, coherence, enforceability that's predictable. And none of that has happened.

ROSEN: You can't possibly really think that, that after what happened in 2008, that we should not be regulating their capital risk that banks are taking.

MATALIN: I didn't say that. I said --

(CROSSTALK)

ROSEN: The reason that Dodd-Frank --

MATALIN: (Inaudible) clarity.

ROSEN: -- is so ineffective is because that we had a situation where it became complicated because of the intense lobbying around it. That's why it's not effective. But the notion that we would say, well, you know, no regulation here is going to matter --

MATALIN: Who has (inaudible) the taxpayers --

(CROSSTALK)

ROSEN: I mean 2010 happened because people thought the taxpayers foot the bill and Democrats let them.

UNIDENTIFIED MALE: Who is saying no regulation?

REED: The idea you'll be able to eliminate the risk of a global 21st century economy by running regulations at the Fed is laughable. This is a reminder yet again that we now live in a global economy.

Let's remember why this happened, George. JPMorgan was trying to hedge their risk against further losses in Europe. They made a bad bet but it was only 0.1 percent of their assets. It was only 1 percent of shareholder value. They'll be fine. And the other thing --

MATALIN: It's not taxpayer backed. It's not taxpayer backed.

REED: Markets work. Allow markets rather than bureaucrats to punish bad actors. JPMorgan lost $14 billion in shareholder value the day after they admitted this bet and, by the way, the credit rating agencies downgraded their credit. So allow the (inaudible).

SPITZER: (Inaudible) rhetoric. Markets worked for 70 years after the New Deal when we put in place Glass-Steagall, when we put in place a financial services system that globally regulated size, separated commercial and investment banking, said taxpayers will not provide capital to institutions that gamble recklessly so we can bail them out, an incentive structure, that the most conservative folks agree, makes no sense.

That's the world most of us should want to go back to. When we deregulated, we went to the libertarianism of the late -- first decade of the last, of this century, we led up to 2008. That's what took us over the precipice. We want capitalism, we don't want corporate oligopoly. That's it.

(CROSSTALK)

REED: We cannot even agree on whether or not the Volcker rule prohibited this trade.

(CROSSTALK)

SPITZER: We can't agree -- those of us who understand what the Volcker rule should do would make it very clear, a $2 billion on credit defaults swaps and derivatives that actually serves no purpose is not what capitalism is about, not what we should be backstopping at the bank.

ROSEN: Here is one thing the politics have changed, which is that instead of doing what so many bankers did years ago, and just, you know, strong-arming Congress, Jamie Dimon actually went out there and said, wow, we made some mistakes here and we're going to clean this up. I thought that would not have happened three years ago, and I thought that was impressive.

STEPHANOPOULOS: There was a change in -- a subtle change in Mitt Romney's rhetoric on Friday. He's been talking about repealing the Dodd/Frank law out on the campaign trail. He started to put more emphasis Friday on putting some regulations in place.

HABERMAN: Commonsense regulations was his phrase. This is the pivot for Mitt Romney from the primary to the general. Right? I mean, he is not outlawing all regulations. We will hear more from him in coming days and I think he's going to want and see whether there is any market impact. There may be another billion in losses, I believe. But I think this is not a surprise. This is where Mitt Romney sort of is. He's in the middle. I don't think that when he was talking about repealing Dodd/Frank, this was I think in part a red-meat primary play. I don't think that he is a no-regulation kind of guy.

STEPHANOPOULOS: And we are seeing some other pivots, Mary, also on the issue of immigration, coming out for a version of the DREAM Act for Mitt Romney. What else do you expect?

MATALIN: I expect him to laser focus on the economy. I just want to make this point. I'm not avoiding the immigration question. The only way the Obama campaign can run against Romney is distort his position or the Republican position. There is no -- nor has there ever been any Republican position that's been no regulations. We are for regulations and always have been. What common sense means clear and uniform and predictably enforced. What Dodd/Frank does, is it gives the authority to gauze the discretion of the regulators which always results in regulatory captures. Madoff was regulated. We know what the Volcker rule is and we agree with the concept, which is no taxpayer backed --

(CROSSTALK)

SPITZER: All I need to say is in all the years I was there trying to bring these cases, every time I went before the House Financial Services Committee, they wanted to pre-empt me so we could not bring an enforcement action. It was kowtow. When bankers said jump, they said how high? It was the most outrageous--

MATALIN: The Democratic Congress you went to?

SPITZER: No, these were the Republicans --

(CROSSTALK)

STEPHANOPOULOS: Thank you all very much. I'm going to be back in a moment with more of those remarkable photos you wanted all of us to see, but first we honor our fellow Americans who serve and sacrifice.

This week the Pentagon released the names of eight soldiers and Marines killed in Afghanistan.

(COMMERCIAL BREAK)

STEPHANOPOULOS: Finally this morning, your voice, your picks. For three weeks, you have been sending in photos to show us what America means to you, and tons have come in. Like Main Street in Plano, Illinois. A Cub Scout from Trussville, Alabama. Sunset in Pennsylvania's Amish country. A painter capturing upstate New York's fall colors. And the Braddle (ph) book shop outdoors in the heart of Boston.

Kevin Murphy snapped one of the most popular shots.

(BEGIN VIDEO CLIP)

KEVIN MURPHY: I'm in Carolina Beach, North Carolina, and I am the president of Ocean Cure, where we bring people that suffer from spinal injury out surfing. I'm with Whitney Cramford (ph), who suffers from mild spastic cerebral palsy. We need to make sure that we're helping all of our neighbors, especially those with disabilities.

(END VIDEO CLIP)

STEPHANOPOULOS: We all support that, and more photos on next week's broadcast. You can get all the details about how to submit your photos and vote for your favorite at abcnews.com/thisweek.

That's all for us today. Check out World News with David Muir tonight. Thanks for sharing part of your Mother's Day with us. I'll see you tomorrow on GMA.

END

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