Rattner: $10B bank deal a 'reasonable result to a very ugly situation'

>>> welcome back to " morning joe ." a live look at the white house . the lights are on. the sun is yet to come up over washington. it's 49 past the hour. we've got time for one "must-read opinion page." this is "the new york times" editorial board writing, "another slap on the wrist. not surprisingly, after spending an estimated $1.5 billion on consultants, the banks have found little wrongdoing and provided no meaningful relief. equally unsurprisingly, regulators will let the banks off with a wrist slap for their failure to execute credible and effective reviews. regulators have said that the goal in ending the reviews is to provide relief to borrowers in a more timely manner. if it's timely relief they wanted, they would not have instituted the deeply flawed review process in the first place. nor would they have let the sham reviews drag on for more than a year. worse, the settlement amount is inadequate. since there are no reliable analysises to identify wronged borrowers, there is also no clear way to apportion the $3.3 billion among 3.8 million borrowers covered by the settlement."

>> the bank audits.

>> it's interesting, i was thinking about this last night, it's hard to think of very many hometown newspapers that are as antagonistic toward their hometown industry as "the times" is toward the banks . the houston papers i don't think are bashing exxon every day, but put that aside. "the times" has a very strong point of view on this. and i'm not here to defend the banks , but the fact is the banks paying --

>> by the way, thank you for inviting rattner here to defend the banks .

>> i had him fly back from overseas.

>> but since you've got a strong point of view, let me give you a slight balance. the banks are paying $10 billion to resolve this thing. it was not the banks that could not finish these reviews, it was the regulators who said these reviews are too complicated, taking too long and they really are impossible to do. so instead let's just have you pay a lot of money and then we'll figure out what to do with it. so i think it's a reasonable result to a very ugly situation. a lot of bad behavior.

>> once again, we've got an industry that's become so complex that regulators who are supposed to keep it in check can't even follow the rules. the new rules of the game .

>> well, can't, and remember in the '07 period didn't want to. everything was rip-roaring great.

>> but they want to now and they still can't.

>> it's too complex.

>> so it's still too complex. the banks have gotten bigger, the rules are still too complex for regulators to follow, so we're just as much at risk of another bank failure and another taxpayer-funded bailout as we were in 2008 .

>> well, we're a little bit less because we have required these banks to hold a lot more capital. there have been changes through dodd-frank that have made the banks safer and sounder. by the way, there are very sophisticated investors who won't invest in banks because they say we can't understand them. your basic point that a bunch of regulators in washington can't really know exactly what's going on inside an institution like citibank is correct.

>> i'm glad we're talking to steve rattner for all these complex questions.

>> he flies around in a gold-plated plane.

>> he understands money. but i would suggest, steve and joe, that maybe in order to get a good answer to these questions, you ought to ask yourself what would elizabeth warren say?

>> what would elizabeth warren do? i ask myself, what would she do?

>> bring yourself to the light. she's perfect. she's perfect.

>> can you believe that even the most sophisticated investor stays away from banks because they don't get it.

>> they don't get it. but i will say not only are the banks holding more money, they're not as involved in as risky investments and so on. the truth is, a lot of smart investors aren't even in stocks. because they don't necessarily want that market. they want real estate . so it doesn't surprise me that smart money 's staying away from that.

>> real estate . good old bullion and dog racing . those are my big three.

>>> still ahead, we're going to talk to governor chris christie about his state of the state address . also "hardball's" chris matthews joins the conversation. we're back in just a moment.