This is a rush transcript from "On the Record," November 9, 2011. This copy may not be in its final form and may be updated.
GRETA VAN SUSTEREN, FOX NEWS HOST: Mr. Herman Cain just finished another GOP debate. And tonight's debate topic, your job -- well, that is if you're lucky enough to have one. The debate was held near Detroit, a city whose September unemployment rate is a gasping 20.6 percent. Meanwhile, what about Italy? Its financial crisis is shaking us big-time, the Dow dropping almost 400 points today. That could rattle our jobs and our economy.
So what would he do if he were president? Mr. Cain joins us from Michigan. Good evening, sir.
HERMAN CAIN, PRESIDENTIAL CANDIDATE: Hello, Greta. It's a pleasure to be with you.
VAN SUSTEREN: Nice to have you, sir. Now, tonight, sir, Speaker Gingrich said that he would fire Ben Bernanke and he would audit the Federal Reserve. In the 1990s, you were chairman of the board of directors of the Kansas City Federal Reserve. And I'm curious whether you agree with him that we should audit the Federal Reserve, we should dump Ben Bernanke, and the role of the Federal Reserve in our economy and monetary policy?
CAIN: Two out of three. Yes, I would fire Ben Bernanke. I would also audit the Federal Reserve because there has been some bookkeeping going on that I don't think that the public totally knows about in terms of where did all of the TARP money go, who got bailed out, et cetera. So that's the main reason for auditing the Federal Reserve.
Back in the '90s, when I was on the board of the Federal Reserve, we didn't have to deal with a $14 trillion debt. We had a much smaller debt to deal with, so we didn't try and basically tweak this economy with monetary policy and control unemployment as well as price stability.
The Federal Reserve's role needs to be refocused on just price control, monetary price stability of our currency. That should be the only focus. And I happen to believe that that's how we fix the Fed, not getting rid of the Fed in its entirety.
VAN SUSTEREN: All right. OK. So I understand the bookkeeping -- like, I'm all for looking to see where the money's going. I don't like any fraud or risk of it. And I -- frankly, I had assumed that it was rather transparent and that there was someone doing that. But obviously, I'm wrong about that.
But I'm curious, what's wrong with Ben Bernanke? What's he doing wrong that he would -- that he should be fired, or that you think so and that Speaker Gingrich thinks so?
CAIN: Well, he allowed himself to be politicized by this administration, by -- with these infusions of money into the monetary supply that has really gotten out of hand. In other words, back in 1988, Greta, it took $1.20 of Canadian money to buy one U.S. dollar. Today it takes $1.20 of U.S. money to buy $1 Canadian. This is upside-down in terms of the value of our currency.
And quite frankly, his decisions have helped lead to that. Now, the reason that he did that, I'm conjecturing, is because of the $14 trillion debt. When foreigners are not standing in line to buy our debt, then the Federal Reserve was trying to prop up the Treasury. That's the problem that I have and Speaker Gingrich have with some of the decisions that he has made.
VAN SUSTEREN: Well, you know, it brings me to the question of currency, then, something that I think that Governor Romney said that he would name China, I think, currency cheater, or something like that, and Governor Huntsman disagreed with him on that.
But the whole idea of how we value our currency, and if China doesn't -- devalues its currency, its products become really cheap, so we want to buy their products, we're not buying our own. I'm wondering if you disagree with sort of the way that the Federal Reserve is currently, you know, handling the -- valuing our currency, the money supply. Is there any -- is there anything you could do differently that would profoundly affect our economy, our ability to make more jobs?
CAIN: Yes. It starts, Greta, with outgrow China. That's where it starts. If we outgrow China, we won't have to borrow as much money. If we balance the budget in each fiscal year, which I plan to do as president -- maybe not the first full fiscal year, but certainly the second -- then we can start bringing down the debt.
That's the biggest problem. Sure, some of these other things like checking into how they are basically stealing some of our intellectual property -- our problem isn't -- our problem with China is that we are not growing fast enough. They have a much smaller base (ph). We've got a bigger base. We simply need to outgrow China and do some of the things that Governor Romney is talking about.
But the fundamental problem is our anemic economic growth, which is projected to be about 1.6 percent for this entire calendar year.
VAN SUSTEREN: All right, Speaker Gingrich said tonight -- I don't know if you agree with him or not, but he said if you repeal Dodd-Frank, which everybody on the platform says get rid of Dodd-Frank -- and he says if you -- if you repeal Dodd-Frank, overnight, you know, the housing industry will do extremely well. That wasn't exact words.
You know, it seems like all of you lay criticism of where we are on Dodd-Frank. Dodd-Frank wasn't passed until July of 2010. Our problem started much sooner. It started in 2007 with the housing crisis, with those stupid credit swaps, the toxic credit swaps, with people borrowing money that shouldn't be borrowing.
So I mean, why -- why are you demonizing Dodd-Frank so much?
CAIN: Well, you have to go back to the start of the problem with the financial meltdown of 2008 because of Fannie Mae and Freddie Mac. That started this whole housing meltdown. It started the whole financial system meltdown.
And then on top of that, the Democrat Congress thought that they were trying to fix the problem because there were some things on Wall Street that needed to be regulated, not the way Dodd-Frank does it. And what Dodd-Frank did was impose more regulations on small banks, community banks. It caused them to be afraid to lend money.
That's what's helped to basically freeze up the market. And so Dodd- Frank made the situation worse.
VAN SUSTEREN: Wouldn't you be -- wouldn't you -- is it sort of like you would do it differently? I don't mean to put words in your mouth, but you've got the situation -- for instance, MF Global, which apparently -- who knows what they were doing, but suddenly, everybody woke up Monday morning to find out it had gone bankrupt.
And apparently, someone wasn't watching. There's even a suggestion of commingling of funds -- suggestion -- I say it's only a suggestion at this point. I mean -- I mean, we can't let that happen to investors. So I mean, where do you draw the line?
CAIN: Well, you know, a lot of these problems are interrelated. The reason that Speaker Gingrich and I and others are saying we should repeal Dodd-Frank is because it didn't solve the problem. The biggest thing that it didn't do, it didn't provide oversight for Fannie Mae and Freddie Mac.
Now, the committee that was headed up by Senator Dodd, the committee that was headed up by Congressman Frank -- those were the committees that were supposed to stop the stuff going on inside of Fannie Mae and Freddie Mac from happening. They didn't do their job.
So then they wrote this legislation, and instead of working on the right problem, they worked on the wrong problem, imposing more restrictions and regulations on medium banks and small banks and community banks. That's the heart of the problem.
Get rid of it. There are some things in Dodd-Frank, such as regulations on derivatives, that should be addressed, but not all of the other things that are slowing down money being able to get out to small businesses and people trying to reset their mortgages.
VAN SUSTEREN: And I will tell you, small business owners have told me they are unable to get -- borrow money to build. So I will...
VAN SUSTEREN: ... you know, certainly agree on that. Mr. Cain, thank you, sir.
CAIN: Always enjoy it. Thank you, Greta.