DOBBS: The results of the so-called stress test on the nation's top banks will be released tomorrow. Some of the nation's largest banks will need billion, tens of billions dollars to survive. Congressman Barney Frank is the chairman of the financial services committee joins me now to discuss that and the likely direction and a few other initiatives. First of all, Mr. Chairman, good to have you with us.

REP. BARNEY FRANK (D), MASSACHUSETTS: Thank you, Lou.

DOBBS: These stress tests leaked out by the treasury department. Any surprise in it at all for you?

FRANK: It's not an area of great expertise. I got a job making public policy. I have a rule I try to follow. Keep to a minimum the number of times when I tell people more than I know. I'm not expert on the innards of the banking system. They obviously do. One thing I should be very clear, to the extent that they say the banks need more money, we want to maximize the extent to which that's private money and not public money. We want to maximize the extent to which this is capital raised privately, maybe they should sell things off like Citicorp is talking about. I don't think you'll see any public money going in here.

DOBBS: Let's turn to other areas. And let's -- amongst other things, the idea of -- well, eliminating the law, banning online gambling sites. Governor Schwarzenegger saying he's open to an idea you have discussed for some time that's the legalization of marijuana. We can go through all of that. Let's start with -- you've called this ban online gambling sites the stupidest ever, why so?

FRANK: Because adults should be able to do what they want with their own money. And as you and I were just half joking before, the federal government given what we're doing for us to announce that no one else should gamble. Only problem they're gambling with minuscule stakes. Some of my conservative friends have been critical of liberals of what they call the 90 state. John Stewart Mill got it right in the 1950s. When you're doing something that has an adverse effect on me I think you need to regulate that. When you do something that only affects you, it's none of my business whether it's smart or dumb. That goes to my judgment for smoking marijuana. Now we're talking about adults. Let's be clear, you can not have a society if it's bad for children to do it, adults can't do it, then you don't have freedom.

DOBBS: If you start quoting Locke and Adam Smith, I'll be in shock.

FRANK: I think there's a great deal to be said there. John Locke -- one that John Locke said, one way to make sure you have good rules set forward by government the rules have to apply to those who make them. That's why I'm tough on members of Congress, others who are hypocritical and make rules and don't follow them themselves. John Locke got them right. If they allow them to make rules you'll have nasty rules.

DOBBS: Let's turn to the idea of legalized gambling.

FRANK: By the way, I will say, Lou, I'm skeptical of individual mandates. I think there's a problem with whether or not you have to provide other people care. I'm leery of the individual mandate on those grounds.

DOBBS: Governor Schwarzenegger turned to marijuana. Said he's willing to -- with approval ratings an all-time low, one might say or note he ties it's time for a debate on legalizing marijuana. What say you?

FRANK: First of all when people say it's time for a debate. That generally means they are for something that hasn't popped up yet. I'm for the debate. If you're an adult, you decide to smoke marijuana we can't put new prison. I don't think it's a good idea to smoke marijuana, drink alcohol or smoke cigarettes. Are you encouraging people to gamble or smoke marijuana? It's a mistake to divide human activity in two sets. One thing the government encourages. Most human activity ought to be neither. It ought to be up to you to make the choice. You and I think there are people out here in the financial world, maybe you want to be in prison. I want to make room for them by getting the people who smoke marijuana out.

DOBBS: If you use that up appropriately I might be persuade.

FRANK: I have that in mind for the future.

DOBBS: Congressman thanks.

FRANK: Thank you, Lou.