Joining us now is the member of Congress who more than any other is the gatekeeper on these issues. He‘s the chair of the House Financial Services Committee, Barney Frank. Mr. Chairman, thanks very much for joining us again tonight.

REP. BARNEY FRANK (D-MA), CHAIRMAN, HOUSE FINANCIAL SERVICES COMMITTEE:

I‘m glad to, Rachel. This is about as important an issue as consumers can deal with.

MADDOW: Do you think that we ultimately are going to get a Consumer Financial Protection Agency?

FRANK: Yes. Look, the conventional wisdom and the way Washington has worked has been that the powerful lobbies line up. And they‘re the ones that are on the scene. They‘re right here. They‘re the ones people hear from.

Ordinarily, it‘s very hard to mobilize the average citizen. You know, people have their own jobs. They have their families. They have other things to do. Consuming is kind of a small part of what they do. They‘ve got to worry about where the income comes from.

But the abuses in the financial area have been so egregious and the consequences so negative because as you pointed out it wasn‘t just that with some of these mortgages people were getting hurt. The whole economy suffered.

I believe the public is now ready to speak out. And I told my associates in the banking industry, the people I deal with, I think they‘re making a mistake. I‘ve invited them to work with us. We want to do this consumer agency in a sensible way. We want to make it work. But if they are going to try and kill it, then they will be outside the process and they‘ll lose.

I don‘t have any doubt that the American people will do this. Look, you‘ve got people obviously watching here tonight. If every one of them calls his or her U.S. representative and senators and says, "Don‘t you dare come home without a consumer product agency," at the end of the year, then we‘re going to win.

MADDOW: Common wisdom in Washington is that when people slow something down, that‘s the first step toward killing it. And the people who are against the Consumer Financial Protection Agency think that they have succeeded in slowing it down.

But just to be clear you think that the more time there is to debate this, the more likely it will pass because people are so (UNINTELLIGIBLE).

FRANK: Absolutely. Let‘s put it this way. We‘re sort of holding the fort here. And the people attacking the fort - they were the ones on the ground. But the reinforcements are coming.

My advice to the banking industry was, look. I don‘t think you‘re all evil people. You have an important function in the economy. Let‘s work together to make sure this works. Too many of them said, "No, no. We‘re going to beat it." I said fine. Let‘s have this debate.

I think it will be very healthy for the country to have this debate for the average citizen to speak out and talk to his or her representative. No, this bill is getting stronger, not weaker. It is going to get more sensible.

There are some things in it that I thought were excessive. I worked very closely with Elizabeth Warren who is a very creative consumer advocate at Harvard Law School whose basic idea this was.

And yes, I believe that over the next couple months, by the time we vote on this in September, six weeks from now, it‘s going to be a very strong, very effective piece of legislation, because I think part of the problem people in the financial community have, they don‘t understand how angry people are.

Look, you saw it last week, some of the people to whose rescue we had to go in the financial crisis. Now, we didn‘t want to rescue them. We had to rescue the economy and there was no way to, you know, rescue them without - to rescue the economy without them.

They started to go back to their old ways. And I said - Rachel, you were probably too young to remember the radio series. But there was a radio series which began with, "Return with us now to the thrilling days of yesteryear, when the lone ranger rode again."

And I said, these aren‘t the lone rangers. These are the loan arrangers. They‘ve arranged loans and arranged it badly. And if they think that they‘re going to take us back to those thrilling days of yesteryear, they‘re crazy. We‘re going to beat them. I‘d rather work with them. But if it becomes a fight, we‘re going to beat them.

MADDOW: People who work at Goldman Sachs are supposedly going to make more money this year on average than they made in 2007 before the crisis. Is there going to be action from Congress on top of this message?

FRANK: Yes. Tomorrow, the committee that I chair will be voting on a piece of legislation to deal with executive compensation at two levels. First of all, we‘re going to let the shareholders vote on the pay. The problem is that the boards of directors and the CEO 00 they‘re very closely connected. They don‘t have an average (UNINTELLIGIBLE). They shouldn‘t, but they kind of compete.

You know, everybody wants his or her CEO to be above average. It‘s kind of like Lake Wobegon. What we‘re going to do is to pass a law that says if you‘re a public corporation and you‘re spending shareholders‘ money, the shareholders get to express their opinion on the pay. We call it say on pay.

And we believe that will be very effective. Beyond that, we‘re going to tell the Securities and Exchange Commission that they have to, with regard to all financial institutions, investment banks, commercial banks, any financial institution. Here‘s the problem. It‘s not just the amount they pay themselves, it‘s how they do it.

They give themselves incentive bonuses and they work under the general principle of "heads I win, tails I break even." Because if they take a big risk and it makes money, they get some of that money. If they take a big risk and it loses money, then it was a nickel.

Well, if that were the situation you were faced, take a risk and you only get a benefit if it pays off. You lose nothing if it doesn‘t. You‘d have to be pretty dumb not to take too much risk, and that‘s how we got into trouble.

There was this incentive to take too much risk. So we‘re going to let shareholders vote on the pay and give their opinion. And we‘re going to have the Securities and Exchange Commission mandate, refuse to allow any compensation system that has these incentives to make money.

Because, as we said, in 2007, things went good and made money. 2008 - bad year. They didn‘t lose any money. Now, they want to go back to winning. You can‘t have this win, win, win, and breakeven. There has to be a win-lose situation.

MADDOW: Congressman Barney Frank, Democrat of Massachusetts, these are complicated matters that I feel like I understand better after I talked to you about them. Thanks for coming on the show tonight, sir.

FRANK: Well, thank you.