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CNBC Exclusive: CNBC Excerpts: Federal Reserve Governor Daniel Tarullo Sits Down with CNBC’s Steve Liesman on “Squawk Box” Today

WHEN: Today, Wednesday, April 5th

WHERE: CNBC's "Squawk Box"

Following are excerpts from the unofficial transcript of a CNBC EXCLUSIVE interview with Federal Reserve Governor Daniel Tarullo and CNBC's Steve Liesman on "Squawk Box" (M-F, 6AM-9AM ET) today, Wednesday, April 5th. Following are links to the video on CNBC.com:http://video.cnbc.com/gallery/?video=3000607629, http://video.cnbc.com/gallery/?video=3000607627 and http://video.cnbc.com/gallery/?video=3000607624.

All references must be sourced to CNBC.

TARULLO ON JEFFREY LACKER

What's most important is that when there are problems seen, when there are potential problems with the rules we've established for the confidentiality of FOMC information, that the responsible parts of the Fed, whether it's Reserve bank board or the board itself, take action to show that those are important rules and I think that is what has happened.

TARULLO ON VOLCKER RULE

The way in which it was implemented, and frankly the way in which the agencies chose to try to implement the statute, was very much done in good faith, but I think it's proven to be clunky. The effort to infer the intent of the traders from quantitative metrics was something that might have worked but I don't think it has worked.

TARULLO ON ADP

Traction in the economy really seem to have taken hold with respect to job numbers, but other data as well. And so I think while one never wants to put too much emphasis on any single number, the ADP number today probably is another piece of evidence confirming the solid trend of growth in employment and I think it probably arguers well for second quarter growth as well.

TARULLO ON THE BALANCE SHEET

Balance sheet has always been a little bit in the background and people understood that we need to think about how the balance sheet would be reduced over time. The question has always been, how one pairs that with interest rate normalization. And I think under the circumstances, with the kind of data that we're talking about, from my perspective at least, it is sensible to begin thinking now about balance sheet moves.

TARULLO ON STRESS TEST

We have been refining, modifying the stress test virtually every year since we put it in place in an effort to move from a post-crisis program to a more or less permanent program. And so what I suggested yesterday is just as we have already done for banks with less than $250 billion in assets, we should probably now be thinking about phasing out the qualitative side of the stress test.

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