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CNBC EXCLUSIVE: CNBC TRANSCRIPT: CNBC'S INTERVIEW WITH BLACK ROCK CHAIRMAN & CEO LAURENCE FINK ON "SQUAWK BOX" TODAY

WHEN: Today, Thursday, November 13th at 8:00 AM ET

WHERE: CNBC's "Squawk Box"

Following is the unofficial transcript of a CNBC EXCLUSIVE interview with BLACK ROCK CHAIRMAN & CEO LAURENCE FINK, on "Squawk Box" today.

All references must be sourced to CNBC.

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JOE KERNEN: HERE NOW EXCLUSIVELY WITH HIS THOUGHTS ON THE CHALLENGES FACING THE ECONOMY AND POLICYMAKERS IS LARRY FINK, CHAIRMAN AND CEO OF BLACKROCK. HE'S ALSO THE KEYNOTE SPEAKER AT THE EVENT THIS MORNING. LARRY, IT'S GREAT TO HAVE YOU ON, FINALLY, ON "SQUAWK BOX." I WANT TO WELCOME YOU TO THE SHOW.

LAURENCE FINK: THANKS, JOE. NICE TO BE HERE.

KERNAN: YOUR KEYNOTE'S ENTITLED "CREATING OPPORTUNITIES FROM THE CHAOS OF THE CREDIT CRUNCH." CAN YOU JUST SUMMARIZE -- CAN YOU GIVE US SOME OF THE THINGS YOU'RE GOING TO SAY AT 8:30, OR IS IT EMBARGOED?

FINK: IT'S NOT EMBARGOED. YOU KNOW, WE ARE STARTING TO SEE SOME HEALING IN THE CREDIT MARKETS, THE EQUITY MARKETS ARE STILL TRYING TO FIND ITS FOUNDATIONS, BUT IN THE CREDIT MARKETS, I THINK WE HAVE SEEN THE BOTTOM IN MANY OF THE DIFFERENT CREDITS. WE HAVE SEEN IN THE MORTGAGE AREA SOME STABILITY. WE'RE ACTUALLY SEEING STABILITY NOW IN SOME OF THE SUBPRIME AND THE OTHER MORE EXOGENOUS TYPES OF MORTGAGES AND THE CORPORATE CREDIT AREA WE'RE STARTING TO SEE SOME STABILITY NOW. THE STABILITY IS HAPPENING THROUGH, YOU KNOW, THE FEDERAL RESERVE PROGRAMS AND TREASURY PROGRAMS, AND WE'RE ACTUALLY STARTING TO SEE FOREIGNERS COMING BACK INTO THE CREDIT MARKETS. AND SO, A COMBINATION OF THE FORCES AND NOW THE MOST RECENT DEMAND.

STABILITY IS STARTING TO MOVE INTO OUR MARKETPLACE, AND HOPEFULLY, THIS IS NOT JUST A SHORT-TERM PHENOMENA, BUT A LONG-TERM TREND. AND IF WE HAVE THAT, I THINK WE'RE GOING TO HAVE GREATER STABILITY IN THE EQUITY MARKETS TO COME.

KERNEN: ONE OF THE THINGS THAT WE'VE BEEN KICKING BACK AND FORTH FOR A COUPLE OF DAYS NOW IS THE GOVERNMENT STARTS, IT GETS INVOLVED, AND THEN IT GETS INVOLVED AND MORE INVOLVED AND MORE INVOLVED, AND IT'S JUST A -- IT'S SORT OF A SNOWBALLING EFFECT. YOU WOULD SEEM TO BE SAYING THAT EVEN IF IT DOES GET -- IF WE GO TOO FAR IN THE DIRECTION OF INVOLVEMENT, WE NEEDED THAT INITIAL INVOLVEMENT, AND EVEN THOUGH WE MAY BE TOO INVOLVED AT THIS POINT, THAT'S WHY WE'RE STABILIZING?

FINK: YEAH. WE DEFINITELY NEEDED THE INVOLVEMENT, ESPECIALLY IN THE SHORT-TERM AREA. EARLIER IN YOUR PROGRAM WHEN YOU TALKED ABOUT THE COMMERCIAL PAPER PROGRAM -- WE HAD A MARKET ABOUT TO BE TOTALLY FROZEN. WE SAW YOUR PARENT, GE, NEEDING TO GO TO THIS WINDOW. WE NEEDED TO RAISE NEW EQUITY. THIS WAS BECAUSE OF THE FREEZING OF THE SHORT-TERM MARKETS BECAUSE OF THE COLLAPSE OF THE MONEY FUNDS IN SEPTEMBER. BECAUSE OF THESE NEW FEDERAL RESERVE PROGRAMS, WE'VE SEEN IN THE COMMERCIAL PAPER MARKET STABILITY, AND WE'RE NOW SEEING INFLOWS BACK INTO THE MONEY MARKET FUNDS, AND THE FLOWS IN THE MONEY MARKET FUNDS ARE NOW, YOU KNOW, SUPPLYING CREDIT NOW TO CORPORATIONS. AND SO THAT THE GOVERNMENT INVOLVEMENT IN MY MIND WAS VERY NECESSARY TO RECALIBRATE THE MARKET, TO GET THE MARKETS LESS FRIGHTENED AND LESS FEARFUL AND ALLOW PORTFOLIO MANAGERS TO BEGIN ACQUIRING MORE COMMERCIAL PAPER, EXTENDING MATURITIES, AND THROUGH THAT, ALLOWING MORE CREDIT AVAILABILITY TO CORPORATIONS. SO, THERE WAS A GREAT EXAMPLE WHERE GOVERNMENT INVOLVEMENT WAS NECESSARY AND QUITE HELPFUL. IN TERMS OF THE MOST RECENT INVOLVEMENT, THIS IS AN EVOLVING STORY, BECAUSE WE'RE WAY BEYOND THE CRISIS OF WALL STREET. WE'RE BEGINNING THE CRISIS OF MAIN STREET, AND WE'RE TRYING TO MINIMIZE THOSE IMPACTS THROUGH THESE NEW GOVERNMENTAL PROGRAMS AND ACCESS TO GOVERNMENT MONEY IN DIFFERENT INDUSTRIES. WE WILL FIND OUT WITHIN MONTHS WHETHER THIS IS THE PROPER PATH TO TAKE. IT IS MY BELIEF THE PRESIDENT-ELECT'S ECONOMIC TEAM ARE GOING TO HAVE TO DO MORE THAN JUST RESTABILIZING OUR COMPANIES IN AMERICA. WE'RE GOING TO NEED TO CREATE DEMAND, AND DEMAND ESPECIALLY IN HOUSING. AND THE ONLY WAY WE'RE GOING TO BE ABLE TO CREATE DEMAND IS TO MAKE HOUSING MORE AFFORDABLE. NOW, WE'RE SEEING AFFORDABILITY IMPROVE DUE TO THE DECLINING PRICES, AND THAT'S CAUSING STRESS WITH THE HOMEOWNERS AND THE PEOPLE WHO HAVE NEGATIVE EQUITY, BUT WE'RE GOING TO NEED TO CREATE PROGRAMS IN WHICH NEW PLAYERS, NEW BUYERS, NEW HOMEOWNERS, NEW FAMILIES ARE BACK ACTIVELY TRYING TO BUY A HOME INSTEAD OF RENTING, AND IT IS MY OPINION, THE ONLY WAY THIS WILL OCCUR IS THROUGH A FEDERAL PROGRAM TO LOWER INTEREST RATES FOR MORTGAGES. VERY SIMILAR TO THE MORTGAGE PROGRAMS WE HAD AFTER WORLD WAR II, WHEN OUR VETERANS CAME HOME, THE VA PROVIDED A VERY DISCOUNTED MORTGAGE. AND THROUGH THAT PROGRAM, WE REALLY STIMULATED OUR ECONOMY. YOU KNOW, WE WENT FROM AN ECONOMY IN THE WARTIME PERIOD OF BUILDING, YOU KNOW, MACHINERY AND MILITARY ITEMS TO AN ECONOMY THAT WAS MUCH MORE CONSUMER-ORIENTED, AND IT WOULD REALLY BLOSSOM BECAUSE OF THE EXPLOSION IN HOME OWNERSHIP AFTER WORLD WAR II. I BELIEVE WE'RE GOING TO NEED TOCREATE THE SAME TYPE OF DEMAND COMPONENT THROUGH A LOW INTEREST RATE MORTGAGE PROGRAM.

BECKY QUICK: THAT PROGRAM THAT YOU'RE MENTIONING, LARRY, WAS THROUGH THE VA. DOES EVERYONE QUALIFY THIS TIME AROUND?

FINK: I THINK WE'RE GOING TO HAVE TO HAVE IT MUCH MORE OPEN TO THE GENERAL ECONOMY. I THINK THROUGH A LOWER MORTGAGE PROGRAM, THOSE WHO HAVE THE ABILITY TO REFINANCE AT A LOWER INTEREST RATE, THEY SHOULD BE ABLE TO DO THAT, AND THAT WILL RESTIMULATE THEIR ABILITY TO BUY MORE ITEMS OR TO SAVE MORE MONEY AND TO FEEL MORE COMFORTABLE. FOR THOSE FIRST-TIME HOMEBUYERS, WHICH THERE ARE GOING TO BE MANY OF THEM, BECAUSE WE DO HAVE A GREAT DEAL OF FAMILY FORMATION, THEY'RE GOING TO BE ABLE TO HAVE A MUCH MORE AFFORDABLE HOME. AND THROUGH THAT NEW DEMAND, IT WILL RESTABILIZE EQUITY IN HOMEOWNERSHIP AND IT WILL HELP SOME OF THE HOMEOWNERS WHO ARE SITTING WITH MORTGAGES THAT MAY BE ABOVE THEIR EQUITY VALUE, AND IT WILL CREATE THE STABILITY THAT WE NEED TO RECALIBRATE AND STABILIZE OUR ECONOMY.

QUICK: LARRY, YOU SAID SOMETHING THAT'S VERY TANTALIZING TO A LOT OF PEOPLE. YOU SAID YOU THINK THIS GREATER STABILITY IN THE EQUITY MARKETS IS COMING, BUT YOU ALSO SAID THE STABILITY WE'VE SEEN SO FAR IN THE CREDIT MARKETS, IN THE COMMERCIAL PAPER MARKETS, IN THE DEBT MARKETS, THAT CAME BECAUSE OF THE GOVERNMENT INTERVENTION. ARE YOU SAYING THIS STABILITY

THAT YOU THINK IS COMING IN THE EQUITY MARKETS, IS IT ALL RELIANT ON THE GOVERNMENT DOING MORE?

FINK: I DON'T THINK SO. I'M NOT QUITE CERTAIN THIS NEW GOVERNMENT INVOLVEMENT IN COMPANIES WILL HAVE ANY CONNECTIVITY TO THE EQUITY MARKETS. THE EQUITY MARKETS ARE REACTING NOW TO THE INCREASING BELIEF THAT A RECESSION'S GOING TO BE DEEPER, JOB LOSS WILL BE DEEPER, AND IT'S ALL GROWTH, OUTCOME FROM OUR EXPLOSION IN OUR CREDIT MARKETS AND INABILITY TO ACCESS

CAPITAL AND INABILITY TO FINANCE PROGRAMS. FOR OUR EQUITY MARKET TO RESTABILIZE, WE NEED TO SEE LOWER INTEREST RATES FOR OUR CORPORATIONS. A FEW WEEKS BACK, VERIZON RAISED 30-YEAR DEBT ABOVE 9%. IF YOU PUT IN THAT COST OF CAPITAL INTO THE EQUITY MARKETS, AND I BELIEVE THAT'S A PERMANENT, NEW COST OF CAPITAL, OBVIOUSLY, THE EQUITY MARKETS MAY BE STILL TOO HIGH. SO, THE ONLY WAY WE'RE TO REALLY RECALIBRATE AND STABILIZE EQUITIES IS LOWER INTEREST RATES IN CORPORATE CREDITS, AND AS I SAID, IN MORTGAGE CREDITS. IF WE COULD DO THAT, WE WILL HAVE THE STABILITY IN EQUITIES THAT WE NEED TO, I THINK, TO CREATE GREATER STABILITY IN THE CONSUMER SECTOR OF OUR ECONOMY.

JAMES CHANOS (GUEST COMMENTATOR, PRESIDENT OF KYNIKOS ASSOCIATES): WELL, I THINK ONE OF THE PROBLEMS THAT WE NOW SEE IN HINDSIGHT, REGARDING STIMULATING HOUSING AND WHAT THAT MIGHT DO FOR THE ECONOMY, IS THAT WHEN WE HAD HOUSING APPRECIATION OVER THE PAST FIVE YEARS, PEOPLE WENT OUT AND SPENT IT. SO, IT DIDN'T BECOME PART OF THE STOCK OF SAVINGS IT BOLSTERED

CONSUMPTION. AND SO, YOU KNOW, HOUSING BOOM THAT'S FED ON A CONSUMPTION BOOM WAS SORT OF WHAT GOT US HERE IN THE FIRST PLACE. AND GOING BACK TO TRY TO KICK-START THAT WORRIES ME LONGER TERM. OVER THE SHORT TERM, IT MIGHT BE EXACTLY THE TONIC WE NEED. LARRY MIGHT BE RIGHT. BUT I WORRY WE JUST GET BACK ON THE SAME POLICY MISTAKES THAT WE'VE DONE IN THE PAST. AND ONE OF THE THINGS YOU HOPEFULLY LEARN FROM BIG, BIG EVENTS LIKE THE LAST 18 MONTHS IS THAT YOU TRY TO LEARN FROM YOUR MISTAKES, NOT REPEAT THEM.

KERNEN: LARRY, DO YOU HAVE A COMMENT ON THAT, OR ARE YOU READY FOR ANOTHER QUESTION?

FINK: NO, I AGREE WITH JIM. I MEAN, YOU KNOW -- BUT JIM IS SUGGESTING THAT CONSUMERS' SPENDING PATTERNS WILL CONTINUE.

WE SHOULD THINK THAT THIS SHOCK IN THE SYSTEM, THE SHOCK IN HOMEOWNERSHIP DEVALUATION OF VALUE IS GOING TO REORIENT THE

CONSUMER TOWARDS A GREATER AMOUNT OF SAVINGS. SO, HOPEFULLY, THIS EXPERIENCE AND THE JOB LOSSES THAT WE ARE GOING TO HAVE BECAUSE OF THE PAST 15 MONTHS IN OUR CREDIT CRISIS WILL CHANGE CONSUMER BEHAVIOR, AND MAYBE WE'RE GOING TO HAVE TO -- YOU KNOW, OUR REGULATORS, OUR LEADERS ARE GOING TO HAVE TO SPEAK LOUDLY ABOUT SAVINGS SO WE DON'T GET BACK INTO THE SAME RUT THAT WE HAVE BEFORE. BUT WE NEED TO FIND A WAY TO STABILIZE HOUSING, BECAUSE I STILL BELIEVE TODAY HOUSING VALUATION IS THE FOUNDATION TO OUR ECONOMY.AND IF WE CAN RESTABILIZE HOUSING, WE COULD THEN BEGIN STABILIZATION OF OUR OVERALL ECONOMY.

KERNEN: IF WE COULD STABILIZE HOUSING, WOULD THAT -- THEN WE WOULDN'T NEED TO -- THE ORIGINAL INTENTION OF THE T.A.R.P., TO MOP UP THE TOXIC ASSETS? WOULD THOSE IMPROVE WITHIN A STABILIZED HOUSING MARKET? ARE YOU OKAY THAT WE'VE LEFT THAT BEHIND NOW AND MOVED ON TO JUST RECAPITALIZING THE FINANCIAL SECTOR?

FINK: WELL, RECAPITALIZING THE FINANCIAL SECTOR WITH THE ASSUMPTION THAT THEY ARE GOING TO PUT THAT $1, 5% EQUITY INTO

THE MARKETS AND LEVER THEIR PORTFOLIO, LET'S SAY SEVEN TO ONE OR EIGHT TO ONE, OBVIOUSLY, YOU'RE GOING TO HAVE MUCH LARGER

BANG FOR THE DOLLAR THAN BUYING A TOXIC ASSET. IF WE CAN CREATE MORE STABILITY IN HOUSING, AND IF WE CAN CREATE MORE DEMAND THROUGH LOWER INTEREST RATES, THAT WILL ULTIMATELY CREATE STABILITY IN THESE TOXIC ASSETS AND MAY CREATE A FLOOR.

ONE ASSET TO UNDERSTAND -- IF YOU USE A CASE SCHILLER INDEX, RIGHT NOW WE'VE SEEN ABOUT A 12% TO 18% DECLINE IN HOUSING VALUES IN THE COUNTRY. WE'RE BUYING THESE TOXIC ASSETS NOW WITH THE ASSUMPTION THAT THERE'S GOING TO BE A 50% DECLINE AND MAYBE AS MUCH AS A 70% DECLINE IN PARTS OF CALIFORNIA. I CLEARLY DON'T BELIEVE WE'RE GOING TO GET TO THAT EXTENT, BUT THE MARKETPLACE IS PRICING THESE ASSETS WITH THAT TYPE OF FEAR. AND SO, IF WE HAVE A BELIEF THAT DECAYING HOUSING VALUES WILL NOT BE AS GREAT, THESE TOXIC ASSETS THAT WE ARE TALKING ABOUT WILL NOT BE AS TOXIC, BECAUSE THE MARKETPLACE WILL START TRADING THEM WITH THE VIEW THAT THE LOSSES WILL NOT BE NEARLY AS SEVERE AS WE ARE TRADING THESE ASSETS TODAY.

QUICK: THAT MAKES A LOT OF SENSE, THE IDEA OF TAKING THAT 5% MONEY, SPENDING IT AND LEVERING IT UP SEVEN DAYS TIME. IS THAT YOUR SENSE OF WHAT'S ACTUALLY HAPPENING WITH IT? IS ANY OF THAT MONEY BEING HOARDED? IS ANY OF IT BEING USED IN OTHER

WAYS? DO YOU THINK IT'S BEING WELL SPENT?

FINK: I DON'T THINK IT'S BEING SPENT, AND I THINK THAT'S THE SHORT-TERM PROBLEM. I DO BELIEVE THIS IS GOING TO BE THE NEXT BIG CONGRESSIONAL ACTION. I KNOW THERE IS SO MUCH DISCUSSION BY THE MEDIA ABOUT EXECUTIVE PAY. I THINK THE MEDIA, I THINK OUR REGULATORS, I THINK THEY NEED TO FOCUS ON HOW WE ARE PUTTING THIS MONEY TO WORK TO RESTABILIZE THE ECONOMY. TO ME, THIS IS THE NUMBER ONE ISSUE. I THINK IT'S MORE OF A MEDIA SHOW ABOUT EXECUTIVE COMP AND I'M NOT TRYING TO SUGGEST IT'S NOT IMPORTANT, BUT I THINK THE MOST IMPORTANT ISSUE RELATED TO THE T.A.R.P. IS GETTING THAT MONEY TO WORK AT A LEVERAGED

RATIO OF SEVEN TO TEN TIMES AND PUTTING THAT MONEY TO WORK, THAT WOULD HELP THE STABILIZATION OF OUR ECONOMY AND OUR CREDIT MARKETS.

KERNEN: WHO WOULD YOU LIKE TO SEE -- WE'VE GOT TO RUN, LARRY. I KNOW YOU'VE GOT TO RUN, TOO. WOULDN'T IT BE GREAT IF WE KEPT HIM PAST 8:30, FOR HIS KEYNOTE ADDRESS? WE'RE NOT BEYOND DOING THAT WHO DO YOU LIKE FOR TREASURY SECRETARY, LARRY? DO YOU HAVE A PICK?

FINK: WELL, I THINK THE TWO CANDIDATES THAT ARE BEING DISCUSSED OPENLY, AT LEAST IN THE MEDIA, TIM GEITHNER FROM THE NEW YORK FED AND LARRY SUMMERS ARE BOTH GREAT CANDIDATES. YOU KNOW, I'VE WORKED VERY CLOSELY WITH TIM. HE WOULD BE A VERY CREDIBLE, CAPABLE SECRETARY OF THE TREASURY. LARRY SUMMERS HAS PLAYED THAT ROLE, HAS A VERY STRONG UNDERSTANDING OF OUR ECONOMY, AND COULD DO A VERY GOOD JOB. SO, I THINK BOTH CANDIDATES ARE GOOD. I THINK ONE IS MORE OF AN ECONOMIST IN SCOPE AND THE OTHER ONE'S MUCH MORE OF A TACTICIAN, AND SO, THE QUESTION IS, ARE WE GOING TO NEED MORE OF A TACTICIAN? AND THAT TACTICIAN IS MORE OF A TIM GEITHNER, AND I'M NOT TRYING TO SUGGEST HE IS NOT ANY LESS OF AN ECONOMIST, BUT I THINK THEIR SKILL SETS ARE SOMEWHAT DIFFERENT, AND I THINK THE ECONOMIC TEAM FROM THE PRESIDENT-ELECT WILL HAVE TO COME UP WITH A DETERMINATION WHAT IS MORE NECESSARY AT THIS TIME.

KERNEN: MR. FINK, WE REALLY APPRECIATE IT, AS I SAID. WE KNOW YOU'VE GOT TO RUN. THANK YOU FOR TALKING TO US IN AN EXTENDED FASHION THIS MORNING.


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