tv Nightly Business Report PBS August 19, 2009 6:30pm-7:00pm EDT
captning sponsored by wpbt >> paul: while consume will see the fit signs of the biggest overhaul othe credit card iustry in two decades, tomorrow, ma are already gettg hit with rate changes and account closures. tonight, a look athe new provisions. >> susie: the he of whole foods lands in the middle the health care bate, saying heal care is not an intrinsic right. but his views ar't jiving with so of the organic grocer's die hard customers. >> paul: tight's "street crique" guest sees performance anxiety gripping t markets this fal he's doug roberts of chann capital researchnd he'll explain. >> the idewas to create a centralid transparent place for buyers and sellers to me together to se assets that they can't sell the public exchanges orther types of plforms. >> susie: he's talki about second mart.
we profi the market maker for rd to trade securities including california iou. >> paul: i'maul kangas. >> sie: and i'm susie gharib. this is "nightly busess report" for dnesday, august . "night business report" is made possible by: this proam was made possible by contributions to yo pbs station om viewers like you. thank you. 7//& >> susie: good eveningveryone. the inteal revenue service today lifted the veil of seccy on a major swi bank. the names 4,500 americans th accounts at u.b.s. were handed over to the tman.
those clients arsuspected of hidi their assets and evading u.s. taxes. one time, those accounts he more than $18 biion. a tentative deal w reached between b.s. and the i.r.s. last week. buthe details weren't made public until now. irs coissioner doug shulman says the agreement sends strong message tall americans, inuding tax eats. we will use all of the enforcement tools at o disposal to purs you. for honest hard workg everyday americs. school teachers, firem, policemen who y their taxes. the message is ao there. wealthpeople can't skirt the rules and hide assets. were going to insure that everyone pays their fa share of taxes. >> susiespeaking of fair shar, late this afternoon, the swiss government annnced its selling s stake in u.b.s. e swiss hope to recoup more an $5.5 billion on that sale
anchanges are coming tomorrow for american consurs. thanks to the credit cd act of 2009, a w set of rules goes into effect. includg, the ability to reject rate increases. but as jeff yastine rerts, it's alreadyaving some uninteed consequences. >> rorter: across the country right now, there arehousands of peopljust like kirk arthur. he keeps several credit rds. and when he attempteto make a small puhase with one of them la weekend, he found it was canceled withouany advance noti. >> there's thafeeling of embarrsment. you feel, oh, what d i do wrong? and en i got angry because i knew i hadn't done athing wrong. and th was the disconnect. i've been a good customer. i pay my balances f on time. >> reporter:rthur's cancellation comes as part oan industry-wide movement to t out ahead of t credit card act 2009. curtis arnold, founder of
cardratings.com, says thnumber of accountbeing cancelled or switched to variable ratesas surged in rece weeks. >> this is crazy. unprecedented thgs that are happing right now. probably a worse casscenario example. not happening to millis and millions oaccount holders, but it is starting to happ, and we're hearg about it anecdolly. >>eporter: starting tomorrow, consumerwill now get their statements 21 days bore paymens due, instead of the current 14 days. and card issuers will ha to give at leas45 days advance notice to rateikes, instead of -days now. second phase of changes come in february withven more protectis for card users. bankrate.com's leslie mcdden says t law is forcing adjustments on issuers a consumers alike. we're weather r we're alrey seeing credit going down,
minimum score requirements going up. so there are some negative conseqnces, but i'm gl to see that consumers have more prections on their credit cards. >> reporter: consumers whoend to carry lar balances, or have inactive accounts, were most likely to see card cancellations. experts say paying down lances will lowerhe probability of seeing a no-notice cancellatn. but as kirk arur's experience ows, no one's immune as card users and card issrs adjust to the w, more regulated landscape of consumer credit jeff yastine, nitly business repo, miami. paul: wall street opened lower in reaction selloffs in overas markets, especially china, as concerns persist that gbal stocks are over- priced. 30 mutes into trading, the dow post a modest 33 point loss and the nasdaq was off points. the mild early downtn attracted buye. then a surge in oil tures on news of a drop in crude inventories trgered aggressive buyi in the energy sector and thatuying in energy helped thgeneral market close in positive territory.
>> susie: a partisan group of senators isn waiting until the suer recess is over to get back to work on healthare reform. finance committee chairman m baucusaid his group of three democrats and three republans ll continue working tomorrow over the phone. and hehinks they'll defy skeptics by rehing a
comprose that can pass the full senate this fall. >> susie: but the c.o. of whole foodis speaking out agnst health care reform. john mackey says the obama reformlan would become ssive entitlement program. laid out his views last wee in aighly critical op-ed piece in the "wall street urnal." as stephan dhue reports, those views have landed him in aeap of trouble, th some loyal cuomers. >> rorter: whole foods is better known for its organic a natural productshan for its polics. the brand appeals to shoers who want sustainable seaod and environmenlly friendly foods. but c.e.o. jn mackey's editorial against so-cled obamace has tarnished the chain for people like mark rosenthal. he started a "boycott whol foods" group foreople wh disagr with the c.e.o.'s health care views. >> whole foods builtheir brand onffering progessives, especiallyxtra value for their product, cut t principles that
mackey was espoung. make me think, this is nothe company i thout i was suorting. >> reporr: the group, started last friday, already has6 thousand members ofacebook and is ao spreading the word on twitter. at first whole foods rponded that the oed was mackey's rsonal view. but in a statent today, the company says it brding expert robert passikoff sayshe emotional reaction to e c.e.o.'s op-ed will cost t company. >> these days, ithis economy, a loyal customeran be worth quite a bit of money, if you even just extrolate out againsthe people who felt angry enough to list tir names on the facook boycott page and multiply that out times thei week buys, that adds up to a lot of money. >> reporter: financial anasts doubt the sue will derail the company's long term prospes.
ma shoppers, like erin gray, won't change their spping habits. >> is almost unamerican to boycott somethg simply because you digree with what they have to say, as long as what mebody saying is t offensive then i don't see the int in a boycott. >> reporter: whole foods i already grapplinwith selling premm products in a recession economy. alysts say while this may no have a huge impact, iton't help. stephanie dh, "nightly busine report", washington. >> paul: it's been said at at some priceany trade will clr. but that doesn't always mean it's easy to matchellers with woulbe buyers. now the's a new marketplace which hos to be the match- maker for those tough trades scott gurvey tak a look. >> repter: got a white ephant you'd like to get rid of? th is the place to bring it. second mart looks like your standard wall street trading floor. but it brings together buyer and sellers willinto trade otherwisilliquid assets. barry lbert founded
second market in 24. >> we started f with something lled restricted stock and warrants in public cpanies. and then we add eight new markets over the past fourears ranging from sething called auction rate securitieto privatcompany stock and even recently the california o.u.s. >> reporter: this is notbay. buyers musmeet regulatory andards for sophisticated instors, those permitted to buy unlisted securits. second market works cooperatively with t s.e.c., finra, sc and other regutors. and it arrges the escrow and legal paperwork on all sales send market collects a transaction fee on successl tres, making twenty million dollars in 2008 on 1 blion dollars wortof transactions. >> there's trillns of dollars oflliquid assets out there. we're involv in things like the toxic assets which are mortgage backed secuties and c.d.o.s. d just because they're illiquid doesn't mn that they're diressed or not a good investment. so things like prite company stock, which is gointo be an active mket for us in good times and d times will
obviously improve the economy improves, whereas the toxi assets we certaiy hope to help cln out the system and then move on. >> reporter: timonnolly of corpore strategies turned to second market when he need to raise cashor the family trust and pension funds he manag. the assetsere auction rate securities but, because the credit market freeze, the were no auction secondarket found a buyer in two weeks. in this case, it was a buye who managed a largnumber of i.r.a.s and the peop in the i.r.a.s got a tremendouseal because the r.a.s can be patient and at was pension pl money that could wait to be paid off. all these i.r.a.s got it at discount, they g a small fee d we got our liquidity back. it word just perfectly. >>eporter: there are no financial restrictions o sellers, butf course some assets are stillore illiquid thanthers. >> we get inquiries people trying to sell things ngg
from an ice skating ri to sets, mines in siberia, fortunately, we have bers for lots of sets, unfortunately, some of the morenique one we don't have buyers r, not yet. >> reporter: whi is a shame because i have a bridgi'd like to sell. scott gurvey, "night business report new york. >> susie: tranortation secretary ray lahoodromised todathat auto dealers participating in "cash for clunkers" will be id. the mments came as a new york dealer group said halff its 425 members ha pulled out of
the progra because they haven't been rmbursed. so far only about 2% of unkers claims have been paid. lahood blames the lays on paperwork mistakes and shortage of stafto process the clms. the secretaralso said, later this week hel detail plans for winding down the %3 biion program. meanwhile, chrysr is winding down its lifete warranties starng with its new 2010 models. instead, the automer will provide year, 100,000 mile warranties. the move was prompteby customer cfusion and the inility to transfer the warranty if a used car was sd to another buyer. the new offer covers nrly all vehicles with e exception of a few commercial andiesel- powered trks. chrysl continues to struggle to persuade car shopperso buy its vehicl. ght now, the best-selling ca the "cash for clunkers" prograare toyotas and hondas. paul >>aul: susie, chrysler does make the jp cherokee. it's one of thmost popular clunkers, being traded ifor a rebate.
>> paul: tonig's "street critique" gut says right now the markets are particular sueptible to bad news even with the economic optism we've been seeg. he'soug roberts chief investment strategist at chael capital resear and author of "flow the fed to investment success." doug welcome tthe progra >> thankou, paul. >> pau on wall street we saw g selling on mony followed by modest comebacks yesterda and toy. what is your take onhe current market? >> right now we've come long
extremel, from period in degree of pessimism. people tught the world was falling apart. now we've bn fueled by basically better than expected earnings and ao better than expected economic news. althou thebsolute news hasn't been particurly good, it has beenetter than expect. we're now seei a few chings in the armor that a appearing as news throws doubt on t question. the question ihow much of a unce we'll be geling, and that's what you'reeeing over the st couple days. >> paul: so you're not a full-fledgedull by a means, are you? >> no. i thk i c be bulli short-rm. but i think long-term these problemsill take time to work out. paulds i under you're expecting the markets to suffer fm performce anxiety is paul what do you meanby that? >> performance anxty means that the market tendsto go up, you're go have a money magers who will be forced to participatin this to keep thr jobs of there's a saying
on wall stet that if yore wn when everybody else is wn you're not going to get hurt. hover if you're down or lagging when everybody else outpofing, thas a real danger to ur job so, you may have a lot of ney managers who are fced to buy into this market. if itontinues to go up. even if they rlly don't believe that this is a lasng rally. >> pau interesti, and i ink you're right on targ there. tell me abouthat you call ur threeucket appach to investing, what is that? >> well, in this tyf environment where there's a high degree of uncertainty, i believe that investors are to divi their money into three buckets. the first bucket is money that y need immediatel and that should be revery safe, and concerned more with preservation of capital and return of capital th return on capital. then youave yo long-term money whh can be a b more aggressive a long-termith. then the third bucket is real money that you have in the middle a you haveto view tt as more trading money, money that you're going to te profits much more
quickly they arise. >> paul: withthat in md, what is the favorite sector that you have rightow inhe stock market? >> rig now i believe this is government trade, really areas that will than benefiting from the government involvement in the economy. which is incrsingly on life support with gornment help, and that's really thnology, since technology benefits from really the fact that you can replace jobs with soware, with technology solutions, and that's a much cheaper alternative. i think that's going to continue. also you've seen in health care really that's again a government fus, andight now the pharmaceutical industry h determined that they c make money in this environment by lowerg their marketing costs. >> paul: so technology and health care. phmaceuticals. exactly. >> paul: very good, doug, our time is up but i want to thank yofor being with us. thank you,aul, for having me on. >> paul: my guest, dg roberts, chief vestment strategist at channel capital research
susie: tomorrow, 1.5 millio americans may so lose their unemployment benefits, but oy 60% of the outf work are covere we'll explain. >> susie: james lockha, the former heaof the agency that supervised fannie mae and freddie mac, is now turnaround speciast. he is joining ross and compan the new york firm known for restructuringsnd buyouts. untitwo weeks ago, lockhart oversaw fannie and freie as they emerged from counting scandals and guided them as ey becameovernment-chartered companies. >> paul: the food and drug administration is laching its centeror tobacco products. toda the agency announced that doctor lawrence deyt will head that n division. he was t chief public health officer for veterans affai, deyton's deparent will monitor tobacco advertisg and promotions andocus on stopping the illegalales of cigarett and other tobacco products to kids. euu
>> susie: in the money fil tonight so thoughts on boosng the nation's savings rate. here jason zweig, personal finance columnist at thewall street journ." >> ithe economy is to recover, saving will have to come easier. the personal savinrate has official risen to around 5% after hovering close to ze for years.
but, accordi to the federal serve, only 57% of american families saved anyoney in 2007. here are a few ias that might he. tax rends automatically invested in i.r.a.s all tax refunds could be aomatically invest in an ira unless the taxpayer chose to take t refund in cash itead. the money uld go into cheap stock and bond index funds modeled after the thft savings plan ud by federal workers. taxpayers uld be free to trsfer to another i.r.a. at any time, but early thdrawals would penalized. congress should create d.y., or develop & invest in yrself, accounts. i.y.s would be available to any household earng less than the s. median income currently around $50,000. contributions, growtand withdrawals uld all be free of any income tax. the proceeds could be spt only on educati or vocational trning, buying a home or starting a new business. and thu.s. should revive the thrift stamps that encouged savings duri world war i. in tiny increments of 25ents
each, savers fled a card with worth of thrift stamps. filling cards entitled them to a little bond thapaid roughly 3% interesand was worth $1 five years later. in 18 alone, americans saved $1.6 billion this waor nearly 23 billionn today's dollars, 25 cents at a time. saving moris all about making it easier for peop to spend less. i'm jason zweig. >> sus: and finally tonight, forbes magazine is out wh its annual lisof the world's most powerful women. eight out of the top ten are c.e.'s, while two work in government. angela merkel, germany's chancellor tops the li for the fourth csecutive year. f.d.i.c.hairman sheila bair is the runner up, for her leadership role duri the current econic crisis. also in thtop five are: all 3 were also on last year top ten list. and thc.e.o.'s of kraft foods, dupont, wellpoint, are and sunoco roundut the top ten li.