>> tom: debt limit deadlock-- with only 12 days until the u.s. loses its ability to borrow, time is running out. and lawmakers still can't agree on a budget deal. >> it's a very simple metaphor that i use-- if you're trying to reform a drug addict, you don't give them more drugs. >> susie: what would a u.s. government default mean for regional banks? we'll ask b,b&t bank c.e.o. kelly king. it's "nightly business report" for thursday, july 21. this is "nightly business report" with susie gharib and tom hudson. "nightly business report" is made possible by:

this program is made possible by contributions to your pbs station from viewers like you. thank you. captioning sponsored by wpbt >> tom: good evening and thanks for watching. we're a few hours away from an important deadline-- july 22. that's the date president obama originally wanted to have a debt-ceiling deal hammered out. but, susie, it looks like that's not going to happen. >> susie: tom, democratic congressional leaders are at the white house tonight meeting with the president. house speaker john boehner thinks a majority of house republicans will end up supporting some kind of compromise to avoid a government default. >> tom: despite boehner's predictions, the only thing that's certain about the borrowing limit fight is, right now, there's no final agreement

in place. but as darren gersh reports, behind the scenes, there are signs progress is being made. >> reporter: listen hard and you'll hear a new tone in washington. there's a growing fear the united states might actually tip into default, and that has given house republicans a new sense of urgency to reach an agreement to keep that from happening. >> we have a debt ceiling that has to be raised, and if we don't deal with the size of our debt, our credit rating is going to be downgraded. if the united states of america's debt rating gets downgraded, every interest rate in america will go up. it is important for us to act on both fronts. >> reporter: the situation is fluid and could change quickly, but sources close to the debt limit talks say the most likely option is what could be called "big deal lite." it would include initial spending cuts in the $1 trillion range, enough to extend the debt

limit by at least six months. lawmakers would spend that time working on a tax reform that would increase revenues, and additional cuts in entitlement programs like medicare, medicaid and social security. together, that would trim $1 trillion to $2 trillion more from the deficit. if those talks fall apart, the fallback is a short-term debt limit extension. but the white house opposes that, calling it bad for the economy. >> it only furthers the uncertainty that is already a drag on the economy, the doubt about whether or not washington can get its act together. >> reporter: it is clear the prospect of default is beginning to concentrate minds. tea party favorite allen west today tried to tamp down investor concerns. >> i don't think we're going to have to worry about the armageddon scenario that everyone tries to hang over the heads of the american people. that's very frustrating for them, that's very frustrating for me. >> reporter: but tea party supporters in the senate have vowed to filibuster a debt limit agreement, and it's possible time has already run out to

avoid a one- or two-day technical default by the united states. >> and the results of that, as dr. bernanke said, will be at least chaos and could even be catastrophic, because once you've breached that trust, you've breached that trust with every investor in the world. >> reporter: the best hope now is for the least worst deal possible. that means bond investors won't love what congress produces, but they won't be greatly disappointed in it, either. darren gersh, "nightly business report," washington. >> tom: stocks surged on optimism on a debt deal here and in europe. at the close, the dow finished 152.5 points higher, the nasdaq added 20, and the s&p 500 up 18 points. eurozone leaders have agreed on a sweeping deal that will grant greece a massive new bailout, and make radical changes to the currency union's bailout fund.

the eurozone countries and the international monetary fund will give greece an additional $155 billion. banks and other private investors will contribute $53 billion to the rescue package by either rolling over greek debt, swapping it for new bonds with lower interest rates, or selling the bonds back to greece at a low price. >> susie: a year ago today, wall street got a new rulebook. president obama signed the dodd- frank financial reform and consumer protection act into law. the goal of the massive 2,300- page legislation was to stop another financial meltdown like the one we saw in 2008, before it happened. but a year later, the vast majority of changes, including structural changes to how big banks do business, are yet to come. nearly half of the 243 new rules mandated by the law were supposed to be finalized by now, but regulators have completed fewer than 50. testifying before a senate committee today, federal reserve

chairman ben bernanke says implementing the new rules will take time. >> a full transition to the new system will require much more work by both the public and private sectors and, no doubt, we will learn lessons along the way. >> susie: one new process is in place-- the consumer financial protection bureau officially launched today as an independent agency to regulate credit cards, mortgages, and other financial products. our next guest heads up the nation's ninth largest bank and will be dealing with those new rules. he's kelly king, c.e.o. of bb&t. >> nice to have you on the program this evening. >> nice to be with you. >> you're going to be facing the new rules, whether it's the dodd frank or consumer protection agency. what impact is this going to have on your banking business. >> i think there will be a number of ramictions of all of this. in terms of the dodd frank act

as was just talked about, very few of the rules explain and all the details written. so at this point, the biggest issue around dodd frank is we have a freight amount of sun certainty. we don't know exactly what we have to do to comply with them, and also with the consumer bureau, we don't know what's going to happen there. body things in the banking system, and supervision. and that maybe would be a good outgrowth of that. >> emily: isn't it going to eat into your earnings? >> absolutely. any additional fees and requirements will increase our calls, and reduce earnings and make it more difficult to make loans. we have to be careful careful about this, this can be very

problematic to create jobs which is what we like to do. >> net income up 46%, and loans up 3%. tell us about the demand for loans. >> the demand is soft. in the first quarter is started out strong, and ended up soft. it did start to accelerate. for example, our commercial loans point to point begining to the end of the quarter were up, but in all honesty, we're moving a lolt of market share. loan demand is tepid. >> emily: tell us a little bit what you're hearing from consumers, and from businesses.

you operate 1800 branches across the southeesh part of the country. what are they telling but plan for hiring and business investment and their sense of >> i do a lot of traveling and talk to people in all walks of life, and they are other than cashed what's coming out of washington and very concerned about the economy. they're concerned about all the rules and regulations in terms of what it does for their business. all of this is creating uncertainty, and the natural reaction for them is to be very careful about their expenses they're waiting for positive leadership before they will invest. >> if there isn't some kind of agreement or deal by august 2nd what kind of impact is that going to have on the

banking system and the economy? >> let's hope and pray we have a resolution. if we were not. it would be very bad, and simply hope the folks in washington realize they're playing with fire. if you did not see this. you would see a downgrade with bonlds that would rock the systemarn the globe. irvariably that would increase -- almost certainly throw us into a double dip recession of major magnitude. this is a very serious matter and needs to be resolved very quickly. >> let's hope that that happens. thank you so much for coming on the program. we really appreciate it. >> thank you so much. have a good evening. >> emily: we've been speaking with kelly king, the ceo of bb & t. >> tom: some of the nations big airlines have been flying high this summer.

today, united-continental reported its second quarter earnings were up a little more than 4% compared to the same time last year. u.s. airways profits jumped a little less than 5%. both airlines made money, despite skyrocketing fuel costs. but as diane eastabrook reports, they could have trouble repeating that performance in the coming months. >> reporter: since the beginning of the year, business and leisure travelers have been shrugging off the sour economy and flying the friendly skies. through april, the number of u.s. airline passengers increased a little less than 2% versus the same period a year ago. and thanks to several fare hikes, airlines made more money, too. revenue passenger miles, a key metric that shows the number of miles flown by paying passengers, jumped 2.5%. but getting passengers to pony up more to fly is getting harder. fitch rating analyst bill warlick says more recent attempts to raise fares have fallen flat with consumers >> i think we're reaching a point where fare traction is slipping. with the consumer under pressure

and business demand still somewhat weak, the fare environment clearly isn't strong enough to support multiple fare increases. >> reporter: that puts airlines in a very precarious position heading into the fall, when travel usually tapers off. american, united-continental, and u.s. airways all said their earnings were negatively affected in the second quarter by a nearly 50% increase in fuel costs. warlick says if jet fuel prices keep soaring, with fewer passengers flying, airlines may be forced to trim capacity or make cuts in other areas. >> you haven't seen a large number of cost initiatives of that kind so far in 2011 but, certainly, with another round of capacity cuts, you could see an impact on labor and some of the other line items. >> reporter: experts say fuel will continue to be a wild card for airlines. carriers are trying to rein them in better by purchasing more fuel-efficient planes. yesterday, american said it ordered 460 new jets that offer between 15% and 30% better fuel

economy than its current fleet. joseph schwieterman studies the transportation industry for depaul university's chaddick institute. he thinks these new planes will determine which carriers survive and thrive down the road. >> in five or six years, it is going to be essential that you have a fuel efficient jet or you just won't be able to compete in the market place. the implications of 5%, 10%, 20% less fuel costs is going to drive fares down relatively speaking. >> reporter: still, it will be a few years before airlines start reaping the benefits of fuel efficient fleets, and that could mean more financial turbulence for the industry in the meantime. diane eastabrook, "nightly business report," chicago. >> susie: still ahead-- as triple-digit temperatures sweep across the country, energy prices have not heated up, even as demand has spiked.

>> tom: corporate earnings and deal-making helped lift stocks. let's get to tonight's "market focus." with the s&p 500 adding more than 1% today, the index is making another run after its july low. we're only about ten points below that level. after the bell, microsoft released strong results-- earnings 69 cents a share, more than a dime ahead of estimates.

pacific crest senior research analyst brendan barnicle credits the better than expected surprise to lower taxes as microsoft is keeping more of its profits outside the u.s. >> those areas have lower tax rates than the u.s. federal rate, and therefore, the rev jews don't get subjected to u.s. federal taxes. they're subjected to the local tax rate which is lower. and the overall taxes benefit from that, and it looks like the trentd will continue to next year. >> tom: the strongest sales gains were in two business units-- entertainment and devices, and its online services. shares rose just a fraction ahead of the earnings. financial stocks were the strongest, but insurance firm genworth continued sinking, falling more than 13%. the drop takes genworth to a new 52-week low. the company warned it lost money last quarter as it sets aside more cash to make up for mortgages going bust. that warning hit other mortgage

insurers. radian group, mgic and mbia each fell. radian and mgic hit new 52-week lows. morgan stanley was the best financial stock, rising more than 11%. volume more than tripled. this stock was at a 52 week low on monday. the bank lost only about half as much as analysts had feared in the second quarter. revenues were strong, thanks to underwriting several hot initial public stock offerings this spring. a big deal in pharmacy benefits management. express scripts will buy medco health for just over $29 billion in cash and stock. medco shareholders will get just over $71 per share. medco was one of the most actively traded issues today, up 14%. it closed shy of the buyout price, perhaps reflecting some concern about getting the necessary regulatory approval.

still, the deal got an endorsement with the buyer's stock price moving higher. express scripts added 5%. five years ago, express scripts tried unsuccessfully to buy caremark. instead, drug store cvs bought it, creating cvs caremark. its shares were up 2%, while competitor walgreen dropped 5%, dropping below $40 for the first time since march. and that's tonight's "market focus."

>> tom: from swimming pools to ice cream shops, a huge section of the united states continues looking for ways to beat the record heat. between tomorrow and sunday, about two out of every three americans will be dealing with heat indices in the triple digits. millions of air conditioners have increased demand for electricity, but the price of a key fuel for that electricity has not boiled over. power utilities that have had to buy natural gas right away to meet spikes in demand this week have seen higher prices but, overall, natural gas futures are cheaper this summer compared to a year ago. rod krukro is chief editor of electricity for trade publisher platts. >> one reason is there was so much what they call demand disruption during the recession of 2008, and much of that has not returned. so the level at which consumers were demanding electricity, say, in 2005, 2006 or 2007 is not the same today in 2011, and it may not be back to that level for another year or two. >> tom: crops and livestock from texas to the upper midwest are suffering. joe white is watching his corn

fields in northern illinois. >> it is starting to show signs of stress. the corn leaves are starting to roll in the afternoon, and then we are starting to see soybean plants wilt in the early afternoon. so that's an indication that it's under stress. >> tom: corn prices are much higher than last summer, but they haven't jumped significantly since the heat wave blew in. one industry that may welcome the high temps is the movie business, hoping people seek a dark theater to cool off. compared to this time last year, box office revenues are down 7%. >> susie: coming up, putting all that hot sun to use, by building, designing and operating a house that runs on solar power. we'll show you who's giving it the good old college try. and coming up tomorrow, our "market monitor" guest likes consumer staples, technology, and healthcare stocks. he's kurt reiman, head of thematic research at ubs wealth management research americas. we'll also see quarterly results from general electric,

honeywell, verizon, and xerox. caterpillar is out with earnings, too. we'll go inside the numbers to see what they tells us about the global economy. the federal aviation administration faces a partial shutdown this weekend due to a subsidy showdown on capitol hill. lawmakers have yet to agree on a short-term extension of the faa's operating authority. a deal is being held up over union rights and funding for rural airports. the faa says 4,000 workers could be furloughed on saturday, but airport screeners and safety inspectors would not be affected. >> tom: america's taxpayers are off the hook when it comes to chrysler's government loans. the treasury department's sale of its remaining stake in chrysler is complete. fiat is now the majority owner in chrysler. the government committed a total of $12.5 billion to chrysler as part of the auto rescue. to date, treasury says it's gotten back just over $11 billion. officials say it's unlikely to recover the remaining $1.3 billion.

>> susie: creating cost- effective, energy efficient homes. it's a tall order, especially when you up the ante and say those houses have to be attractive. college students will compete to build them this fall.

tonight, we continue our series, "planet forward," a partnership with the george washington university social media project using your ideas to power our future. frank sesno takes us behind the scenes on the race to build the best solar home. >> reporter: when you hear "decathlon," you think of this-- ( gunshot ). but every two years, teams of a different sort of decathletes from all around the world are gathering in washington, d.c. meet the team from middlebury college in vermont. they've been submitting videos to planet forward in the run-up to the solar decathlon this september. the u.s. department of energy sponsors the contest. 20 college teams have to design, build and operate solar-powered houses. >> we just raised the last section of the south wall. >> reporter: the house-- a super-efficient 1,000 square feet, reminiscent of a new england farmhouse, insulated with spray-blown cellulose composed of 80% recycled

materials. >> it's actually an architect's and engineer's dream to start with a clean sheet of paper, and use that creativity and ingenuity to come up with a house of the future, an energy efficient house that is powered entirely by the sun. >> reporter: richard king is the creator and director of the solar decathlon. >> it's not just a paper design competition, if you know what i mean. they actually have to build it, bring it to the national mall in washington, and demonstrate that it works. you not only need the engineers and architects to design the core of the house, but interior decoration, the lighting, the furniture, the cabinetry. also, they need to communicate and raise the money for it. so its like a small business. >> reporter: serious business for the university of maryland, college park. in their fourth solar decathlon, they've named this year's house "watershed." >> so, normal solar decathlon houses are all requited to do

everything powered by the sun, but our house has an extra measure-- our house cares for the way that we handle water. one of the innovations that grew out of the 2007 effort was what we call the liquid desiccant waterfall. the water is actually a working fluid, and this water runs in a closed waterfall in the house, and when air is drawn over the flow, it draws humidity out of the air. and we have received hundreds and hundreds of indications of interest from businesses and homeowners, thinking "this is something i need in my home." and so the team that researched and designed that device filed for patent to try to take our lessons learned and make a marketable prototype. >> reporter: there's the hope that a green energy breakthrough could come from one of these houses. >> what's good for america is to grow these green businesses and industries. if i owned a business, i would want to hire these students to give me a jump on the competition and make my business grow. >> reporter: this year's solar

decathlon features large universities and small colleges. middlebury's design capitalizes on efficient design and materials and, of course, the sun, from south facing windows to the latest in solar panels, enough to power a family of four in 21st century style. for planet forward, i'm frank sesno. >> tom: finally, it's the end of an era for space travel. the space shuttle program had its final landing shortly before sunrise today in florida. the space shuttle "atlantis" will remain on display at the kennedy space center. the long-term destination for nasa is now true outer space-- sending astronauts to an asteroid by 2025, and to mars the following decade. susie, private companies will take over trips to the international space station. that's "nightly business report" for thursday, july 21. i'm tom hudson. good night, everyone, and good night to you, too, susie. >> susie: good night, tom. i'm susie gharib. good night, everyone. we hope to see all of you again tomorrow night. "nightly business report" is made possible by:

this program was made possible by contributions to your pbs station from viewers like you. thank you. captioning sponsored by wpbt captioned by media access group at wgbh access.wgbh.org >> be more. pbs.