the new york federal reserve. he sounded an early warning with british and u.s. regulators about weaknesses in the bank-to- bank lending rate known as libor. it's a key global interest rate and one which traders and banks are accused of manipulating. darren gersh reports members of congress aren't convinced geithner did enough. >> reporter: back in the spring of 2008, geithner says he sent a detailed memo to the bank of england warning that it needed to reform the way british bankers came up with the libor rate. >> we were aware of the risk that the way this was designed created not just the incentive for banks to under-report, but gave them the opportunity to under-report and that was a problem. >> reporter: but members of congress said the problem was deeper. >> if they were having structural problems, i thought your email was appropriate. but what was being disclosed here was fraud. >> reporter: geithner argues british bankers set libor and british regulators had the authority to act. >> our first instinct as you might expect at that point was

to go to the british and they said "we agree with you, we're on it." >> reporter: but lawmakers wanted to know why the fed continued to rely on libor. >> which means it appears that you treat it almost as a curiosity, or something akin to jaywalking as opposed to highway robbery. >> reporter: geithner says he took the concerns seriously, and that he personally raised libor with the governor of the bank of england. >> and we felt, and i still believe this-- that it was really going to be on them to take responsibility for fixing this. >> reporter: geithner also briefed u.s. regulators on the problem, but republicans wanted to know why he didn't brief the justice department and congress. darren gersh, "n.b.r.," washington. >> reporter: i'm erika miller. many consumers started buying store brands as a way to save money. still ahead, i'll tell you why they're still remaining loyal to them, even as the economy gets better. "nightly business report" is brought to you by:

captioning sponsored by wpbt >> susie: a disappointing read on new home sales. they fell to their lowest level in five months. sales were off almost 8.5% in june, to just 350,000 units. analysts expected a gain of nearly 2%. meanwhile, median prices on new homes fell just over 3% in june to $232,500. >> tom: strong earnings from two big dow components: boeing and caterpillar helped offset disappointment over that drop in new home sales. as did hopes the federal reserve will soon take action to stimulate the economy, more on that in a moment. the dow closed up 59 points, the nasdaq fell almost nine points, and the s&p down a almost half a point; weakness in apple shares

weighed on both the nasdaq and the s&p. >> susie: as tom just said, there's a lot of speculation that when fed policymakers meet next week, they will announce new steps to rev up the sluggish economy, and boost hiring. our guest tonight believes the fed will do something. alan blinder is a former vice chair of the fed, and now is a professor of economics at princeton university. so, alan, chairman bernanke has been saying that he's been looking for new approaches to fix the economy. will we be hearing something new from him next week? >> it depends what you mean by new. i don't think you be hearing anything very new. although if things get bad, you may hear new things down the road f. they announce anything at all, and i feel it's a 50/50 bet, maybe a little better than that even. i think the most likely thing they would announce is another round of what's called quantitative easing, and this round in mortgage backed

securities. the idea to nudge down mortgage rates again. >> susie: will it give the economy a jolt? >> well, those are two different things, actually. i think tell work. it will probably nudge down mortgage rates a little bit. that will increase mortgage ittivity a little bit. it will create a bit more home building. a jolt is maybe a bit of an exaggeration, but a little bit of a shove in the right direction. >> susie: caterpillar came out with earnings and said they didn't expect nil growth this year. how effective are these policy moves by the fed? will they get businesss to hire? and >> and also the timing.

wore into the end of july, and the fed move will be august 1st. if it announces anything it won't happen on august 2nd, and then there's always lags in the effects of fed policy on real economic activity. it wouldn't be at the end of 2012, it's about 2013 and thereafter. >> susie: what if the fed does nothing? what's the impact of that? >> i think you're going to see a little bit of a disappointment registered in the markets. rates back up a bit here and there, and markets have a way of getting themselves hyperexcited. i'm pulling numbers out of the air, of course, that this is better than 50/50. i think the average bond trader on a trading desk think it's much more likely than that, and therefore would

register disappointment if the fed stands pat. >> susie: you know, all of this raises the question. what kind of shape is the economy in. if the fed is going to step in and takeac, there's a sense many people might be thinking mable the economy is much worse off than we thought. what kind of shape is the economy in from your perspective? i think the mediocre at best. let's put it that way. it looks like we're stuck in a two percent growth rut give or take a little. the first half under two percent, and the second half over two percent. that's not good performance when you have an unemployment rate of 8.2%. the fed is concerned about that, and all of that is assuming this two percent rut, assuming europe doesn't blow sky high, and we don't fall off the fiscal cliff. if either of those happen, we could do a lot worse. >> susie: all right. well, a lot of ifs. alan, thank you for coming in

and explaining it. we appreciate t. alan blinder of princeton university and former vice chair of the federal reserve. >> tom: while we wait for the data on the u.s. economy in the second quarter, britain today reported it continued to be in recession during the second quarter. the u.k.'s economy took a bigger hit than expected this spring, falling 0.7%, between april and june. it marks the third quarter in a row of contraction in the u.k., which has been hit by weakness in the euro-zone region. >> susie: meanwhile china announced some currency moves today to deal with slowness from its exposure to europe, the people's bank of china guided the yuan downward against the dollar for a third day, to its lowest level since november. it's a stark contrast to the central bank's previous behavior, over the past two years, it has been focused on boosting the yuan's value.

>> tom: the global economy may be slowing but its business in north america that is powering some big american manufacturers. caterpillar, boeing and ford were able to shake off weakness in europe, even as the difficulties are expected to continue. >> reporter: caterpillar is the most optimistic of the three. despite flat second quarter sales in europe and a drop in latin america and asia, it still expects this to be a record year. caterpillar earned $2.54 per share last quarter, much stronger than analyst estimates, and a big jump from a year ago. it's construction business illustrates where business is getting done. caterpillar's north american construction equipment sales jumped 42%. they were essentially flat in latin america and europe, and

down 11% in asia, due to what the company described as a large decrease in china. caterpillar was optimistic enough to raise its earnings outlook for the year. but ford continues struggling, cutting its profit forecast as it anticipates to lose more than $1 billion in europe this year. while ford was able to post better than expected earnings in the second quarter, it was solely its north american business that generated its profit. it lost money in europe and asia. ford and caterpillar's global business mix illustrates a larger economic trend. >> the u.s. is definitely the best house on a bad block. and that while we may face challenges and lackluster growth, what we're experiencing in the u.s. is certainly better than what companies are seeing in europe, which inow solidly in recession territory, as well as, in the b.r.i.c. markets where we're seeing greater than expected slowdowns. >> tom: despite the threat of

defense spending cuts by the u.s. government, boeing sees demand growing for its international defense sales, as well as its commercial jet planes. like caterpillar, boeing raised its financial forecast. it expects to ramp up deliveries of its dreamliner 787 next month. as it sped up deliveries of other planes last quarter, boeing earnings were ahead of estimates and up from a year ago. >> tom: ray neidl follows the aerospace and airline industry for maxim group. the nasdaq here, and are u.s. airlines among those picking up with boeing aircraft? >> yes. boeing says today that deals are strong, and that the airlines are growing worldwide despite the sluggish economy, and a lot of the demand is from airlines that want new fuel efficient aircraft which boeing has a supply of both in the narrow body and the wide body areas. >> tom: are they replacing fleets as opposeed to expanding them? >> the u.s. right now is mostly replacement except for the midcarriers.

they're growing. the legacy carriers it's mostly replacement. but worldwide, the airlines are growing faster. and the boeing market, the commercial aircraft are growing. here in the dom airlines they've announced airline hikes as much as $10 per round trip. is it going to help prflts if help profits if it sticks? >> it is. i'm surprised they are doing it in the sluggish season, but it looks like it stuck. >> dropped down as long as oil prices remain where they're at. you mentioned the hub and spokes, traditional carriers delta and us airways had better growth than anticipad. due like any of these? >> it wasn't growth in size. it was growth in earnings. they come across strong, and expecting the same for the third quarter. post labor day, i'm a little more nervous. i'm looking for one or two

percent economic growth in the u.s., and i'm nervous about the tax cut in january. >> and we'll have a good quarter for carriers. >> tom: is us airways going to buy american airlines in the next 12 months? >> i think the probability of that happening nlt next year is 90% to less than 50/50. american wants to go it alone, and they expressed that. it might not be exclusive right. >> tom: a big change in that consolidation. >> and you mentioned the discount space. we've seen better bottom lines than anticipated in the likes of southwest airlines, spirit and hawaiian airlines. >> smaller carriers, different business model. anything to change with the headwinds out there? >> i don't count south southwest because they're not growing right now. but the niche carriers in special iepzed area, alaska airlines, spirit, allegant and hawaiian, are all in areas where they can grow a product

even in a slow economy. and it's reflected in earnings. good margins, flexibility and good growth prospects. >> tom: does it make them ripe for consolidation? >> no. it's a unique model. i don't think consolidation is in the cards for these guys. unless american comes along and wants to buy one. >> tom: do you think it would have the financial resources to do it? >> once american reorganizes, i think they're going to come out a much stronger carrier. at that point financial investmentors will be willing to go to american. >> tom: do you own any of the stocks we mentioned? >> no, i don't. >> tom: the view from the first class seats. ray knight with the following airlines.

>> susie: it's being called the worst drought in half a century, and while it's burning up the nation's corn, wheat and soy crops, retail food prices are holding steady. but the government warned american consumers today that they can expect a big price spike next year, on higher feed costs. the u.s. department of agriculture said beef prices could jump as much as 5% next year. dairy, that's milk, cheese, and eggs could rise by 4.5%. and chicken dinners will also cost more: poultry prices are expected to rise as much as 4%. >> susie: tom, this is the ag department's first food price projections to factor in the drought. >> tom: susie, we saw a big price jump in corn futures today, more on that in just a

moment as we get going with tonight's "market focus." >> tom: u.s. stock indices ended mixed caught between mixed earnings results. the s&p 500 trended lower in the morning hours after new home sales showed a steeper than expected drop in june. the market caught a bid into the mid-afternoon, before ending essentially unchanged. trading volume was 782 million shares on the big board. 1.75 billion on the nasdaq. yesterday's biggest sector loser was today's best gainer. the telecommunications sector rebounded 0.8%. holding the market back was technology. that sector fell 0.8%. apple was among those weighing on the tech sector. shares fell 4.3%. the company came up short of expectations in its latest quarter. it was only the second time in the past ten years that's happened.

a change at the top for computer security firm symantec was greeted with a stock rally. shares jumped 13.5% after it fired c.e.o. enrique salem, installed chairman of the board steve bennett as c.e.o. and launched a strategic review of the firm. bennett used to head up turbo tax maker intuit. symantec shares have been falling since issuing a disappointing outlook in may. it released another disappointing outlook today, but the market instead focused on the change in leadership. also cutting its financial guidance today was health insurer wellpoint. second quarter earnings were weaker than expected and the combination of rising medical costs and lower membership will cut into future profits. the warning set shares down 12%, to a new 52-week low. other health insurers were hit with selling. united health fell 4.4%. aetna dropped 4.7%. after the closing bell tonight we saw stronger earnings from grocery store whole foods market. results were $.02 per share ahead of estimates. while more traditional grocery

chains have struggled, whole foods has been growing revenues and margins. last week the stock dropped after disappointing results from safeway, shares were up a fraction before tonight's news. they were up over $93 in after hours action, up by as much as 11% from this closing price. but it may be a different reception tomorrow for online video game maker zynga. this company earned a penny per share, but analysts were looking for a nickel. zynga makes the farmville and words with friends games. however, the decline of its existing online games has been picking up. while shares were up 3.3% in anticipation of tonight's results, they closed at about half their initial public offering price last year. after cutting its outlook tonight, shares dropped 35% in after hours action, trading around $3.25 per share. much of zynga's business comes through facebook, and zynga's warning hit facebook shares. after closing over $29 today,

facebook fell to around $27 in after hours trading. facebook reports its quarterly results tomorrow. social media is getting credit for helping j.c. penney today. this tweet, "i'm at j-c penney, thank you ron johnson for the walk through of j.c.p.'s prototype. get ready to shop! it's going to be a game changer." it came, not from a wall street analyst, but from nina garcia. she is a judge on the tv show "project runaway." the tweet is getting credit for helping j.c.p. shares jump 4.7% today. the company has been trying to turnaround its image and reduce its reliance on promotional pricing. four of the five most actively traded e.t.f.'s were higher. the lone loser was the nasdaq 100 tracking fund, down 0.7%. and that's tonight's "market focus."

>> susie: it looks like hollywood is cooking up a blockbuster: m.g.m. holdings, parent of the metro-goldwyn-mayer films, says it filed with the securities and exchange commission, for a potential public stock offering. m.g.m. gave no time frame or other details. but insiders tell bloomberg, the company has hired j.p. morgan and goldman sachs to handle the offering. m.g.m. has been in turnaround mode since filing for bankruptcy two years ago. >> susie: from phony emails that try to trick you into giving up personal data, to malware that can steal your credit card info when you shop online, it pays to be safe when surfing the web.

as we continue our week-long look at cyber security, tonight's commentator says common sense is key. here's samara lynn of pcmag.com. >> there are a few tips to help you stay safe online: many of us now have wireless routers that let us surf the internet from ipads and our phones while we are home. when installing a wireless router: use strong encryption security. no one should be able to access a wireless router without a password. use w.p.a.-2 level security and password protect your wireless network. additionally, change the default password used to access the management software of the router. also, invest in anti-virus and anti-malware security software. there's great software available not only for computers but protection available for iphones, ipads and android devices. parental control software can help keep your kids safe online as well. another good practice try and avoid transactions like online banking or credit cards

purchases while you are on a public wi-fi hotspot as they may not be as well protected from someone intercepting your data. you can stay safe online with a good mix of technology tools, best practices, and common sense. i'm samara lynn. >> tom: tomorrow on "n.b.r.", after a treacherous initial stock offering, facebook reports its first quarterly results as a public company, we'll have the details. some other big companies reporting tomorrow, starbucks, with more competition from fast food chains. how will the coffee company fare? and strong profits are expected from amazon, we'll find out if it makes the grade. >> susie: when you go into the supermarket or drug store, do you tend to buy brand name items or the private label equivalents? a new study shows almost 40% of consumers have increased their purchases of store brands in recent years. but as erika miller explains,

price is only part of the reason. >> reporter: lillian perez started buying walgreens private label cookies to save money. >> i compared the ingredients and the fat content and i found that to be good to me. and i bought it. >> reporter: but she keeps buying them, even when the national brand is on sale. so, if they are the same price, which do you pick? >> i will pick the walgreens, simply because i have been buying them. that's they way i am. >> reporter: it's not just her. according to accenture, u.s. shoppers now fill, at least, half their carts with store brand products. in fact, 28% of shoppers actually, prefer them. for its part, walgreens credits a dramatic shift in its private label strategy. >> store brands of five years and ten years ago would never have this type of packaging. the amount of time and effort we put in to quality packaging along with quality product, is so much different than it was before. >> reporter: here's something

that may surprise you; once consumers find a store brand product they like, they generally don't switch back to the brand name, even if their financial situation improves. and the more money a household earns, the more likely it is to buy the store brand: >> it's households with a higher income that actually buy private label a lot more. so it's really the smart choice, and that's what we call it. it is now smart and in vogue to actually buy private label. >> reporter: walgreens has 12 in-house brands, with names like "nice" and "sunny smiles", making it difficult to tell them apart from the national brands. >> retailers are doing a phenomenal job with sophistication and quality of their products. so much so, in fact, that consumers don't even realize that they're buying private label products. >> reporter: but don't count out the big consumer products companies just yet. >> there's still a value to brands. there's a distinct emotional connection consumers have with brands. >> reporter: which explains why justine gabbard will buy walgreens bandages, but not its soda. >> i would probably buy coke

rather than a walgreens brand cola, just because it's really about the brand. it's about coca-cola, rather than just a fizzy drink. >> reporter: so stores have no choice but to play "nice", promoting their own products alongside brand name competitors. erika miller, "n.b.r.," new york. >> tom: we asked our facebook friends what's in their shopping cart, and found out they like store brands too: chris says he's definitely buying more store brand stuff, noting the much lower price, same quality and taste. joseph says, "if quality isn't an issue, i don't see the harm." and christopher says, for him it's all about the deal, "whether it's a store or national brand, if its' a good deal, i buy it." you can join the conversation, we're on facebook and twitter at: bizrpt. >> tom: that's nightly business report for wednesday, july 25. good night susie and everyone. >> susie: goodnight tom, thanks for watching everyone. join us on-line and back here

tomorrow night. "nightly business report" is brought to you by: captioning sponsored by wpbt captioned by media access group at wgbh access.wgbh.org

tonight on "quest" -- one of the most troubling effects of global warming is the steady rising of the earth's oceans. "quest" and climate watch investigate how sea level rise will impact san francisco bay and what planners are doing to prepare for the worst. and we all need a little pampering after a long day. find out how the oakland zoo uses a decidedly "hands on" approach to keep the animals healthy and happy.