. this is "nightly business report" with tyler mathisen and sue herera. united under fire. the viral video that's sparking outrage. why this imagine was dragged off an overbooked flight. fed in focus. how janet yellen is cat dporizing the economy after last friday's worse than expected jobs report. new details on the tactics wells fargo employees used to create those fake accounts. those stories, and more, tonight on night"nightly busine report" for monday, april 10th. welcome. sue herera is off tonight. with ebegin with a public relations debacle at united airlines that has gone viral. a disturbing video making the

rounds, first on social media, now everywhere virtually, showing a man being forcibly removed from an overbooked flight in chicago. last night. >> oh, my god! >> no! this is wrong! oh, my god! look at what you're doing to him! oh, my god! >> the confrontation, which alarmed fellow passengers, as you heard there, has sparked a big debate. over the rights of travelers of airlines to forcibly apply overbooking rules and law enforcement officials who ejected the man. remarkably shares of united airlines ended the day higher. phil lebeau joins us with the very latest. let's start with what happened. as i understand it, the flight was overbooked, and united needed the seats to accommodate crew members who had to be in louisville today. >> correct. and that's not uncommon in the airline industry. look, it's very common to have a

flight that is oversold. if you fly a lot, you often hear the announcement, we're looking for two or three people who would be willing to give up their seat for $500, or a voucher for a future round-trip ticket on this particular airline. and in this case, united was saying, we need volunteers. when they didn't get them, they needed four seats, they then started saying, you're going to get bumped. two people were bumped before this passenger said, huh-uh, i'm not getting off this flight. >> was the airline then acting within its rights? and what about the passenger's rights? he was on the plane and seated. >> well, even though you're on the plane and seated, if you're still at the gate, you have not left yet. while it probably would have been easier to handle it before he boarded the plane, yes, the airline was within its legal rights. you can make an argument, they're within their rights to eventually call airport security to remove the gentleman. on the other hand, it played out terribly. for everybody involved here. >> absolutely.

>> and that's what we're seeing today on social media. >> how has united reacted? >> well, the initial reaction was, it was an overbooked flight. we had to ask passengers to leave. that's what happen i think everybody would say that it was a fairly cold, almost tone-deaf reaction at first. now, in the middle of today, oscar munoz, the ceo of united, realizing how much backlash was out there against united, issued a statement which was much more understanding of how bad this situation is. in that statement, he eventually says, look, this was an upsetting event for all of us here at united. i apologize for having to reaccommodate these customers. our team is moving with a sense of urgency to work with the authorities and to conduct our own detailed review of what happened. we're also reaching out to this passenger to talk directly to him to address and resolve this situation. that's helpful, tyler, but i have a feeling they'll have to go much further in the days ahead to truly calm down the backlash.

>> very quickly, has the passenger been heard from today or his lawyers? >> no. not at all. >> an annual report ranks airline customer satisfaction, the airlines are doing better, united not so much. how did they do? >> right. united game in eighth out of 12 airlines. this is the annual airline quality ratings, which takes d.o.t. data, mishandled bags, on-time arrival percentage, number one with alaska, then delta, and virgin america, and then united at number eight. this happened on the same day this report is released, shows 2016, best year ever in terms of airline service for passengers. >> phil lebeau, thanks. about the overbooking and united's handling of it, we're joined by form continental ceo. gordon, always great to see you. i'm sitting with my friend steve liesman who asked an obvious question, why didn't the people at the gate just keep raising

the price that they were willing to offer to customers there to voluntarily get off the flight? do they have the authority to do that? >> no, tyler, actually the government prescribes the amount. i think it's between $800 and $1,300 depending on the fare and distance. i think they west to the $800 where you can be unvoluntarily removed and paid $800, that you're accommodated according to the law. what happened here is really unfortunate. but with the millions and millions of people that the men and women of the airport and on the airplanes deal with every day, it's not unusual. but i know from personal experience that kicking and screaming and yelling doesn't work well with t and so there's another way to handle this. >> that was sort of my question here. you know, united seems to be taking all of the heat here, and obviously as you point out, this

situation, on many levels, probably could have been handled a lot better. should it be taking all the heat? after all, it was law enforcement officials who pulled the man off the plane, and we didn't see how had einitially reacted, or talked to the police officers. >> yeah. tyler, i assure you, knowing the people at united, probably the most professional men and women anywhere. they went right by the book. and when the man refused to cooperate, they had no alternative but to call the police, because they have an airline to run. and they're doing it in accordance with the law. the gentleman, and it's unfortunate because i understand how you can be emotional, but kicking and screaming and fighting the police is not a good way to solve the issues. >> one of the things that i think viewers might be surprised to learn is that in a situation like this, accommodating non-paying airline employees is a higher priority than accommodating paying customers. >> well, these were what they

called dead-heading people. they were working, and they were being sent down to pick up a flight that didn't have a crew, or it wasn't going to work. the whole flight would be canceled the next day. so they're actually being paid, they're called positive space, and they're must-ride. so they take precedence on everything. >> you've been captain of airliners. i'm surprised that the captain of the flight wasn't obviously visible there in that. i'm sure he's taking care of other things. what would you advise mr. munoz to do tomorrow? >> there's no more human guy to put a face on united than oscar has. i know, knowing oscar, how personally troubled he is, he's going to make all the apologies. he doesn't like this at all. and i'm sure they're going to review everything that went wrong. and they could improve, i'm sure they can. but at the end of the day, they're going to try to make it right with that person. not all the people on the airplane that made the videos. and i suspect they will.

my understanding was that person actually was accommodated. i'm not sure about that. >> gordon, thank you very much. ceo and chairman of continental airlines. stocks closed fraction alli higher. nasdaq higher by three points. and the s&p 500 was higher by 1 2/3. a rather listless trading day. we heard from janet yellen this afternoon, talking about hiking interest rates gradually to sustain what she's calling healthy growth. joining us is steve liesman. >> the economy is pretty healthy, she likes what she sees from the consumer. as well as the global economy, not being a drain any longer. even adding to growth in the united states here. and then she gave sort of a

layman's explanation of what it means for the fed to gradually remove accommodation. >> before we had our foot pressed down on the gas pedal trying to give the economy all the oomph we possibly could, now allowing the economy to kind of coast and remain on an even keel, to give it some gas, but not so much that we're pressing down hard on the accelerator, that's a better stance of monetary policy. >> so maybe to put that in technical terms, the idea is to raise the federal funds rate, raise the interest rate, about you not get to the point where the fed think it's actually restrictive. but get to neutral is where they're trying to get to. >> at this point in time, the if ed has two things that it's trying to jimmy and jockey here. one is interest rates. the other is the size of its balance sheet, which ballooned up as it bought bonds in what we

call quantitative easing. now they want to unwind that balance sheet. they have less experience doing that than with more conventional monetary policy. >> a bit trying to control the economy with the levers of one of those old automobiles, for example. she said the impact of it, we don't know what it's going to be. $4.4 trillion balance sheet. normally it should be about $800 billion. what do you want, four times or more bigger than it should be. they want to bring that down over time. the idea is what they'll first do is have securities. they mature. they get to be the end of their life. the fed right now has been reinvesting the proceeds into that security. they'll stop reinvestment and over time gradually bring it down. but we don't know what the impact's going to be. there's analysts who say, you know what, there's going to be more volatility. >> that very fact they won't be reinvesting, will it raise interest rates? because a big buyer will be in the market?

>> that's one of the speculations. that's what the fed essentially will intend, tyler, is for interest rates to go up. what they did is took those securities off of the market, and that reduced interest rates by an unknown amount. maybe as much as 2 percentage points. they'll put some of it back in. there will be more supply of them. therefore, interest rates should rise. >> steve, long day. thanks for sticking around. good to see you in the evening. still ahead, an inside look at the culture that badly dented wells fargo's reputation. a high level investigation into the fake accounts scandal

at wells fargo was released by the lending giant's board today. the 100-plus page report blamed a sales oriented culture for the controversy. we have detailed examples of how this culture played out and hurt consumers. >> wells fargo announcing the largest clawback in financial services history in the sales practice scandal that deemed it necessary to claim back an additional $28 million of pay from former ceo john stumpf after he agreed to forgo $41 million when he retired. an additional $47 million from kerry tollstead. she already having foregone $19 million last september. tolstead was also terminated retroactively for cause. here is chairman steve sanger. >> the root cause of the practices issue determined by the investigation, was the

excessive sales pressure in the community bank, the excessive sales goals, and the failure to escalate the problem appropriately through the structure of the community bank. kerri is the leader of the community bank, is responsible for all that. >> tolstead refused to be interviewed as part of the board review. a statement from her lawyer said we strongly disagree with the report to lay blame with miss tolstead. tim sloan is given a pass. the report said that his direct involvement with the sales practices issue was limited, until he became president and coo in november 2015. despite that, i asked him if there could have been more he could have done earlier. >> in hindsight, i wish we would have moved more quickly, we would have made decisions, for example, that we made last fall, was to end the incentive compensation plan in the community bank. >> away from the individual, the

report said a sales oriented culture and decentralized corporate structure caused the issues. here are some examples. monthly motivator reports where it was said that some employees lived and died by the results. and retail score cards which were instituted by tolstead and, quote, generated significant sales pressure. how did that bad behavior manifest itself? the report details one instance where a district manager warned an employee during onboarding that wells fargo provided a challenging and intense sales environment, and that he should be prepared, quote, to do whatever it took to meet numbers unless it was downright unethical. the report also uncovered more about the tactics employees used to hide their practices within the wells fargo system, substituting their own e-mail address for their customers to prevent wells fargo from contacting customers who might provide a less than perfect

survey score. speaking of banks, earnings seasons gets under way this week when citigroup, jpmorgan and chase and wells fargo report this thursday. joining us with what to expect from the banks, and other stock market sectors, is john butters, senior earnings analyst. john, welcome. maybe one of the reasons the market moved so little today is that we're waiting for earnings season to really get going here. what are you looking for when we get the reports for first quarter profits? >> based on estimates submitted, analysts are looking for 8.9% for the first quarter. it would mark the third straight quarter of earnings growth after five straight quarters of earnings declines. if we hit 8.9% growth, that would be the largest growth we've seen since the fourth quarter of 2014. >> one of the reasons growth should stack up better this year than last, is that energy is

going to, by comparison, look a lot better, right? >> that's correct. we're not calculating a growth for the energy sector, because the sector actually reported a loss in the year of the quarter. but we're looking for $7.7 billion in earnings in q1, versus a loss of $1.5 billion in q1, 2016. that's the largest increase of any sector. one of the main reasons energy is driving the growth of the s&p 500. other reason is higher oil prices. the average price of oil about $52 a barrel the first quarter. last year $33 a barrel. a significant increase in the price of oil. as a result, energy is the largest contributor to growth for the index this quarter. if you take the energy out, the 8.9% drops down to 5.1%. >> what are the standouts and laggards? >> the financial sector, about

14.3% growth. and the tech sector at 13.1%. and both of those sectors are seeing fairly broad-based growth across the board. most of the industries in each of these sectors are expecting growth for the quarter. on the flip side, the real laggard is the industrial sector, expecting a decline of 7%. and a lot of the weakness there driven by the airlines industry where earnings are expected to be down 52% year over year. >> you also have telecom down 2.3%. john butters, always great to see you. >> great. thanks for having me. >> well, activist investor jana partners wants to shake things up at whole foods. that's where we begin our market focus. nearly a 9% stake in the grocery chain. jana said it plans to speak with the company about exploring a possible sale, and changing its board of directors. they've proposed their own directors, by the way. whole foods shares popped nearly

10% to $34.17. tesla passes general motors become the most valuable automaker in the country, following an analyst upgrade today. tesla shares hit a record high, and with that, the company's market capitalization grew to $51 billion. that makes it by market value the largest automaker in the u.s. tesla shares were up 3% to $312.39. the two largest trucking operators in the country are merging to create an industry giant, swift transportation and knight transportation say they would combine in an all-stop deal and call the new entity knight swift. the value of the company at more than $5 billion. shares of swift soared 23% to 24.77. knight rose 13%, to 34.75. the activist shareholder elliott management is now calling for change at the mining

giant, bhp. they received a letter telling the company to spin off the u.s. oil business and combine the lond and sydney stock listings into one exchange listing in australia. but bhp said the cost of the proposals significantly outweighs any potential benefits. shares up 3% to $38.26. switching gears now to real estate. despite the big headlines of store closures on manhattan's fifth avenue, and fears that sears and other places, retail estate is not quite in as dire a strait as you might think. there may even be deals out there to take advantage of. dia diane oleck has the report. >> reporter: if they can't take the heat in big names like sears and jcpenney closing stores, retail real estate must be in trouble, right? maybe not. >> the retailers are not

expanding, or paying attention to them. so, yes, those are the stores, and the announcements making the headlines. but you see on some retailers, especially food and beverage store concepts are expanding. >> reporter: ecommerce is taking a big bite out of brick and mortar sales, but they're filling up with other types of offerings. >> the mix of stores we're going to see in malls, in shopping centers does begin to change. >> reporter: boutique fitness, things people can't buy online. some online stores are going offline. >> when online retailers are opening those brick and mortar stores, part of what they're trying to do is showrooms. so a limit bttle bit of the opp of the usual retailers. >> reporter: the vacancy rate was unchanged for the quarter and the year, asking rents actually increased a little. at big malls, vacancies

increased just slightly and mall represent was up a little bit as well. >> most of the rents are flat. because i think retailers are somewhat confident that they will fill the stores. but the retailers are expanding with service providers. >> reporter: those with high-end anchor stores, business is brisk. but the stocks of the companies that own these properties are getting hit by the hype. general growth, simon, and toddman, they have good prospects according to green street advisers which says the mall reits stocks are a real bargain now. >> very little new retail construction. as some stores close, they reopen as restaurants, entertainment, health centers, boutique fitness stud yoesz, you name it. if they're in a good location, they don't stand empty for long. coming up, coding for convicts. lowering the recidivism rate at california's oldest prison.

what to watch for tomorrow, the nfib releases the small business optimism index. we'll get a read on the labor market with the jobs openings and labor turnover survey. and minneapolis fed president will give a speech in the afternoon. new york lawmakers have approved now an initiative last night under the state budget making it the only state to offer free four-year college tuition. under the plan, the state will supplement aid for in-state residents, starting with families who earn $100,000 a

year or less, providing a tuition-free education at all in-state public two and four-year colleges. that income cap will increase over the next few years. well, prison has become a revolving door for about half of the inmates who leave it. there's a drain on resources, but jane wells has the inspiring story of one training program in california's oldest and maybe most notorious prison that is delivering results, thanks to silicon valley. here's part one of jane's series from san quentin, california. >> they are the least sympathetic among us. >> what am i in prison for? kidnapping, assault, murder. >> reporter: but most of the inmates inside california's san quentin prison will some day walk free. they're going to be your neighbors. they're going to be in your communities. they're returning to their families. who do you want them to be?

in an amazing experiment, a handful of inmates here and inside three other california prisons are learning computer coding and web development, even though there's no internet on the inside. >> i've been incarcerated almost 20 years. so i didn't know about the internet. >> they're building complex ecommerce websites and they've never actually clicked a mouse in realtime. >> reporter: venture capitalist chris started the program called the last mile. after giving a talk on entrepreneurship to inmates. >> i won't say what i said, but i thought he was crazy. >> reporter: but once his wife, beverly, learned how expensive it is to house prisoners and how many of them keep coming back, costing even more, the bottom line changed her mind. together they set up mock servers to fake the internet inside san quentin for software training and began screening qualified candidates. this inmate has helped develop a

tool for airbnb to monitor social media influence. harry is working on a website for the last mile radio. >> i had almost given up home on myself. but i began to get more confidence in myself and realize that i still have value. and that i still have a lot to offer back to society. >> reporter: one in ten prisoners in america is in california. and the recidivism rate is over 40%. it costs taxpayers $71,000 a year for one prisoner. but of the 20 inmates who have gone through the last mile program and left prison, so far, zero have returned. the last mile just celebrated its third graduating class. the program is funded privately, and with sales of prison products like license plates. taxpayers pay nothing. it is a joint venture in the truest sense. >> 17 years feels like a lifetime. and it's amazing the things that

in a few short weeks i'll be walking out the gates as a free man. >> reporter: by the time you see this, chris schumacher may already be a free man. but when he leaves california's oldest prison, he may also be a changed man, armed this time with skills that could finally turn him into a taxpayer instead of a liability. for "nightly business report," jane wells, san quentin. part two of jane's report tomorrow. and that is "nightly business report" for tonight. i'm tyler mathisen. have a great evening, everybody. we'll see you back here tomorrow.

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