>> susiealmost $3.5 billion-- goldman sachs' latest earngs blow the doors off estimes. so, how'd they do it? some call it the "goman mystique." >> jeff: signs of lifen the beaten down computer iustry-- intes latest results show the beginnings of a reund in demand, and the company sees improving sales onhe horizon. >> susie: about 80 mlion americans use creditnions, and while banks gotanked by the fincial crisis, the nation's credit unioncontinued to lend. coming up, how they're dng now. >> jeff: then,f your annual income tops a million llars a ar, house democrats want to send you the bill r health care refm. they're oposing new taxes on the wealthiest america to pay for heal care coverage.

susie: i'm susie gharib. >> jeff:nd i'm jeff yastine. paul kangas is off tonight this is "nigly business report" for esday, july 14. "nightly biness report" is made possible by: this programas made possible by contributions to ur pbs statiofrom viewers like you. thank you. captioning sponsored by bt >> sus: good evening, everyone. one of tse "green shoots" may be sprouting in the techector. late tay, chip maker intel rolled o much better than expectedecond quarter earnings, but re importantly,

the company had a surprisily upbeat outlook for t second half of e year. exuding a one-time charge for a fine by the eupean union, intel earned 18 nts a share in the quter, ten cents more than expected. thmicrochip giant said it expected improved condions in the comper market, a sign analts took as encouraging. sty smith, intel's chief financiaofficer says the numbers tell a sol story. >> you can seet at the top line-- ua billion dollars. you can see it at thgross margins-- up five points quarter on quart. our inventory vels are down, so i'm real pleased th the execution from the comny. and then as we go intohe second half, we start e ramp of our 32-nanometer faories, ich should extend our produc leadership and allow us toring out a slew of new products tt, pefully, will stimulate some innovation in the rketplace. >> susie: e news sent intel's shares soaring in aftehours trading, ramping up their ghest levels since october. susie: not much of a rally goldman sachs shares tod, despitrecord second quarter earnings.

goldman sodly beat expectatio, thanks to strong trading revenues. but can e momentum continue? as erikailler explains, experts say goldman has important advantag over its rivals >> reporter: call it the gdman mystique, anura created throh secrecy and success. you won't find t company's name oits buildings, let alone a sports sdium, like citi fiel goldman's financial prowesis legendary, and itsecond quarter eaings were no exceion. the bank managed to blow awa expectations in the midst ofhe worst fincial crisis since the great depression. k.b.'s fred cannon says he knows how. >> the short answer isthey're goldman. the longer answe though, is you ve to remember what happened in e quarter, and thats we went from a period of a comptely frozen financial market in the firsquarter to one where liquidity came bk through the gornment programs. so trading activitreally did improve a t in the second arter. >> reporter: b there's growing coern about goldman's dependence on trading revees.

>> we don't consid it's first- halfesults to be sustainable. >> reporter: morningar's michael wong seeother challenges, well. >> the equitunderwriting fees, pent-up demand, pulled fward mand, not likely to continue >> reporr: there are signs of continued trouble in theeal estate markeburied in goldmas results. >> one thing that was small weakness within goldman's earnings, they took $700 milon of write-downsn commercial los. they also took $500 millio of mks on its commercial rl estate. >> reporter: there's ao the threatf increased regulatory ersight, and restrictions on leverage, which could hu profits at goldmannd its rivals. bunew rules could also help stabilizthe sector. >> we are past thecute stage the financial crisis, where everything had seid up. but wh we have entereds we've entered a long, chnic stage of t financial crisis,

where we're still hang to work througa lot of issues. >> reporter:ut for firms like goldman, trouble ithe sector does have it's advantages. when othernvestment banks pullback or go out of busine, goldman swoops in to gra clients. rt of the strategy behind it powerful reputatn. erika miller, ightly business report", new york. jeff: while earnings did little to move stos today, an improvement in rail sales numbers helped wall stet into the blac consumer-relatedtocks, like home depot, prtor and gamble, and disney, roseicely after the commerce deparent said reta sales rose a better than expected six-tenths of one percent in june. and th had stocks trading modestly higher rough the afternn. the dow went on to closeith a gain of almo 28 points at 8,9.49. the nasdaqose 6.52 points to 1,799.73. the s&p 500 rose 4 3 points to 905.84. in the bonmarket, the ten-year note fell 302 to 97 4/32, putting the yielat 3.47%.

>> jf: the banking sector gets most of the ink en it comes to the nation'sinancial crisis. less well-known ishe status of the nation's tusands of credit unions mpared to banks, these non- profit fancial institutions have largely weathed the storm. >> reporter: crediunions look like bks and act like banks. but did they lend like bks during the reaestate boom? the answer iyes and no. for exple, brightstar, in burban fort lauderdale, got s start in 1946, handling deposits and making loans to school teachers. with more than $300 llion in assets and 40,000 members, brightstar wtes lots of loans. but e.o. and president ralph

crockett says brigstar was cautious wle others chased the real estate boom. >> we were nevernvolved in sub-prime nding, we were never volved in investments associated with sub-pre loans. we've had a conservati lending practice and sets of policie and we've ways adhered to ose policies and programs. >> reporter:ot all credit unns can make that claim. an industry port shows about 8% of credit unis, or roughly 800, have sub-ime exposure, carrying a totalf $18 billion in etic mortgages on their books. three edit unions have failed this year, b that's small mpared to the 45 banks that failed in the firshalf of the year still, communi banking experts li ken thomas say it's a wake- up call for creditnions. >> some ofhe credit unions out there haveignificant exposure to these exotic rtgages. e same mortgages-- option- arms-- that got washinon

mutu, wachovia, and others in trouble,any credit unions have thessame mortgages. >> reporter: tre's also oppounity for credit unions withoney to lend, when consumers need it st. >> we're looki for borrowers. people who need loans ar welcome to ce to brightstar. we're writing mortga loans every day, caroans, home eqty loans, consolidation loanfor high debt consolidatio, credit cards-- you name it. we've been avaable, we're conservative. we're not taking on additial risks. we've done thingas we've done them always and our doorare open. >> jf: some experts see another ri ahead for credit unions. ey're worried the wave of jo losses abig companies, school systemand local governments will make it harder for members to stay cuent on loans. >> susie: joing us now to talk more abouthis, dan mica, the c.e.o. of the credit uni national association, the washinon trade group

presenting most of the naon's credit unions. mr. mica,elcome to ightly business report". >> thank you, gd to be with you. >> susie: sounds like cret union, fally being impact bid this financial crisi how serious is it? >> i woul't call it serious at all. i would put it in perspective our default re is aroun 1 to 1.5%. other financial institutions would love to have that. credit unions are doing extremely well. we are like everyon in this economy seeing some collateral damage. but we're very strong we are lending, we're growing, in fact the population ofhe s. is growing at 1% of the year. this firstalf of this year we'verown at.5%. savings islowing in t highest we'vseen in 18 years. so the are a fewpots, as there are in every indury or business, that he some rough edges. but edit unions by and large are doing extremely wl. >> susie: butou her jeff's report where he's saying that

with many credit union members are now at risk of losing their jobs, many of them there's a cnce th'll fault on their loans. so aren't some credit unions at risk failure? >> any bank, any edit union, any company tt is depennt on payments from a nsumer who loses their job i going to have problems. but we've en very fornate. as was mentionede're very conservati in our underwritingand we've worked with our members and ou customers are our mbers and the our owners. so where asthers may just write off a loan, we try to mod fi it, extend the terms, change the terms. we do erything we can to work with a member, and therefore we haven't had the kind of default rates as i indicated, 1 to 1.5% mortgages is extremely low in this fancial situation. >> susie what about credit ions that a operating in the big housing hot spots like

florida, california, neva? ho exposed a they? >> well, obviouy those are our eas of concern but even there we're seeing what w wod call green shts. we're seeing areas wre it's starting totablize, it's not as good as it should be but many credi unions in these areas are doi very well. me are having aifficult me, but there working it out th their members. theirapital ratios are etty strong. yes, hll have se concerns in some sprefk areas. butationwide, credit unions are doin extreme well. >> susie: as y know, the big nks had to go through the stress tests that were mandated bthe u.s. treasury. why ist that credit union han't been stress tested >> wl, first of all, we are credit unis are the most highly regular ed financial institutions in the uned states. >> susie: so are banks. >> actually the fedel government did toy and said credit unions are regulated en more than the banks. second, we didn't cause any of this problem weidn't dohe no-doc loa,

we didn't dohe liar loans, wetuck to our stdards by and large and the chairman of the house financial services committee, barney frank, put it succinctly. he said if eryonees in the financl services industry conducd themselves like credit union, we wouldn't are this situaon in the first place. so there saying in effect, and he sd you're the dog that didn't bark, you did everhing right. you were getting a few problems, but you'rethe example, not the prlem. >> sus: you know tha washington there's this whole move afoot to have ne regutions, new rulesfor e financial system. and i know you're opposed to y new regation for credit unions. tell us why. >> well, we have not said we're opposed to any new regulationor credit unions. and iill tell you the administrati, i just met with oicials yesterday, said that some the regations th're proposing wldn't be on top of current regulations, but theyould be in place of. and we'd beinterested in that. if they could elimine it.

but i don't ce whether you're a credit unio or a bank, if you have 50ounds of regulations anthen they want to put another 5 on it you say wait a minute, the burden gets too heavy. weant to do what'sbest for consumers, and that's who we workor. we want to do what's bt for our members. but we wanteasonable ount of regulation. and we want complete transpency and access for our members. an silicity in forms, all of what the adminisation is talking abou bu that extra 50 pounds,f 's not needed, saying we're going to work against i and work toodify it so it works to everyone advantage and go public policy. >> susie: allight. let's leavit there, a subject to b continued, thank you very much m mica, for comingn the program. >>hank you. >> my gues tonight, dan mica, e.o. of the credit uon nationalssociation.

>> susie: itissed the credit isis, and the bernard madoff ponzi scheme. some say more money wod solve the probm; others say the agency just needs to think smarter. but as darn gersh reports, airman mary schapiro says th s.e.c. is improving the wait does business. >> reporr: to many members of congress, the securities and exchge commission is almost a troubled teenage after each bad rort card, it offers a long list of cuses. day, congressman scott garre askes.e.c. chairman mary schapiro why investors suld

believe is time will be different. >> it ems like the s.e.c. is always cominin after the fact to the table, alys a different chairm, saying, "we realized our errors and now we' going tory to correct them." reporter: in response, schapiro offered long list of coections. the s.e.c. is focusing enforcement on what it cls "high impact cas" that could hurthe most investors; it's increasintraining for emplees; and hiring more expericed market ofessionals; and tightening controls on investnt advisers. but schapiro cautied there will always be criminalsike bernie madoff o are caught aftethe fact. >> to some extent, all regulators, nojust the s.e.c., play cch up with the frdsters. and perhaps that wilalways be the unfortunate y for us to opere. >> reporter: lmakers like jackie speiealso press for stronger regulations on th cred rating agencies who ntributed to the credit crisis. >>hould there be some kind of liability at the rating agencies inc when they rate an a.i.g. as a triple-a, or a

lehman at a-minus, and then two days later, both of thos institions are defunct? >> reporter: schapiro sa her agency is lookg at ways to increase competition amo ratings firms. and when asked, she said s mighsupport legislation to hold cret rating agencies liable when th don't do their mework by properly checking eir financial facts. >> i think priva liability would. could have a very important effect on the qualy ofhe efforts rating agencies are making. >> reporte the s.e.c.'s mistakes are also havi an imrtant effect on the quality of its efforts. every day, sapiro says, she thinks about madofs victims, and how she can ke other instors from becoming victims as well. rren gersh, "nightly busines report," washingn.

>> sie: house democrats unveiled tay their plan to revamp the heah care system. it would create government-run insurance option, anpenalize businesses who don't offer health insuran and individuals who refuse to y it. to pay for the oveaul, the bill wouldut medicare and medicaid, and raise taxes by more than 5% on uples earning more than a million llars a ye. congressman henry waxman ss healthare reform can't wait. >> wcannot allow this issue to be delayed. we cant put it off again. we, quite frankly,annot go home for a recesunless the house and the nate both pass lls to reform and restructur our healthare system. >> susie: democrats stilface stauncopposition from republican who today called the proposed taxncreases "oneus" during a recession.

>> jeff: tomrow, "street critique" guespatrick o'hare goes bargain huntingmong the retailer he's chief markeanalyst at briefing.com. >> susie: bernard maff is spending the first nightf the rest of s life at butner fedel prison near raleigh, north carolina. inmate number 617-054 checked in this morning to start sving 150-year sentence. other ll-known prisoners there includadelphia communications founder john rigasnd his son, timoy. madoff pleaded guilty in mar to running a ponzi seme that wipeout thousands of vestors. >> jeff: developed couries are expeed to lose nearly 30 million jobs by the time t global recessi is over. that prediction cameoday from the organizati for economic cooperation and devepment. it's a gup of 30 countries working together to fight poverty. many experts think thelobal economy will rover next year, despithigh unemployment.

>> susiehere's a look at at's happening tomorrow: the june reportsor consumer prices a industrial production are releed, as well as the weekly rept on crude oil and gasoline inventories. also, quarterlresults from american airlines pare, a.m.r.

tonight's commtator has a few thoughts on what he calls "t washington way." he's allan slo, senior editor at large at "fortune". >> tre are simple, straightforward, and honesways to do things; then, there'the washington w. considerhe way washington is trying to reduce gasoline age and carbon dioxi emissions. the easiest, most straightforward and host way to do this would be toax gasoline and cbon emissions. that way, people wouldee what things cost,nd could make inteigent decisions on what to buy and use. and the govement could give rebates to theeople who can't afford the higher tas. but no one in washington wts toe accused of raising taxes on anye other than the rich, whoever they are. so inste of simple, straightfoard taxes, they give us rules that the insidersan game. stead of taxing gasoline, washington gives auto mars mileage standas. the standas are wasteful, complicated, and game-le by

big players, a more expensive for the econy than putting a big tax on gasoline would . instead taxing carbon dioxe, washington went the cap-and-trade route. that'sreat for wall street, which willake billions trading caon rights; and great for bbyists and lawyers, who'll write the rules. it wont be gat for anyone el. i certainly dot want to pay higher taxes. t look-- we'd all be better off payi taxes directly than paying for mileage staards and carbon trading indectly. let's hope that our suosed leaders se up and try to do these things theight way, not the washington way i'm allan sloan. >>usie: and finally tonight, it was paws-up at public airport in farmingdale, new york, today aset airways made its inaugural flig. it's the fir all-pet airline. a new york cple came up with the ideafter their jack russell terrier made his fir and last trip in a tradional airliner's car hold. at pet airways, dogs and cat

fly in theain cabin of a freight ane fitted with carriers in ple of seats. the one-way flights co $250. peairways flies animals between neyork, washington, chicago, dver and los angeles. and jeff, the sponse has been good. flights are alrey booked up for the next two months. >> jeff: there's only on thing i want to ow, how many pieces of carry-on luggage t the pets get. >> susie: and they even have a first ass or business class opon. >> jeff: that's ing to the dogs. >> jeff: that's ightly business rort" for tuesday, july 14. i'm jeff yastine. good night, evyone, and good nit to you, susie. >>usie: good night, jeff. i'm susie gharib. we hope to see all of u again tomorrowvening. "night business report" is made possible by:

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