captning sponsored by wpbt >> paul: more bullish ws on housing. new home sales sge on steep price cutsnd the first time yer tax credit, but economists say it wl take years before we see a full reaestate recovery. >> jeff: sheilbair and the f.d.i.c. are making easier for private equityirms to buy up failed banks. we get analysis on theate day decision and what means for the banking industry. >> paul: the barga hunter return street critique guest trick o'hare obriefing.com tells us y kraft foods has land on his bargain basement rar. >> jeff: the remembering the liberal li. look at how the late senato ted kennedy shapedealth care reform and what happens to tse efforts now.

>> pl: i'm paul kangas. >> jeff: and i'meff yastine. susie gharib is assignment. th is "nightly business report" for wednesda august 26. "nightly business rert" is made ssible by: this progr was made possible by contributions to yourbs station from viewers le you. thank you. >> jeff: good evening,veryone.

a much bigger increase tn forecast. les of new homes jumped 9.6% in july. coulit be the housing market is turning? scott gurvey rorts. >> reporter: it was the urth straight month of increasenew ho sales and although this is a number with a wide mgin of error, it did encoure those who see a bottom in hoing. beth ann bovino of staard and poor notes there has also been increased ying of distressed properties and exiing homes. >> those homeowners we actually free to move and acally buy something sewhere. so you're starting to see it trickle through. will it ntinue through next year? ll, we do expect that is something thats going to see some..basically get some stabity and continue through next yea although we're not expecting any ki of blockbuster salethrough this year or the next. it's just somethg that we'll slowly climb out othat hole. >> reporter: scks in the home constructi sector began rallng in early july. but maury harris of u.b.s. wns there will be shakeout among the companies the group. you're going to have a lot more concentraon among the top

five of six seers in the market. it is rtly because of credit conditions andhe small builders not being ablto get the financing. so when you talk about wt's going to happen to the homeilders and their fortunes, ey should outperform overall home sales because they're gng to get a bigger rket share. >> reporter: but howig a market will they share some of the current buyi is a result of government'sirst time buyertax credit, which expires deceer 1. before the housing bble burst, 25% hmortofe gages we in the non-primcredit category.ga assuming tt kind of lending is history, the n normal for housing will be muchower than the two miion starts seen in the year beforthe sector collapsed. >> while it does look like housinstarts, the numbers that were out a ltle while ago, were also stting to show signs of stabizing, and that would be a goosign for home builde. itoesn't look like we're going to really see anything near at would consided an average rate of say about 1.6 milln

for using starts, until obably 2011. >> reporter: home prices a expected to contin to decline into next ar, but recent data indicates the rate of decle is decreasing. scott gurv, "nightly business report," new york. >> jeff:omorrow we'll see quarterlresults from luxury me builder toll brothers and talk with airman and c.e.o. robe toll. >> paul: wall street startedn a narrowly mixed note bubuyers soon took control onhat solid rise in w home sales and a 4.9% jump in july durable gos orde. so b11:00 a.m. the dow posted a 21 point gain withhe nasdaq up 4 points. stocfell into modestly lower ground during d-session as investors show caution after a stringf six straight winning sessions for theow. optimi that tomorrow's second quarter d.p. revision would show strgth helped stocks close wi miniscule gains. the dow jones ended 4.23 at 43.52. thnasdaq added .20 to 2024.43.

the s&p 500 edged up12 to 1028.12. in the bonmarket, the 10 year note edged up 1/32 to 101-192 putting e yield at 3.43%. >> jeff: it just got a l easier for pvate-equity firms to buy failed banks. the f.i.c. voted this afternoon to lower the pposed minimum catal requirement for those prive investors to 10% of the failed nk's assets. the d.i.c. proposed higher capital rati last month, drawing howls of protestrom the private-equity communi. joining usow for more about thdecision is alex pollock, a resident fellow the american enterprise instute.

>> t fdic has alread brokered two sales banks deals this year, two positivequity firms. will today's decions ope those flood gas. >> i don't know about floo gas but it seem to me it's a sensible decision that they made to backff fromheir 15% quirement to 10 so you could get more interest on private equity. the bank failures of course as we know are mounting and loo like tre could be quite a few goinforward. you want to have as many pools of capital as are intested be able come in and take a serious look at insting in the newecapitalized bank that will go forward. >>eff: i counted more than 70 fled banks just this year alone onhe fdic website. >> it' 81 ts year-to-de. >> jeff: 81, ay. >> if we look back tothe late

1980, i'm not talking about savings and loans, i'm talki about commerci banks. there re eight years in aow at which more than a hundred commercialanks failed. >> jf: with that in mind do the fdiceally have a choice on this. they haveo bringn these deeper pocke from somebody who has the cashnd at this point it seems liket'snly the private equityunds that have those deep resers. >> well they ctainly have to lo for sources of catal and this is onef them. so thas why i tnk this is a asonable step for them to take. >> jeff: you know, for a bank to buy a failed bank, it only takes 5% as a minim capital requirent. why doesn't e fdic just bng in all the way down to parod so prate equity funds andhe banks are competi on an eal level. >> as i understand it, it's 8 foa bank to buy one. i think it's a strong argument that itould be better to have one set of les that's constently applied to everybody. there was one vote against the propos today by the acting director of the office of thrift

supervision, a as i uerstand it from the press, his reason was he thoug there should be one set of rules and everydy should have e sameet of rules appld to them. that's a pretty strong argument i'd say. >> jeff: do you thi the fdic will eventuly go all the way that level? >> i don't know these thgs are all about negotiatis subject to aot of uncertainty when we're in these pressured financial situatns. so that's anybody's guessi'd say. >> jeff: how does the fdic make sure it is not brokering the deals on too cheap of a basis. we saw indy mac a the stt of the year. they were the first of this year to get bough by private equity or a series o private equity firms, a group of them. and i've seen som criticism after that osome who say rhaps indy mac was breredr sold too cheap by the fdic >> that's a problem and worry

you have if you're a receiver whose taken over the bank and now sellinit, that later so somebody's gng to say you sold tocheapnd somebody made a pile of money because you gave them too gd a deal. that certainly happened in the early 90's when you ha the rtc, if yo remember that, quidating thrifts and selling them pretty cheap. and se people me enormous amnts of money buying thing chea so you got to worry abouthat financially t also politicall on the other hand,f there are few buyers, the pricesre going to be chp. if the are lots of buyers dying to buy, the prices wodn't be so cheap. that's the nature of a mket, d this is a sor of spialized market in taking over the ongoing assets of fail financial institutions. >> jeff: we'll have to see how the reaction ofhe private equity commity to this late change in decisn by the fc.

ex, appreciate you cing on the progm. >> thanks, gre to beith you. >> jeff: our gue alex paul awk of the enterprise >> paul: the nation is mouing the passing of one of e most influential senators iour history. presenting massachusetts for closto half a century, ted kennedy heed re-write the nation's lawon bankruptcy, immiation, and education. but as darren geh reports, kennedy's passion and most likely legacwill be health care reform. >> reporter: for millionof milies senator ted kennedy i one of the reasons the ildren have health insurance alth policy expert chris nnings worked with kennedy, the senator pursued his life- long dream of tending care to ery american. thisas senator kennedy's, one of his big legacies, right? >> yes, this is e signing of the children's healtinsurance legislation. >> reporter: senator kenne's ssion for health care reform and s legislative prowess have been sorely ssed this year. no as has often been the case with theennedys, jennings

thinks the senator's dea will inspe many of his colleagues in congress to act. >> unfortunaly, it sometimes kes this moment of them leaving us, depaing us, if you will, to rlly focus on the facthat they had a point, that there really was an issue woh addressing andt's long overdue th we addressed it. reporter: to be sure, kenne was ntroversial. republicans delighd in campaigning against the liberal li of the senate. t that reputation also gave kennedy the clouto cut partisan deals on health car that sometimes disapinted core decratic constituents. mark mcclellan, a heth care policy adviser to presents clinton anbush, says that kind of pragmatisis badly needed now. >> ithere is a model from what senator kennedy has ne, i think it's that we canind a bipartisan way to solve the problems and aress them. >> reporter: kennedy legacy extes far beyond health care. nick allard, a cse kennedy adviser, says some 300ajor

pieces olegislation carry the senar's name. >> i recall,or example, providing relief frothe bankrucy laws for smalfamily faers. always keeping his eyeut for the litt guy. >> reporter: knedy's friends are ill hoping for one more victy. a bipartisan health care rorm coveng all americans and signed into law byhe man kennedy endoed for president. >> i think the curre health care debate isn the president's hands rit now, but i wouldn't be surpsed if the was some divine intervenon from the senator. he's probably arting to lobby already from up ere.

>> jeff: the final ka-ching in for ch for clunkers. the transportati department released the fin numbers today, shong the popular prograrang up almost 700,000 vehicle sales. thtotal value of rebates was $2.8 billion dolrs, just under thprogram's $3 billion dollar budget. transptation secretary ray laod says the program's winnerwere u.s. consumers and worker but they weren't the onlones. toyota rakedn more than 19% of all unker sales, followed by general motors, ford a honda. now that the programs over, cadealers are waiting to get pa. thr deadline for submitting paperwork s last night. paul? >> paul: 2,000 workers are processing those appcations, t the government hast said t when checks will be mailed now let's take a look at o stocks in the news tonight

>> paul: tonight'street critique guest says oreoaren't the only reason heikes kraft. it's got a tasty dividen too. he's patrick o'har chief market strategt at briefing.com and author of t site's barin hunting column. trick, welcome back to n.b.r hi paul, thank you, nice to be back with you. >> paul: why has krt stock landed iyour barga hunting

radar? well, what we've dean in the broar market rally of course is not the most exciting stock pi but we think it's the right stoc pick at this juncteut our belief is the easy money from that march rly has been made so we're urging the condivorces to start lookingo a na like krafthichffers a nice dividend yield and in this case crash yield is 4.1% leads all the peers in its group. >>aul: do youave a target price and time ame for kraft stock? >> we ink kraft coul move into the mid 30's over the 12-18 months. the company just mpleted a five-year restructurinprogram at has taken out a lot of costs and we thin there's good room here for margin expansion potential. as those margins impve over time here it' goingto increase profitability and raise the dividends and buyack shares. for the paent minded instor we think there's potenal here. >> paul: now you saw silar

emes at jm smker when you recommended it in may. let's look at that chart. it's up3% nce then. i have to congratute you on that a some o your otr recent calls. for instance in mid july you liked discount retailer dollar thre and t thivery dayith very strong earnings, the stock is up almost 14% from the time of your recommendation. on march 25th you said the spieders were the best to play the recover and you're right on. you still like these securities as lonterm investments. >> sure, i think ty are all still attractive as long term investments. i shod putthe caveat they had tremendous ns at a pace that's not sustained. we would ue investors to te them off the tle. they're t going to connue like we've sn in the past several months. >> paul: all right. but do you feel that we are in bull market or i it stine of these rallies in bear market that a lot of people

still think. >> we're in the camp an it' cyclical bull market with a secular bear market. the easy money been made here on this rally. we're not optimistic on the economic recovery as the stock market would lik for us to "invesent megatrends." midwest bureau chi diane he regards demographic trends a -- good to hear yourdeas. thanks for being with us. >> thank y, paul. >>aul: my guest patric o'hare of brfing.com. >> jeff: torrow, the wireless industry goes under the microsocope as rulators look into competition, innovati and billg practices.

>> jef massachusetts' top curities regulator is taking closer look at t trading tips that goldman sac gives its top clients. those tips come from wkly meetgs of the firm's research analysts and are thepassed along toraders and top clients. regulators are concerned t practice fors some clients over oths. masshusetts today confirmed it has subpoenaed goldm for details. the firm has until stember 7 to respond. >>aul: carl icahn is betting atlantic city's tropicana sino. today, new jersey gami regulators clear the way for him and a group of lendersto take over e tropicana. icahwill own about 41% of the casino when it emergesrom chapr 11. the billnaire is no stranger to ts type of deal. in 20, he bought the sands hotel in atlanticity and later ld it for a huge profit.

>> jf: here's a look at what's happening tomorrow we'll e weekly jobless claims and a first look asecond quarter g.d.p. also, quarterly results from ll, h&r block, and toll brothers. in the mey file, some smart things to do with your mon now. here's jathan pond, author of "safe money in tough times >> the great recession has ten its tolln our money and our psyches. re are five smart and feel

good this to do with your money this year. pay extra principal rst. pay extra principal on you mortgage, credit cards, d other loans. ying off principal gives you guaraned return equivalent to the loans intere rate. second, home improvement contractors are ger to work for you during ts dour economy. bumake sure you can afford the imovements and make sure they enhance the valuof your home mo than they enhance your ego. a third smart thinto do with your money: buy big cket items money is to puhase big-ticket items thatou need. manufacters and retailers are rting, so prices are decling. in short, this is a go time to buy expensive stuff, but oy if you really need the stf. idea number four ito continue your ecation. one of the best investments u can makes to obtain more education antraining in your chosen line of wk.

intaining top-notch skills i doubly importa amidst what is likelyo be a weak employment clate for several years to come. help kids angrandkids start finally, helng younger genetion family members fund retirement plans, like.r.a.s, one of the best ways to sho them the importance saving for retirement. even minors cacontribute to i.r.a.s if they ha job income. i'm nathan pond. >> paul: recapping today market action: good ne from >> jeff: and finally tonightin cafornia's latest attempt to raise money, the state is holdina two-day garage sale is weekend. a warehouse sacramento is housing thousands of splus or confiscated items, rging from jewelry and compers, to coat racks and cars. some of the vehicles he been autographed by gernor arnold schwarzenegger. other items are being ld on crailist and ebay. those listings are aimed at

attractinghoppers outside california. all together, thstate hopes to make a million and aalf dollars to help ease its budt crunch >> jeff: that'"nightly business report" for wedsday, agt 26. i'm jeffastine. goodght everyone, and good night to you, paul. >> paul:oodnight, jeff. i'm pa kangas wishing all of you the bestf good buys. ig lyht"nin bpoesusisrts madeossible by: this program was made ssible

this program was made possle byontributions to your pbs station from viewers le you. thank you. captioning snsored by wpbt captioned by media cess group at wgbh access.wgbh.org