captning sponsored by wpbt >> paul: t s.e.c. admits it failed to otect investors from bernieadoff and the biggest ponzi scheme in histor the commentsome as a taped madoff phone call surfac. with the swindler bragng about how sy it is to fool gulators. >> susie: esident obama igtes fresh debate over health care reform. tonight we talk with health care expert sten ullman about the realities of getting reform passed this year. >> paul: after four years the helm of morgan snley c.e.o. john mack announced today 's stepping down. but he isn't going very far.

>>usie: reviving the family business with whacky commercials. tonight our signature sees "all in the family" introduc us to the smitherothers of walter smithe furniture. >> pau i'm paul kangas. susie: and i'm susie gharib this is "nightlyusiness report" r thursday, september 10th. "nightly business report" is made possib by:

this program was made ssible byontributions to your pbs station fromiewers like you. thank you. 7//& >> sus: good evening, eryone. "we're sorry and we're fixg the problem." th was the response today from the securities andxchange coission over how it bungled five separe investigations into bernie madoff's masve ponzi scheme. contrite rulators were called on the carpet by coness today, afr a scathing report said the agency was incompent. addi fuel to the fire: masshusetts state regulators released a tape of ahone call madoff made, bgging about how easyt was to scam the s.e.c. stephanie dhue reports

>> reporter: madoff knewow to work the surities and exchange commission. in a phone call from decemr 2005, madoff coaed the chief risk officer of the irfield greenwich nd about how to handle the.e.c. before an terview with agency examiner >> we run throh this all the ti, these guys come in to do a books and records examinatn and they ask zillion different questions, and we look at th sometimes and we laugh anday at are you guys writing a book. these guys, they wk for five years at theommission, then they become a mpliance manager at a hedge fund now,r they go work at proprietary tradin desk, nobody wants to ay there forever. >> repter: the s.e.c. fielded six complaints and complet three exams d two investigations over 16 yea. but in all that time, spectors ver verified any of madoff's trades through a trd party, insteatrusting his word. inector general david kotz says the agency al never investigat whether madoff was running a ponzi scheme.

>> he used his knowledge generally in the industry to impress the examiner so in many ways knew which buttons to push,e knew how to impress thexaminers and he knew how to keep them off e track that would expose the ponzi schem >> reporr: the s.e.c. has cleaned house. the new head of thenforcement divion, robert khuzami, promises to do better. >> simply sted, we failed in our fundamental ssion to protect investors, we must contue vigorously to reform the way we operate >> reporter: the agency sa has beefed up aff training, now quires 3rd party verificatio of trades and has revamp the way it handl tips. former s.e.c. attorney job frenkel worriethe agency is alady going too far to clean up its image. >> i he seen that and my coeages have seen that the agencys acting in a heavy nded, bordering on improper

mann in how its moving some of these cases very quily. >> reporter: t s.e.c. says the doff mistakes shouldn't mar the 75 year historof the agency. but clearlit already has. some lmakers are considering beefing uphe agencies budget, but someay fundamental chges, not more money are what's needed. stephanie dhue, "nightly business report", waington. >> paul: we're no loer on the brink economic disaster. but treasury sectary timothy ithner today told a congressional oversight pal e recovery still has a long way to go. geiter was testifying about the government's effortso fix e financial crisis including the ta or troubled asset relief program. he says thadministration has not deded if it will extend the $700 billion financial rescue plan. he says even with the econy's progress, nois the time to reir and rebld the foundation of financial regulation for future owth. >> sie: late today, one of those rp recipients morgan stanley announced big chans to its top leadship.

johnack is stepping down as c.e.o.ut staying on as chairman of the investment bankinfirm on january 1, mack will hand overhe reins to the rrent co-president james gorman. since 2005, unr mack's leadership, shes of morgan stanley have fallen abou34%. but shares at rival goldma sachs, have surg about 70%. paul: stocks got off to a slow start on wall streetoday, but ded with another positive close, it's 5th straht session to thepside. an upbeat forecast from xas instruments mbined with prter & gamble's prediction for improved sales to ost stocks. adding to the bullhness, a better tn expected drop in new weekly jobless benefit cims. the upward tnd continued through the afteoon and strong dend for an auction of 30 year t-bonds lped the market end at the day's highs.

susie: president obama was talking up t need for healthcare refm today a day afr his blunt address to congress. speaking tan audience of nurses t president said the number of uninsureamericans rose by 6 million in t past year because of the ression bringing the tal to 46.3 millio did thpresident's speech to the nation make difference in

thhealth care debate? i lked with university of miami healthcare expe steven ullman short while ago and asked him if president oba made a convincg case last nigh >> i think he lose dated to a ch greater extt what he wanted to t across in terms ohealth-careeform, something thatas not really come rth to de. a lot of it had be left up to congress. thisas the first time at he aually laid out a lot of thelan. >> steve, when you exaned the presidt's proposal, wh do you think that the president is promising tt is right and wt is the presidenpromising that is wrong your view? >> in terms of what i right, 47 milli people currently uninsured is what he is trying to get at. and to try to ge them access to health care is one of the ghtaspects of it. alsois crackdo on medicare fra, and abuse and also issues associated with ficiency, bring being greater efficiency are the strong points in terms of the plan. in ter it of concerns o aknesses that i perceive

in the plan, one of the is e issue assocted th a primary care network. if youre bringing all thesnew people into the plan there going to be providers, physicians, nurse practitioners o are providing primary re t servthisncreased population or wi they end instead right back inhe emergencroom, or hhest fo of health care,hat of conrn. >> the presint said last ght that the plan would not add to federal deficits and the cost would come from savings. when you do the math, do the numbers add up, do the costs get balanced out by sangs? >> there is a question mark there. the concept is that if are you going to increase a provision of care to pele who are curreny uninsured, costs will indeed g up. what the obama adminiration is currently indicating isby dealing with fraud and abusend tryingo bring abo grter eiciencies a lot of that willbeoffset by those new innovations.

at aring one of the question mks, if y listenarefully to the speech there is out that president obama has. and that is the indication that if, indeed, al the cost savings are not realized that thercould be adjustnts in terms o h health care by the government is provided in terms it of some of their other programs. >> steve, as you know the is still a lot o date abouthe soalled public option. a vernment insurance plan as an alternative to priva inrance companies. do you think that the government can do a better job? >> think the government can prove aompetitive edge in terms of ogramming, in terms of healt care insurance provision. but i don't thinkt's mission critical. i think that there are otr means willin also that are available to bring about more competitive marketplace at is just one option. >> and wt about small businesses a lot of tm right now e struling with the high cost of providing healt benefits to their employees. is there anying this this plan or shld be in this

plan to lp out sll businesses? >> the concept i that ey are going to he basically a consortm small bunesses that will reduce the risk pool and allow access to private insuran through this risk pool. andf that should help alleviate some othe problems i terms of se o yourmaller companiesot beg able to a vord rig now, health care insance, not only t small employers but also the se-employed as well. >> some of the feedback coming out from whington todayeveals thathe democrs and republicans are still digging in their heels on this whole debate about healthare reform. do y think a compromiseis possible? >> i think a compmise will me about. i think th you will see thathere will be give-a-take on this, that certn aspects of the plan will probabl fall by the wayside in terms of excess abily, in terms of perha the gornment provision of care, in terms perhaps the mandatory aspects of the plan, in terms of mandatory

rticipation by employers and also by private citizens. some of those are gointo be some of the areas tt will be probly hotly debated over the xt few months but i do think that something will be coming out of congress at this point time. >> if someing doesn't come out of congress at is the threat to theeconomy? >> significant. significanthreat. u are looking at from estimates i've seen, uards 68 million uninsuredy the year 2015. you are looking at per capita expenditus for health care going up to about12,000 for every man woman and child. and certain metropolita areas as high a 25,000 for evy man, woman and child that is an unteble situion. it reduces our coetitiveness inteationally. we'll see what happens. steve, thank you so much for comi on the program tonight. >> i appreciate it. thank you.

>> paul: n, let's take a look at some stocks in the news tonight.

anthose are the stocks in the news tonight, susi >> susie: paul, during tough times one ofhe last things pele think about is buying new clothes. the retail and fashion worl have been hit ha by the recessio nothose industries are fighting back. they're offering the first er "fashion's night out": it's worldwide initiati tonight, to bring cusmers into the stes. as erika miller explains, retailers are puing out all the ops to make a sale. reporter: gone are the days when retailers can just pu clotng on racks and expect it to sell.

nowada, many stores find they must also create connection withheir brands. that's where fashion'sight out cos in-- it's a global retail extravaganza designeto lure men and women into the sres with after hrs events. ny well known chain stores a participating, iluding macys, angap. in additn to high end boutiques li calvin klein, that comny's c.e.o. tom murry says the goal is to get customers to buy fall faions while th're still at full price. >> the wle idea is to create exciteme about fashion. let's feel positive! and i think we have someeally beautiful oduct in the stores right now. >>eporter: style may be important, but manshoppers also wana deal. putting another way: frugal is the new black. >> reporter: anast richard jaffe says many appal retailers are focusi on loweringhe average price ints in their stores. rather than the $10,000 purse, maybe it's make ten900 purses and attract broader audience trand work down a little bit

on the food chain. >> reporter: that's expeed to result in wer luxury goods in stores a more moderately iced bridge line merchandise yore also likely to see more accessories, becau it can be an inexpensive way to spice your wardrobe. whent comes to clothing, many stores are pushing pctical pieces, a rategy that could backfire. >> the wrongove-- and we will see it-- is to shift to basi. so instead of a fancy ha knit sweater, you s a navy, grey anwhite cardigan. ve boring. >> repter: fashion's night out is a one time event, sanalysts don't think it will helphe quarterly earnings of most mor chain stores. but retailersay it can't hurt to create buzz ahead of the l important holiy season. some stores arcautiously optimiic this year will be better than last. >>e are starting to see the early signs of a recery in our retailales. we are seeing itore in asia and europe than we aren the united states, but we'reeeing opportunities here wre we're

starting to slowly grothe business aga. >> reporter: but en if the outlook improving, that esn't mean happy days are he again. most industry experts ree it will be yes, perhaps even a deca, before consumer spending returns to its 2007 gh. era miller, "nightly business report", new york. >> paul: tomorrow, our friy "market monito guest is erik riuben chief investment officer at russell invesents. >> sie: sprint nextel is calling on new cusmers with a new icing plan. it's called "any mobile anytime." the naon's third largest wireless provideis offering users unlimited callinto any cellphone inhe country no matter which networkt uses. the new plan starts at abo $70 a month. sprint's offer comes as it struggs with heavy subscribe losses as customers defecto rivals verizonnd at&t. >> paul:eneral motors is selling a major portioof its european opedivision to

canaan auto supplier magna. todas announcement ends months of uncertainty over the fatef gm'sest-selling european brand. under e plan, magna, along with russia's zbeer-nk will own 55% of opel. opel employees would hol10% leaving gm with a % stake. gm sees thdeal closing in november or deceer.

>> sie: here's a look at what's happening tomorrow: >> paul: recapping tay's market actio stocks are higher for the 5th straight d. the dow gained 80 points. and the nasdaq gaid 23. to learn more about the stors in tonight's badcast, to watch oustreaming video and to take part in r daily blog, go to "nightly businesreport" on pbs.org. u can also email us at nbr@pbs.org. >> susie: d finally tonight, mily businesses account for roughly four of evy five american cpanies. so tonight, we bring you the latest installmentf our signature seriesall in the familylooking at the challengesf integrating work and family. ane eastabrook introduces us to walter e smithe, chicago area furture chain building its family busiss for nearly fivdecades.

♪ ♪ >> waltee. smithe. you drm it, we build it. >> reporter: in chicag the smithe brothers antheir wacky tv a are as famous as the furniture stores that be their grandfather's na. >> t, mark get back to work. >> reporter: wter e. smithe furniture has been a chica staple for more an a half centur but sales skyrocked after mark, ti and walt took to the airwaves nine years ago. >>e decided in 2000 that we wantedo come up with something that would be diffult for competitors to sal and we wanted to kind ogive a face to the company and we thought making the brotherthe brand rsonality would accomplish that. >> the smithe brand got stard after world war ii when lter e. smithe nior opened a chicago appliance and fuiture

store. in the 1960's son walter junior took over focusingn furniture. at that same time walt nior's three inseparable son who loved clowning around, often bere home movie cameras-- began honing their own entrepreneurial skls. >>e had a beer can collection and we would go to flea maets and sell beecans. so, we really got in business 30 yeaago. i had a paper route d tim used to sle on the floor-- you know he's fourears younger than i am-- 'd sleep on the oor so he could help me do m paper route in the morng. >> reporte the brothers joined the family business in thearly 1980s, expanding the comny from one store to 13 but deite that growth, the smithes think thcommercials have helpethe chain ep its small busiss appeal. >> pple will pick up the phone and call you if thers an issue or a pblem. that's one of thgreat things aboufamily business. often times there is tha contact. >> we are roing action. >> reporter: most ofhe commercials arshot in the

stor. tim is theead script writer. >> the early scripts were ry heady. and we'd wri a paragraph and eryone would say it. anwe found the more serious we re the funnier we were becau we're just not vy good actors. >> reporter: mark sa the public instaly connected with their raw ting skills. >> i was in starbucks ontime d this was years ago when we st started the commercials a the guy pu the latte up and says that's a latte with an ha ha. that was really te and that's thfirst time i remember someone recognizing us. >> reporter: as savvy businessmen the smits know creative tv ads may dr customers intoheir stores, but ey may not necessarily move merchandise. walter esmithe senior's vorite motto was, forever better. walt says his grandfathes words motivatevery business desion he and his brothers make. >>e're looking to improve towards what you already hav- whether it's our sffing, our advertising, whether is the appearancef our stores. in a fhion business you are constantly wking on

maintaininthe fashionability of what you're trying to sel >> reporter: the smithes tru love promoting wt they sell and ver miss an opportunity to do it, even with us. >> okay,ne, two, three. walter e, smhe you dream it we build it. i love that so. do you want the second vse? ( laughs ) ( applause >> reporter: dia eastabrook "nigly busness report" glendale heights, illinois. sure loo like they are hang a lot of fun. >>t works. >> se does. >>usie: that's nightly business report for thursd, september 10. i'm susie gharib. goodnight, everyon and good night tyou, paul. >> pau goodnight susie. i'm paul kangas wishing all of you the best ofood buys. "nightly business rert" is made psible by:

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