>> i think the real denial here is the denial of a conflict of interest. >> susie: harsh words for goldman sachs from a key lawmaker as senator carl levin previews tomorrow's hearing on the role of investment banks in the financial crisis. >> tom: meanwhile, the senate tries to get down to business on financial regulatory reform, but republicans block a procedural vote delaying debate. you're watching "nightly business report" for monday, april 26. this is "nightly business report" with susie gharib and tom hudson. "nightly business report" is made possible by:

this program is made possible by contributions to your pbs station from viewers like you. thank you. captioning sponsored by wpbt >> susie: good evening, everyone. on capitol hill today, attempts to move ahead on financial regulatory reform stalled in the senate. tom, a key vote by the full

senate just to get the debate started got pushed back late this afternoon. >> tom: susie, democrats and republicans still disagree on how to fix the nation's financial system and what new rules are needed to prevent another financial crisis. >> susie: plenty of issues and politics are holding things up. our washington bureau chief darren gersh explains what's at stake. >> reporter: the test of wills over financial regulatory reform continues tonight. just before a key vote, senator chris dodd, the author of the overhaul bill, warned republicans are leaving the country at risk of another financial crisis. >> today we're just as vulnerable as we were 18 months ago. our house is still unlocked in a way. and what happened 18 months ago could happen again. >> reporter: republicans prevailed, preventing a final vote on a bill they say would institutionalize bailouts with a $50 billion fund. the legislative deadlock played out while the stage was set for a dramatic confrontation tomorrow between a leading senator and a major wall street c.e.o.

senator carl levin of michigan defended his committee's findings goldman sachs took advantage of a major conflict of interest-- creating securities, selling them to clients, and then betting against them. on wall street, betting a security will fall in value is called shorting. for support, levin pointed to thousands of executive emails, citing one to the goldman board. >> we were overall, net short the mortgage market, and thus had very strong results. so, were they big-time short in 2007? you betcha, despite what they've been trying to say. >> reporter: over the weekend, goldman accused the committee of cherry-picking emails. again this afternoon, the bank battled back, releasing c.e.o. lloyd blankfein's testimony. the c.e.o. plans to tell congress goldman sachs lost $1.2 billion on housing, adding, quote: >> we didn't have a massive short against the housing market and we certainly did not bet against our clients.

>> reporter: blankfein says his firm cannot survive if clients don't trust it. but senator carl levin says goldman is misleading the country about its mortgage bets. it will be an interesting hearing, susie. >> this sure looks like it's shaping that up way, darren. we got from your report a preview of what lloyd blankfind, the ceo of goldman sachss is going to say tomorrow but you can give us an idea of what you think the questioning by the senate panel will be like to cover all these hearings, what do you expect? >> i think it's going to be very contentious, susie. this panel has spent 18 months digging through goldman sachs e-mails, thousands of them. and they believe that they basically have a morality tale here that goldmans is the example of what went wrong in the mortgage markets and how wall street kind of spoon fed these toxic assets out to clients and out into the financial system. goldman is having none of it. they know that the committee has all these e-mails in their own words. but they're arguing still that they are misunderstood. so i expect a lot of

fireworks tomorrow. >> darren, that hearing tomorrow does put goldman in the forefront. and maybe pushes back regulatory reform down a notch or two on the agenda, but what does it do to the shape of regulatory reform if that negotiating continues? >> well, clearly advocates of a tougher stands on wall street are using this-- stance on wall street are using this hearing and what comes ot about goldman as a battering ram to try to get tougher restrictions on wall street on derivatives, the kinds of products that are at issue here, these very complicated products. also they want to make sure that there are limits on conflicts of interest that they argue that are at issue here and that goldman played a role in. >> so what happens next, darren, as we just reported, this key vote failed. so now what happens? >> they're going to keep at it. everybody i talk to, all the analysts who follow this very closely do expect that a bill will get done. the question is how and how tough will it be.

negotiations are going to continue. democrats have to decide whether they want to try to jam something true and force the republicans to keep voting against it. and republicans are kind of a little boxed in here. they don't want to be scene as supporting wall street. they do want to make changes to the bill. so eventually they want to find a way to get to yes. it's not clear they found it yet. >> darren w that in mind s it even possible that this reform effort could be blocked entirely at some point or is there just too much public will toward cleaning up wall street. >> it is a good question. but look, tom, this is the u.s. senate so anything is possible. but many people i have talked to, the analysts who follow it do expect that something will get done. it's an election year. this is the issue that brought on the economic collapse. and i don't think either party wants to go home to the voters and say we just said no, we didn't get it done so something, that's motivation to get something done. and usually financial regulatory reform is more

the nature of a bipartisan issue. because it's very technical and usually the two sides can come together and work out their differences. >> so at the end of the day, darren f there is going to be a bill, is this going to be something that the public will be happy with, certainly blue that wall street will be able to live with as well what do you think, what is your prediction. >> it looks like wall street will be in for tougher restrictions it unclear whether wall street will have to spin off businesses or how many restrictions will be placed on the proprietary trading that is possible for them. the public will get some tough new protection. there will be some new cops on the beat. and also especially in the consumer financial area, auto loans, things like that. it's a tough rule of financial systems though that they are prone to have bubbles and bursting bubbles. so we're to the going to eliminate this problem but the hope is that this bill will at least allow us to manage the next one better. >> you certainly showed us what issues are at stake.

and we'll be turning to you for more report on this. thanks so much, darren. >> sure. >> and we've been seeking with-- speaking with our washington bureau chief dar ben-- darren gersh. >> tom: here are the stories in tonight's "n.b.r. newswheel." worries about financial reform held wall street's gains in check; the dow rose a fraction, the nasdaq fell seven, and the s&p 500 lost five points. volume started the week a little heavier on the big board, while it dropped slightly on the nasdaq from friday's levels. the treasury is trimming down its stake in citigroup. 1.5 billion shares of citi's common stock will be sold. that's just over a quarter of the 7.7 billion citi shares uncle sam owns, shares it got as part of the federal rescue of the bank. and a federal appeals court says wal-mart must defend itself against a class-action sex- discrimination suit, the largest of its kind. nearly a million current and former women workers say the stores paid them less than male workers. wal-mart may appeal today's decision to the u.s. supreme court.

still ahead on the program, do you trust your financial advisor? we ask a leading psychologist about what to look for when seeking money advice. >> susie: tomorrow, the federal reserve begins its two-day meeting on interest rates, with a decision likely on wednesday. it's widely expected that fed policymakers will keep interest rates near zero, where they've been since december 2008. so, what will it take for the central bank to finally start raising rates? suzanne pratt reports. >> reporter: super low interest rates sure are sweet, especially if you need a mortgage, a loan for new wheels, or want to borrow cash to finance a small business. they even help the stock market because company profits get a boost when borrowing costs are low. but americans know most good things eventually come to an end. and, historically low rates-- really a sign of a sick economy-- are likely to be no exception. while the federal reserve is not expected to hike rates this week, experts say the clock is ticking on such a move.

still, bank of america economist ethan harris says the fed is not going to do anything just yet. >> i think we're still in a healing process in the u.s. economy and the fed is waiting to see signs of healing in the jobs market, the housing market, and the banking system. >> reporter: many economists say it will be late this year or early next before the fed finally pulls the trigger and raises rates. inflation, or the lack of it, is one reason the central bank seems to have the luxury of a little extra time. citi economist bob diclemente says policymakers may even be a bit nervous about deflation. >> they want to be convinced, too, that the recent slowing in inflation isn't part of something undesirable. that there isn't some sort of undercurrent of weakness that isn't evident. so, i think stable inflation is probably an important element.

>> reporter: but some experts say an end to the fed's pledge to keep rates low for an extended period could come as early as this summer. you may remember that's the famous language contained in every fed policy statement since march of last year. >> even then, when they change the language, it will be a new phrase that also suggests the fed isn't ready to hike yet. so, they're not going to go straight from extended period into hiking interest rates, there will be a transition period. >> reporter: when those rate hikes eventually happen, they'll likely come in baby steps, or quarter point moves. experts say the fed will use a measured approach designed to avoid shocking financial markets and the economy. suzanne pratt, "nightly business report", new york. >> tom: the home mortgage market is still home to big scams. a new report out today finds mortgage fraud rose 7% last year. while that's high, the pace of fraud reported has slowed from the 26% jump seen in 2008. the lexis nexis mortgage asset research institute attributes the slower growth rate to better

policing of the industry. consumers are warned to be wary of fraudulent brokers and loan originators using sophisticated scams. florida was rated the top state for mortgage fraud, followed by new york and california. >> tom, i guess you can say investors and traders were kind of in a wait-and-see mode between financial reform which you mentioned earlier, uncertainty about that, and the fed meeting this week witness absolutely, let's add in earnings as well, let's not forget that

earnings parade continues to march on for investors. let's look at tonight's market focus. financial stocks were the weakest with the regulation debate continuing in congress. citi led the way lower. as we reported earlier, the treasury department is moving forward with its sale of what will eventually total more than seven billion shares it currently owns. but even with today's 5% sell off, taxpayers stand to make a profit as long as the stock remains above $3.25 a share, which is the effective buy-in price for the treasury department. also weighing on financials, money management firm blackrock and its earnings miss. it bought barclays global investors last year and some analysts voice worry that the integration is driving away some customers. the news sent shares sinking, down to their lowest price since last fall. b.l.k. stock did big volume on the sell-off. after the close, texas instruments became the latest high tech firm to turn in its

quarterly financial report card. results were a penny better than expected and management says demand for its products remains strong. first quarter orders skyrocketed 66% compared to a year earlier. t.x.n. came into tonight's report at a new 52-week high. after the report tonight, shares were up as much as 2%. big equipment makers like caterpillar saw some buying interest thanks to cat's earnings. results easily beat expectations. cat says bulldozer and mining equipment demand is picking up worldwide. that helped boost its own guidance. and higher guidance helped push the stock up. this is a two year chart. the stock tonight is at its highest price since june of 2008. that's significant as it means cat shares have eclipsed prices in the fall of '08 when the financial world collapsed. the cat optimism carried over to competitors. deere is at a new 52-week high. joy global is about $2 away from a new high. and bucyrus stock recovered some

of what it lost friday after a disappointing earnings call. buying in consumer companies like whirlpool helped the bullish case. whirlpool is the biggest maker of household appliances and it sees more demand. first quarter results blew away expectations. margins increased and it raised its 2010 outlook. the government rebate program for energy efficient appliance helped. whirlpool stock shot up on heavy volume and tonight is only about a couple of dollars away from a new all-time high. a variety of other consumer- oriented stocks jumped. eastman kodak hit a new high ahead of its earnings thursday. much the same at office depot with earnings tomorrow. and priceline.com sits a new all-time this evening. priceline may have gotten some help from competitor travelzoo. subscriber growth helped it make more money than expected from advertising travel deals online. the stock did ten times its normal volume on today's 17%

jump. that takes shares to their highest price since 2007. what would a monday be with a couple of mergers? the first is in the car rental business. hertz will pay almost $1.3 billion in cash and stock for dollar thrifty. lost in the buyout news was a better than expected first quarter for hertz and an improved outlook. the deal values dollar thrifty at $41 per share. the market thinks a higher offer is to come. competitor avis found stock buyers as well. the other deal is in investment banking. san francisco based thomas weisel is the target of a $300 million buyout by saint louis headquartered stifel financial. based upon closing prices, weisel shareholders would get $7.42 per share, just above the closing price. we want to tell you a quick note about friday's market

monitor interveer on night leer business report. we heard from several of you about a stock quote we showed, nly the ticker symbol. we showed it at 19.21 per share. that number included dividends. the regular closing price on friday was 17.12 per share. analy today closed at 16.96. and that's tonight's market focus. >> it's important to find a financial advisor you can trust but as we reported last week, many people mistakenly choose an advisor simply because he or she looks honest.

so what can dow to keep that kind of psychological bias from your portfolio and driving your decision? that's the subject of tonight's "your mind and your money" segment. our guest this evening, john nofsinger, associate professor of finance at washington state university and a specialist in behavioral finance issues. prove ster-- professor, welcome to nightly business report. checking out a financial advisor, where should one start? >> well, the first thing that you ought to do is check with the financial regulators, on their web site they have links that allow you to check out and see if there has been any kind of problems in the past. but after you have gone beyond that, one of the things that is going to be important is the level of comfort. you want to find an advisor that are you comfortable with. because after all these are very personal kinds of information you going to be discussing. in order to make a competent decision they need that kind of information. but also look for an advisor who has a strategy that can

can be explained to you and you can understand and have some sort of cuan tateive or analytical nature in it. and they have been following this strategy for a while. >> professor, especially with a financial advisor, how much analysis should one expect from that advisor versus how much emotion or kind of gut instinct from that advise never making financial recommendations? >> well, i think you want an advisor that focuses in on the analyst call side because the procedures of analytical thinking often time help overcome or mitigate some of our emotions and psychological biases. >> so as are you siting across the table interviewing financial advisor, how can one decide if they are being analytical-- analytical or more infewive or emotional. >> i think it is the processes that they set up. is it the strategy they've been following for a long time. intuitive planners tend to kind of hit the buzzwords of the day, the hot things of

the day. but analytical planners tend to have a strategy that they follow and that will work for them time and again. >> speak of strategies, bernie madoff the famous schemer didn't tell his customers much of his financial and investment operation let alone his financial strategy. if you have a secret method from a financial advisor, is that a red flag, how much should you be able to understand? >> well, i think it is a red flag. i mean it is either they are making it so complicated that you know, they are trying to sound smart or they are not telling you anything at all. they could be hiding fraud. or they could be hiding the fact that they really don't have a thorough strategy. i guess it is possible that they have some great secret that is going to make a ton of money. but given the two out of those three alternatives are bad, are you probably better off going with someone who can explain their strategy. >> we appreciate the ideas on your mind and your money. thank you so much. >> thank you. >> our guest this evening professor john nofsinger of

washington state university. we will be back with your next mind and your money segment on may 10th. >> susie: here's what we're watching for tomorrow. as we mentioned, goldman sachs' c.e.o. lloyd blankfein and trader fabrice tourre testify before a senate committee. federal reserve chairman ben bernanke appears before the national commission on fiscal responsibility. also, ford reports quarterly earnings, and we get an update on the automaker's turnaround plan as we talk with c.e.o. alan mulally. a major flight delay for american airlines. the carrier postponed today's sold out maiden flight between chicago and beijing. american blamed the delay on a disagreement with chinese aviation authorities. the airline wanted to land and takeoff in the early afternoon. instead, it was given overnight slots. american hopes to resolve things and is holding off launching the new service until at least may 4. customers are being offered full refunds. >> tom: more bad news for u.s.

newspapers as readers keep heading to the internet. nationwide, weekly newspaper circulation fell nearly 9% over the last six months. but that's not as steep as the previous six months when it fell just over 10.5%. free news online is largely blamed for the decline. among the 25 biggest papers, just one gained readers: the wall street "journal's" circulation went up half of a percentage point. euu

>> susie: with c.d.s and money market accounts paying little interest, more investors are turning to dividend paying stocks. but tax changes could make dividends less attractive. so says tonight's commentator, glenn hubbard. he's dean of columbia university's graduate school of business, and former chairman of the council of economic advisors under president george w. bush. >> in the 2008 presidential campaign, barack obama promised that the low tax on dividends-- 15%-- that we have enjoyed since 2003 will rise to only 20% with his plan. but the president recently signed into law budget rules that will make it difficult to avoid a dividend tax increase all the way back to pre-2001 levels. far from washington trivia, this difference is a big deal. such a dividend tax change is big news for the stock market. equities have value in part

because they pay dividends. today, a taxable investor in the u.s. should be willing to pay 85 cents for every expected dividend dollar. if taxes revert to pre-2001 levels-- and assuming other changes the president proposes-- that drops to 55 cents. while stocks wouldn't drop by quite that much, because markets may have already factored in changes, such a tax hike would have real effects. economists focus on two. that dividend taxes reduce firm value is, by now, well established. and higher dividend taxes will reduce dividends and increase investors required return. that means a higher cost of capital for investment, just when we really need that investment. and increasing the tax bias against equity, as the administration proposes, will encourage leverage. on the heels of the financial crisis, this policy is perverse. president obama's original dividend-tax-increase proposal was modest. will he keep that promise? i'm glenn hubbard.

>> tom: finally, a hollywood- style ending for the hollywood sign. the land around the iconic landmark has been saved from real estate developers thanks to a tinseltown cavalry and a $900,000 donation from none other than playboy founder hugh hefner. that's the final amount that a conservation group needed to reach its $12.5 million goal to turn the 138 acres into a public park. donations came in from movie fans in every state, 15 countries, a private land trust, and the state of california. certainly a happy ending to the hollywood sign and its fans. >> isn't that what we always expect from hollywood, tom, a happy ending to a blockbuster story. >> there we go. and that wraps it up for us. >> tom: that's "nightly business report" for monday, april 26. i'm tom hudson. goodnight everyone, and goodnight to you too, susie. >> susie: good night, tom. i'm susie gharib. goodnight everyone, we hope to see all of you again tomorrow night. "nightly business report" is

made possible by: this program was made possible by contributions to your pbs station from viewers like you. thank you. da&a captioning sponsored by wpbt captioned by media access group at wgbh access.wgbh.org