and so when there are swings in asset prices, they become very vulnerable to their overindebtedness. >> are you supporting, then, the bank tax where banks would have to pay this so-called responsibility fee? because i know that this is being hotly debated. the banks feel that this is an onerous fee. they've paid bay the t.a.r.p. money and now they're being charged with paying for the mess. one banker told me it's going to cost his company one of the larger investment banks between $500 million and $800 million over ten years. >> imf said itself one objective is to shrink down the size of the banks. now, that might be okay if you had a new set of banks coming up in their place that was, let's say, oriented toward the business sector. so i'm not sure whether i want to sign on to the idea of

shrinking the big banks at this moment. i would be much more interested in seeing the big banks encouraged to orient themselves toward lending to the business secretary sector. >> let me get your take on what happened last week. that is the fraud charges against goldman sachs by the securities and exchange commission. what's your take on the stability of the banking sector today? >> i certainly think that the foot. if i had to buy something that goldman sachs was selling, i would think twice about buying from goldman sachs. >> so as a client, it bothers you that there wasn't the transparency -- they didn't tell the other side that it was john paulson who selected many of the securities. >> yeah. it's securities fraud if there is an -- if the seller of the product omits to state certain things that are very material. >> as far as whether or not this is the tip of the iceberg -- in

other words, we don't know how many other wells notices are out there. we don't know how significant or steep the number of lawsuits will be for the entire industry. somebody saying just like you're saying, if they defrauded this person, they must have defrauded me. i want to sue because maybe i didn't get transparency. so there is a bit of a vacuum of information from an investment standpoint. we don't necessarily know the extent of this twb right? >> yeah. and it's unfortunate that just in this early stage of recovery, i think it's going to be a very limited one -- but it's unfortunate just in this delicate stage that we had another hit to the covenants that we have in the financial sector and, therefore, to our confidence about the strength of the recovery. >> and of course confidence dictates behavior. and you've studied unemployment for so much of your career and studied it so carefully. do you think we're going to see

any job creation this year? when would you expect a recovery in jobs? >> i'm not a double dip guy. i never had any doubts that we would have -- that we would have pretty good velocity coming around the turn. an wouldn't be at all surprised if employment grew by 2% over the year, for example. what i'm concerned about is that the recovery will be limited, that the new normal when we get to it will be something that's very disappointing, something like, let's say, 7% unemployment. we've had a kind of revolution in banking and the banks are somewhat less oriented now toward lending to business companies than they were -- i think we really have to get back to an old-fashioned capitalism of the 1890s in which there were small banks and big banks, but even big banks made big loans to

companies doing big innovative projects. i think if we don't get back to that dynamism, then the recovery is not going to have legs. it will go pretty well for two, three, maybe four years. but then the economy will settle down at a disappointing level of economic activity. >> well, certainly financial reform would also help there. and i think sheila bair, the chairman of the fdic told me that she is expecting a bill next week. and we will likely see this legislation come to fore by the summertime. so we'll see about that. professor edmund phelps, good to have you on the program. so appreciate you joining us. up next on the "wall street journal report" one of the world's most recognizable entrepreneurs tells me his plan for going green. virgin founder sir richard branson is with us. he has environmental business to attend to. then what your dishwasher says about the economy.

how today's homeowners feel at home in a still-weakened market. as we take a break, take a look at how the stock market ended the week. o's been saving y and who doesn't want value for their dollar? been true since the day i made my first dollar. where is that dollar? i got it out to show you... uhh... was it rather old and wrinkly? yeah, you saw it?

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this week marked the 40th anniversary of earth day. since climate change has entered the national conversation, some entrepreneurs are hoping to create climate wealth. i spoke to one of the world's most recognizable business leaders british billionaire richard branson about the carbon war room, his latest big idea. uniting the business community and developing market-based solutions that may lower carbon emissions. >> taking natural resources and reducing carbon is an exciting challenge. what the carbon war room is doing is to try to help businesses make it -- to do

that. also, to help them save money and to help them come up with some ways of doing it. and i think the world -- you know, the world needs an organization like this that can help different companies and different industries get on top of this problem. we can't just leave it up to the -- up to governments. >> richard, you say the shipping industry is a big polluter as airlines but been flying under the radar. you really want to get shipping involved here. >> well, i think that shipping also wants to get involved. we don't want to just have a stick and go hitting industries. we want to work with industries that know that they have a problem where they know they can actually make a lot of money by resolving that problem. and the carbon war room has been working very closely with the shipping industry. i think they've already made a big difference. i suspect they'll make an enormous difference over the next 12 months.

>> the international air transport association expecting the volcano impact on the airlines to be greater than the september 11th attacks in 2001. can you characterize things for us? what do you think the impact may be on the industry? >> it probably depends whether the european industry gets the same kind of help that the american industry got after 9/11. the ministers transport in europe has indicated that they will give the european airline industry help and compensate the industry for the losses. and obviously, we're hoping that that is the case, because this has been a really exceptional knock for the industry and a pretty horrendous time for our passengers who are stranded all over the world. >> you think, though, that the european response to this crisis has been inadequate? what could they have done better? >> well, i -- look, if you're

going to fly through the heart of a volcano, it's not a good idea. if you're going to fly some hundreds of miles away from the heart of a volcano, most of the experts -- most of the expert engineers believe that it should be completely safe. now, what i think they should have done was much sooner got planes up there to see whether there was any thick parts of the ash that planes should avoid. the idea that they just closed down the whole of europe i suspect was taking it too far and for too long. >> any thoughts on the safety issue here in terms of damage to people from the particles in the air? >> i think the critical thing is that overseas safety is of paramount importance. but we need politicians to urgently learn from this and the

airline industry -- its engineers feels that there's ways they can fly planes safely, then the politicians should take that in the future. >> let me get your take on the environment here given you have such a great vantage point with so many businesses. how do you think the developed world is doing right now in terms of the road to recovery? >> i think basically very well. you could do with a few less volcan volcanos. but subject to -- putting that on one side, i think we're going in the right direction. and i feel very confident about the future. >> my thanks to sir richard branson. up next on the "wall street journal report," home renovations are on the rise and are greening up. what your kitchen remodeling means to the housing industry and the market.

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you to take a look at the new gm. whether he it comes to the battered housing sector today, trading up and flipping are out. as a response to a soft market and a desire to increase efficiency, america's architects report that remodeling is on the rise. many homeowners are choosing to reinvest at home. >> the uncertainty of the economy was one of -- also one of the factors that kept us here. we were worried buying new where the market was going to go. so we redid the kitchen and we made the flow between the kitchen and family room more conducive to everybody being together. >> i think more and more we're utilizing the existing footprint and saying can we open up the space. clients don't always tell me that they want to be green, but as an architect we try to engage green elements.

i find that by bending the wall, you can introduce corners in a room. when you introduce corners you can introduce cross ventilation. it's incredibly useful for reducing heating and cooling costs. >> i don't think we started the project as a green project but i think some of the things we incorporated into the project are green. the windows will make it more energy efficient. the dishwasher is energy star rated. one of the toilets i know is using less water per flush. i felt overall redoing the house was the most cost effective. >> people are choosing to remain in their homes. >> kermit baker chief economist for the institute of architects. nice to have you on the program. thank you so much for joining us. according to the aia's latest survey, renovations are making a big comeback. is that how you see it? and why is that? >> well, renovations are a $250 billion industry, according to our estimates. that's down a bit from its peak, but it's bigger than the housing

market now and for a lot of good reasons, i think. the housing market, new construction is having a lot of problems. so folks are turning to renovations as a way to avoid having to buy and sell homes in this market. >> now, prices as far as your average home out there, are they still too high? do prices still come down? >> no. i think prices relative to incomes is about where they have been historically. they've adjusted pretty much -- in most markets pretty fully. >> not necessarily buying a house that's an issue because prices have come down. but obviously selling your own house could be an issue and getting a mortgage is tough. >> no. selling a house in this market is difficult. credit is still very tight. i think lenders are still nervous about lending. so until that sorts out, i think that we're going to see more remodeling activity. >> let's talk about where the remodeling is. in terms of construction the hot spot is the kitchen and bathroom? >> that's coming back. i think six to nine months ago, the hot spot was really

replacements -- windows, siding, other things that had energy -- retrofits. potential. now we're seeing more traditional kitchen and bath remodels and room additions and interior reality racials. >> is it a good time to do it right now if you want to remodel? should you consider projects like this in terms of affordability? is it more affordable now? >> contractors are hungrier for work now. >> probably get a good deal. >> you can get a good deal. and more to the point you be he you can get your phone call answered a lot quicker. it's no longer wait six months and we'll talk about it. they're over that afternoon talking to you about a project and you're going to get a bid or several bids if you want them within a few days. >> and of course the government uses the word retooling in some regard as far as efficiency and green. so the family that we just saw in that taped piece used a lot of small possibly green elements. tell me about this.

how great is the demand for energy efficiency in the home today? >> i think the demand for green in general and energy efficiency specifically is quite strong. we've talked to contractors and they say nationally, a national survey indicated 25% of all projects out there now green in some way -- energy efficiency or environmental sustain bltd -- is a specific objective of that project. so i think there's a lot of interest in it. >> and that investment makes the home more valuable. >> it makes the home more valuable and increasingly you can write more off of it. the energy tax credit allows you to take some savings when you file your taxes. there's legislation now that may well pass the home star program that allows you to get a rebate when you buy an energy efficient product. >> that's great, great information. if you want to sell your house down the road, what's the most important remodeling that you should do to increase the value of your home? >> well, historically it's been kitchen and bath projects.

those are what people look at when they walk in a home. having a modernized kitchen and bath, modern features, up-to-date appliances and things like that generally are what show the best and that's generally what households feel will make sense as they understeak their projects. >> great information. kermit, we appreciate your time today. kermit baker joining us here in the studio. up next on the "wall street journal report" we'll look at the news that will have an impact on your money. and the most successful women in the media industry. from what you watch to how you surf to who makes you laugh. >> it's exciting. there's 1100, 1200 in this world working.

become a fan on facebook. you'll find us on facebook at wsjr with maria. now a look at the stories coming up in the week ahead that may move the markets and impact your money. earnings season rolls on with reports this week from dow companies caterpillar, dupont, 3m, exxonmobil, procter & gamble and chevron. tuesday leadership from goldman sachs appear before a senate subcommittee to discuss the fraud charges against the firm. on wednesday the federal reserve's open market committee wraps up a two-day meeting. we'll be watching for any signs that the fed plans to raise interest rates. and of course the language about the economy always key. on friday we get the first reading of the gross domestic product for 2010's first quarter. gdp is the broadest measure of the u.s. economy and typically a market mover. finally today having lunch with

some of the media's most powerful ladies the new york women in communications matrix awards were presented. they honored such as tina fey, sheryl crow and gail king presented by her good friend oprah winfrey. i was pleased to present the honor to google's melissa myer. the company's vice president of research. >> do you think she knew when she accepted the job that the ideas she generated would have an effect on the more than 7 billion people who use google every month? >> people often ask me what's it like to be a woman at google and the question always throws me because i'm not a woman at google. i'm a geek at google. >> ah, those geeks at goog p. you know the geeks at google earned almost $7 billion last quarter. that will do it for us for the show today. thank you for joining us. come back next week. i'll be reporting from washington. each week keep it right here where wall street meets main

street. have a great weekend, everybody.

disaster zone. the cleanup begins after destructive tornados level entire communities across several states. then, miners' memorial. president obama's promise to the families of those 29 men killed in that huge underground explosion in west virginia. and, snapshots of space. the hubble telescope marks a milestone and delivers a stunning new image of the universe. it's monday, april 26th. >> from abc news, this is "world news now." >> good morning, i'm todd connor sitting in for jeremy hubbard. >> feels like we're seeing more of you than him lately. >> always out and about doing stories. >> but it's a pleasant change

for us. >> i'm glad to be here. >> i won't say that when he comes back, though. good morning and thanks for being with outside this monday. i'm vinita nair. experts now say the tornado which tore through mississippi had winds of 160 miles an hour and left a path of destruction at least 50 miles long. >> the massive twister was part of a violent outbreak with 54 reports of tornados across seven states. but mississippi clearly took the brunt of it. eric horng reports from yazoo city. >> reporter: in this community of shattered homes, survivors claw through rubble searching for any sign of the familiar. >> i don't know what to do. i'm just totally lost. i have nothing. nothing. there's nothing. i don't know where to begin it, i don't know where to end it. >> reporter: the destruction in yazoo city is measured not in buildings but blocks. from the air you can see the full scope of the catastrophe. on the ground you can feel it. >> the hardest part of moving forward is just to see the community like this, you know. it's so painful.

>> reporter: the twister was one of several that carved a path of destruction almost 200 miles long across mississippi, killing at least ten people, including a baby and two other children. morgan hayden and jaziah moto survived by huddling in their bathroom. >> we came in the hallway and we could feel the wind just coming through the hallway, like picking us up. we went straight here to the bathroom and just got down. >> reporter: in this deeply religious community, many spent this sunday praying in churches and for them. the hillcrest baptist church was heavily damaged. >> i went in the sanctuary and got on the pulpit table and the whole building fell around me. >> reporter: after viewing the destruction, mississippi's governor, a yazoo city native, promised help for his hometown. >> we have begun discussions now or today about how to get temporary housing, because we're going to have a number of people that need different housing. >> reporter: the governor says at least 100 homes in yazoo county were damaged or destroyed. hundreds remain without power

here. the national guard is on hand to make sure no one takes advantage of this vulnerable community. eric horng, abc news, yazoo city, mississippi. a magnitude 6.5 earthquake struck off the coast of the philippines. the quake hit at 10:59 a.m. local time 195 miles off the batan islands in the philippines. the earthquake was also felt in taiwan where buildings swayed in the capital taipei. no injuries or damage were reported. the coast guard is keeping a close eye on oil leaking from that rig that exploded and sank off the gulf coast. it is leaking 42,000 gallons of oil a day, creating a huge slick which could threaten the waters from louisiana to florida. the coast guard says the oil is expected to stay 30 miles off the coast at least the next few days. crews are using robot submarines to activate valves at the wellhead in hopes of cutting off the leak. >> this is sweet crude. it's not as toxic as some of the other oils that we import. it's not a good thing.

and if it does come onshore it will be an environmental catastrophe. >> 11 workers from the oil platform are missing and presumed dead. democrats are writing tough new language into a financial reform bill hoping it will gain bipartisan support. they need 60 votes in order to move forward. senate banking committee boss chris dodd and agriculture committee chair blanche lincoln are nearing agreement on a combined bill for derivative oversight. sources close to the negotiations have told abc news senator richard shelby, the top republican on the banking committee, indicated the two sides are close to an agreement. >> i think we're closer than we've ever been. will we get a bill by tomorrow? i doubt it. i would always hope so. >> the new provision would require most derivatives to go through a new network of clearinghouses and be traded on regulated exchanges. the first procedural vote is expected today. china's growing economic influence is giving it more financial clou