captioning sponsored by wpbt >> susie: the fed's reputation has been tarnished so says a key report on reforming financial regulation. it's co-author, william donaldson, says a systemic risk regulator is needed now and it shouldn't be the federal reserve. >> they were buying a corpse when they thought they were buying a baby. >> jeff: he's talking about scams touting money making opportunities in the worthless shares of old g.m. coming up, an investor alert. >> susie: tonight's street critique guest says wal-mart's not the only retailer cashing in on the recession. he's patrick o'hare, chief market analyst at briefing.com. >> jeff: then, it looks like more people are paying their credit cards on time. american express and capital one both report delinquencies are down. the news helped stocks surge as the dow added over 250 points. >> susie: i'm susie gharib. >> jeff: and i'm jeff yastine. paul kangas is off tonight. this is "nightly business report" for wednesday, july 15.

"nightly business report" is made possible by: this program was made possible by contributions to your pbs station from viewers like you. thank you. >> susie: good evening everyone. >> jeff: no alikely hood of support over the near term. end quote. that means no money to help the

cash-strapped firm. cit is evaluating alternatives and one of the nation's largest small business lenders serving thousands of firms and has been on the verge of bankruptcy for days. >> susie: harsh criticism today of president obama's plan to make the federal reserve the "super regulator" of the u.s. financial system. an institutional investors group led by two former heads of the securities and exchange commission says that won't work. they say the central bank should not get the job of preventing systemic risk in the financial system. that task is the centerpiece of the president's plan to restructure how banks and other firms are regulated to prevent another financial collapse. >> susie: arthur levitt and william donaldson's criticism of the fed was blunt. their report compiled by the investors' working group said:

instead, they are recommending the creation of an independent oversight board to monitor risk management. that so-called "systemic risk oversight board" would be appointed by the president and approved by congress with no affiliation to government agencies. the task force is also recommending hedge funds and private equity firms be required to register with the s.e.c. and be subject to oversight. over the counter derivatives, like credit default swaps, should trade on regulated exchanges and be subject to strict government regulation. and congress should create a new agency to regulate consumer financial products including mortgages. >> susie: i sat down with william donaldson earlier today and asked him why he's opposed to the fed taking on the job of "systemic risk regulator." >> we feel that the basically

the federal reserve has got its hands full in terms of monetary policy and felt an independent group that is not coming out of anyone one of they existing agencies, independent group with great strength in terms of the commissioners and board members and are particularly strong staff with the mandate and the authority to go anywhere they want, it is a way of really getting at the systemic risk problem. >> susie: you're proposing the overside board and treasury secretary geithner said you can't put out a fire with committee. >> the kind of editing we're talking about here is a small group that by apointment and the people apointed have different

dimensions of experience and a strong chairman >> susie: and said hedge funds and private equity funds be registered with the fcc. bernie madoff's funds were registered and also cheated thousands of investors so why would this work. >> he didn't register. the thing registered was a different business so this other business that was such a fraud was not registered, nobody knew about it. it only seems logical that if funds are put together whether you call them hedge funds or whatever there should be some authority that that's right to go in and look at the procedures within that fund and look at things such as how they price their securities, what conflicts of interest they have, etcetera, etcetera. >> susie: i'm sure you heard it said that we really don't need new regulation and structure we

need smart regulators to enforce the rules we already have. what are your thoughts on that? >> there are a number of rules and regulations we don't have. a whole d derivative area that s gotten us in trouble and no oversight from stc and i think clear we need affective regulators and clearly we need we need people who are trained and again this is a problem and a challenge and opportunity to bring people into the regulatory agencies that are trained and know what they're talking about and eager to work through that agency. >> susie: what's your analysis of the obama reform plan? is it the right solution to reform the system? >> we say that it's a very good start. a good start but we're taking

things a little further and also counseling that the whole systemic part of this and some conflicts of interest that are going require more study and we should not move too swiftly. >> susie: so what's the one take away message you would the obama administration to take from your report? >> i hope they take a good hard look at some of the areas we've pointed out and take and see if they want to add to their proposal >> susie: i guess what it comes down to is what investors care about and will the reforms ultimately spot risks in the future and will they be able to prevent a bernie madoff situation from happening again. what are your thoughts on that? >> there's always going to be in a society as big as ours and a global and financial investment world there are going to be people coming up with schemes

and so forth and some will be pretty devious i'm sure so can you say that a madoff kind of thing would never happen again with proper regulation, i don't think you can say that. the best you can do is to address the causes of this situation which the congressional committee taking this on is going to do and then to do the best you can. >> susie: pleasure talking to you. thank you. >> thanks. >> jeff: while the investors' working group made recommendations aimed at preventing another financial crisis, congress today named a panel to investigate the crisis. former california state treasurer phil angelides will lead the ten member bi-partisan group. congress called for the probe into the worst meltdown since the great depression earlier this year. the panel will have just over a year to get to the bottom of things. it has to report back to congress by december 15 of next year. >> susie: former treasury secretary henry paulson is

defending his actions during the financial crisis. tomorrow he will testify on capitol hill about bank of america's controversial acquisition of merrill lynch. paulson released today his prepared remarks, saying bank of america had no legal basis to nix the merrill deal and doing so would have shown a quote, "colossal lack of judgment." paulson also says it was appropriate for him to warn b.o.a's c.e.o. ken lewis that the bank's management could be ousted, if it rejected the merrill purchase. >> jeff: investors viewed today as a colossal buying opportunity, after intel's better-than-expected results last night. the dow opened nearly 100 points higher at the bell. intel shares leapt 8%, giving the dow a 180 point gain by noontime. adding to the bullishness, credit card issuers like american express say they're now seeing fewer defaults and delinquencies. that helped the financials and added more fuel to today's rocket ride higher. the dow rose 256.72 points to close at 8,616.21.

the nasdaq added 63 points to 1,862.90. the s&p 500 gained 26.84 points to 932.68. in the bond market, the 10 year note fell 1-4/32 to 96 putting the yield at 3.61%. >> susie: shares of the old general motors lost half their value today as regulators lifted a trading ban on the penny stock. trading was halted friday after some investors confused the new g.m. that emerged from bankruptcy with the old g.m. stock that remains tangled up in court. to be clear: the new g.m. isn't publicly traded now and most of the company is owned by the u.s. government. but what about those old g.m. shares? as darren gersh explains they're still virtually worthless.

>> reporter: it was stunning news. last friday, a reborn general motors peeled out of bankruptcy far sooner than anyone thought. and shares in g.m. jumped on the news. the only problem is, there are no shares in this new g.m. >> they were buying a corpse when they thought they were buying a baby. >> reporter: finance professor james angel said many would-be investors thought they were buying the new, post-bankruptcy g.m., when, in fact, they were buying g.m.'s cast off parts-- the assets that are still languishing in bankruptcy court and might be stuck there for years. >> many of the online news wires basically said "general motors, gmgmq today emerged from bankruptcy. " so many people thought, ah ha! i can buy stock in the new company now, but it wasn't the new company they were buying. it was the corpse of the old company. >> reporter: when g.m. went bankrupt, its old stock got a new trading symbol-- gmgmq. that confused some investors so regulators have given the old company a new name-- motors

liquidation company. the financial industry regulatory authority's john gannon wants everyone to know buying stock in motors liquidation or any bankrupt company usually means you are buying a lemon. >> people who think, if they buy >> reporter: regulators did not halt trading in the old g.m.'s shares until just after 2:00 p.m. last friday-- too late professor angel says. but gannon says securities law required them to wait for the kind of unusual trading that took place on friday. >> people who think, if they buy the old stock, when the company emerges from bankruptcy, they are all of a sudden going to make a big return, are wrong. what is probably going to happen is the stock is going to get canceled. their investment will be worthless and there is probably going to be new stock issued, but they're not going to have participation in that new company. >> reporter: the new g.m. plans

to issue new shares next year. shares in motors liquidation now cost about as much as a newspaper. and regulators warn the stock will probably be worth nothing by the time the bankruptcy court finishes its work. darren gersh, "nightly business report," washington. >> jeff: municipal debt issuers could soon have to dot their i's and cross their t's in public. the s.e.c. wants the nearly $3 trillion muni market to have the same disclosure rules as publicly traded companies. the agency wants states and counties to be up-front about things like bankruptcies so investors can make better decisions. and it wants those disclosures quickly-- within 10 days. right now, muni debt issuers have some gray area to work with disclosing in what's called a quote, "timely manner"

>> jeff: now let's take a look at some stocks in the news tonight.

>> jeff: tonight's street critique guest says it's still too early to get excited about an economic recovery. he's patrick o'hare, chief market analyst at briefing.com where he writes the bargain hunting column. pat welcome back to n.b.r. >> hi, jeff, thank you. >> jeff: first give us your sense of the market today, the dow up 250-plus. >> earlier in the week the s&p was down and we think it got angst out of the way so what he

we witnessed was a relief trade because earnings are coming in betser than feared and the market's appeased with his second quarter report and the guidance is seven percent below the year ago period intel is still not operating in a normal environment ands they a bit daunting to us given we're 18 months into the recession so we wouldn't get carried away with what we're seeing so far. >> >> so be patient. you still have to wait around a bit. >> given the run we've had off the march, yes, we would agree with that. >> jeff: you write the bargain hunting column for briefing.com. what's your comments on how you define a bargain. >> to start from from a top-down prespective and looking at the broader economy and based on where we think the economy is heading breaking down to industry groups and one of the value-oriented metrics is the

price to earnings growth ratio the pe divided by the growth rate. >> jeff: what's your thought here as far as if you had to pick one bargain what would it be? >> given the top-down view and the outlook that isn't quite as rosy as the market's trading on wednesday's trading suggest it should be we look at the dollar tree stores the symbol is drtr has done well with in the recession period and the unemployment rate expected to hit double digits over the next future here we think it will going to benefit from the trade-down effect because the consumer has limited wage growth. >> jeff: the stock has had a tremendous run in recent months and over the past year or so. do you think there's still room for the stock to go further given time for the gains to digest? >> sure. it's probably going to move with the ebb and flow of the market so when you get a good up day

hinged on favorable prospects and the stock is likely to under perform when that view changes stock because it has had a good run will probably settle done but give enwhere we think the economy is headed we like the prospects for the long term investors. >> i saw the ceo selling a big chunk of stock. >> it's prudent to take some money off the table and we're comfortable with that happening right now. >> jeff: and pat, any disclosures to make regarding dollar tree? >> no, i do not own stock at this time. >> jeff: pat, thank you for coming back on to the program. >> thank you, jeff. >> jeff: our guest, pat o'hare, briefing dot com. >> susie: tomorrow, we'll see if investors go ga-ga for google's latest earnings. we'll analyze the numbers and the outlook.

>> susie: a former credit suisse broker turned fugitive has been captured. julian tzolov was picked up in spain today, after going missing in june. tomorrow, a hearing is set to determine what impact the capture will have on his upcoming trial. it's set to begin next week. tzolov is charged with fraud and conspiracy for buying auction rate securities when his clients thought they were purchasing federally-backed student loans. >> jeff: cox communications is sending the travel channel on a trip to a new owner. reuters is reporting an auction for the cable channel is expected to begin in the next few days. possible bidders include scripps networks interactive and time warner. the travel channel is valued at up to a billion dollars. cox bought it in 2007.

>> susie: here's a look at what's happening tomorrow: weekly jobless claims are out and the national association of home builders releases its july survey. also, quarterly results from harley-davidson, i.b.m., j.p. morgan, marriott and nokia. >> susie: also tomorrow, wal- mart will unveil a new ratings system, but this one isn't for movies or music. instead, it's designed to help shoppers evaluate the social and environmental impact of the products they purchase.

but the sustainability ratings won't be in place for a while. first, wal-mart will send questionnaires to thousands of its suppliers asking about water used and carbon-dioxide emissions created in the making of their products. the effort will be rolled out in steps over the next five years and wal-mart hopes other retailers will get on board. >> jeff: recapping today's market action: shares rally on an improved outlook from the federal reserve and intel's outlook. the dow gained 257 points. and the nasdaq gained 63. and to learn more about the stories in tonight's broadcast, to watch our streaming video and to take part in our daily blog, go to "nightly business report" on pbs.org. you can also email us at nbr@pbs.org. >> jeff: that's "nightly business report" for wednesday, july 15. i'm jeff yastine. goodnight everyone and good night to you, susie. >> susie: goodnight, jeff. i'm susie gharib. we hope to see all of you again tomorrow evening. "nightly business report" is made possible by:

this program was made possible by contributions to your pbs station from viewers like you. thank you.

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