captioning sponsored by wpbt >> paul: while consumers will see the first signs of the biggest overhaul of the credit card industry in two decades, tomorrow, many are already getting hit with rate changes and account closures. tonight, a look at the new provisions. >> susie: the head of whole foods lands in the middle of the health care debate, saying health care is not an intrinsic right. but his views aren't jiving with some of the organic grocer's die hard customers. >> paul: tonight's "street critique" guest sees performance anxiety gripping the markets this fall. he's doug roberts of channel capital research and he'll explain. >> the idea was to create a centralized transparent place for buyers and sellers to come together to sell assets that they can't sell on the public exchanges or other types of platforms. >> susie: he's talking about second market. we profile the market maker for hard to trade securities including california iou's. >> paul: i'm paul kangas. >> susie: and i'm susie gharib.

this is "nightly business report" for wednesday, august 19. "nightly business report" is made possible by: this program was made possible by contributions to your pbs station from viewers like you. thank you. 7//& >> susie: good evening everyone. the internal revenue service today lifted the veil of secrecy on a major swiss bank. the names of 4,500 americans with accounts at u.b.s. were handed over to the taxman. those clients are suspected of hiding their assets and evading u.s. taxes.

at one time, those accounts held more than $18 billion. a tentative deal was reached between u.b.s. and the i.r.s. last week. but the details weren't made public until now. irs commissioner doug shulman says the agreement sends a strong message to all americans, including tax cheats. >> we will use all of the enforcement tools at our disposal to pursue you. for honest hard working everyday americans. school teachers, firemen, policemen who pay their taxes. the message is also there. wealthy people can't skirt the rules and hide assets. we are going to insure that everyone pays their fair share of taxes. >> susie: speaking of fair shares, late this afternoon, the swiss government announced its selling its stake in u.b.s. the swiss hope to recoup more than $5.5 billion on that sale. and changes are coming tomorrow for american consumers. thanks to the credit card act of 2009, a new set of rules goes into effect.

including, the ability to reject rate increases. but as jeff yastine reports, it's already having some unintended consequences. >> reporter: across the country right now, there are thousands of people just like kirk arthur. he keeps several credit cards. and when he attempted to make a small purchase with one of them last weekend, he found it was canceled without any advance notice. >> there's that feeling of embarrassment. you feel, oh, what did i do wrong? and then i got angry because i knew i hadn't done anything wrong. and that was the disconnect. i've been a good customer. i pay my balances off on time. >> reporter: arthur's cancellation comes as part of an industry-wide movement to get out ahead of the credit card act of 2009. curtis arnold, founder of cardratings.com, says the number of accounts being cancelled or switched to variable rates has surged in recent weeks.

>> this is crazy. unprecedented things that are happening right now. probably a worse case scenario example. not happening to millions and millions of account holders, but it is starting to happen, and we're hearing about it anecdotally. >> reporter: starting tomorrow, consumers will now get their statements 21 days before payment's due, instead of the current 14 days. and card issuers will have to give at least 45 days advance notice to rate hikes, instead of 15-days now. a second phase of changes comes in february with even more protections for card users. bankrate.com's leslie mcfadden says the law is forcing adjustments on issuers and consumers alike. we're weather r we're already seeing credit going down, minimum score requirements going up. so there are some negative consequences, but i'm glad to see that consumers have more protections on their credit cards.

>> reporter: consumers who tend to carry large balances, or have inactive accounts, were most likely to see card cancellations. experts say paying down balances will lower the probability of seeing a no-notice cancellation. but as kirk arthur's experience shows, no one's immune as card users and card issuers adjust to the new, more regulated landscape of consumer credit. jeff yastine, nightly business report, miami. >> paul: wall street opened lower in reaction to selloffs in overseas markets, especially china, as concerns persisted that global stocks are over- priced. 30 minutes into trading, the dow posted a modest 33 point loss and the nasdaq was off 9 points. the mild early downturn attracted buyers. then a surge in oil futures on news of a drop in crude inventories triggered aggressive buying in the energy sector and that buying in energy helped the general market close in positive territory.

>> susie: a bipartisan group of senators isn't waiting until the summer recess is over to get back to work on health care reform. finance committee chairman max baucus said his group of three democrats and three republicans will continue working tomorrow over the phone. and he thinks they'll defy skeptics by reaching a compromise that can pass the full senate this fall. >> susie: but the c.e.o. of whole foods is speaking out

against health care reform. john mackey says the obama reform plan would become massive entitlement program. he laid out his views last week in a highly critical op-ed piece in the "wall street journal." as stephanie dhue reports, those views have landed him in a heap of trouble, with some loyal customers. >> reporter: whole foods is better known for its organic and natural products than for its politics. the brand appeals to shoppers who want sustainable seafood and environmentally friendly foods. but c.e.o. john mackey's editorial against so-called obamacare has tarnished the chain for people like mark rosenthal. he started a "boycott whole foods" group for people who disagree with the c.e.o.'s health care views. >> whole foods built their brand on offering progessives, especially extra value for their product, cut the principles that mackey was espousing. make me think, this is not the company i thought i was supporting. >> reporter: the group, started last friday, already has 16 thousand members on facebook and is also spreading the word on twitter.

at first whole foods responded that the op-ed was mackey's personal view. but in a statement today, the company says it branding expert robert passikoff says the emotional reaction to the c.e.o.'s op-ed will cost the company. >> these days, in this economy, a loyal customer can be worth quite a bit of money, if you even just extrapolate out against the people who felt angry enough to list their names on the facebook boycott page and multiply that out times their weekly buys, that adds up to a lot of money. >> reporter: financial analysts doubt the issue will derail the company's long term prospects. many shoppers, like erin gray, won't change their shopping habits. >> it's almost unamerican to boycott something simply because

you disagree with what they have to say, as long as what somebody saying is not offensive then i don't see the point in a boycott. >> reporter: whole foods is already grappling with selling premium products in a recession economy. analysts say while this may not have a huge impact, it won't help. stephanie dhue, "nightly business report", washington. >> paul: it's been said that at some price, any trade will clear. but that doesn't always mean it's easy to match sellers with would-be buyers. now there's a new marketplace which hopes to be the match- maker for those tough trades. scott gurvey takes a look. >> reporter: got a white elephant you'd like to get rid of? this is the place to bring it. second market looks like your standard wall street trading floor. but it brings together buyers and sellers willing to trade otherwise illiquid assets. barry silbert founded second market in 2004. >> we started off with something called restricted stock and warrants in public companies. and then we added eight new

markets over the past four years ranging from something called auction rate securities to private company stock and even recently the california i.o.u.s. >> reporter: this is not ebay. buyers must meet regulatory standards for sophisticated investors, those permitted to buy unlisted securities. second market works cooperatively with the s.e.c., finra, sipc and other regulators. and it arranges the escrow and legal paperwork on all sales. second market collects a transaction fee on successful trades, making twenty million dollars in 2008 on 1 billion dollars worth of transactions. >> there's trillions of dollars of illiquid assets out there. we're involved in things like the toxic assets which are mortgage backed securities and c.d.o.s. and just because they're illiquid doesn't mean that they're distressed or not a good investment. so things like private company stock, which is going to be an active market for us in good times and bad times will obviously improve as the economy improves, whereas the toxic assets we certainly hope to help clean out the system and then move on.

>> reporter: tim connolly of corporate strategies turned to second market when he needed to raise cash for the family trust and pension funds he manages. the assets were auction rate securities but, because of the credit market freeze, there were no auctions. second market found a buyer in two weeks. >> in this case, it was a buyer who managed a large number of i.r.a.s and the people in the i.r.a.s got a tremendous deal because the i.r.a.s can be patient and that was pension plan money that could wait to be paid off. so all these i.r.a.s got it at discount, they got a small fee and we got our liquidity back. it worked just perfectly. >> reporter: there are no financial restrictions on sellers, but of course some assets are still more illiquid than others. >> we get inquiries of people trying to sell things ranging from an ice skating rink to assets, mines in siberia, fortunately, we have buyers for lots of assets, unfortunately,

some of the more unique one we don't have buyers for, not yet. >> reporter: which is a shame because i have a bridge i'd like to sell. scott gurvey, "nightly business report", new york. >> susie: transportation secretary ray lahood promised today that auto dealers participating in "cash for clunkers" will be paid. the comments came as a new york dealer group said half of its 425 members have pulled out of the program, because they haven't been reimbursed. so far only about 2% of clunkers claims have been paid.

lahood blames the delays on paperwork mistakes and a shortage of staff to process the claims. the secretary also said, later this week he'll detail plans for winding down the %3 billion program. meanwhile, chrysler is winding down its lifetime warranties starting with its new 2010 models. instead, the automaker will provide 5-year, 100,000 mile warranties. the move was prompted by customer confusion and the inability to transfer the warranty if a used car was sold to another buyer. the new offer covers nearly all vehicles with the exception of a few commercial and diesel- powered trucks. chrysler continues to struggle to persuade car shoppers to buy its vehicles. right now, the best-selling cars in the "cash for clunkers" program are toyotas and hondas. paul? >> paul: susie, chrysler does make the jeep cherokee. it's one of the most popular clunkers, being traded in for a rebate. now let's take a look at some stocks in the news tonight.

>> paul: tonight's "street critique" guest says right now the markets are particularly susceptible to bad news even with the economic optimism we've been seeing. he's doug roberts chief investment strategist at channel capital research and author of "follow the fed to investment success." doug welcome to the program. >> thank you, paul. >> paul: on wall street we saw big selling on monday followed by modest comebacks yesterday and today. what is your take on the current market? >> right now we've come a long way, paul, from a period in march where we had an extreme degree of pessimism. people thought the world was falling apart. now we've been fueled by

basically better than expected earnings and also better than expected economic news. although the absolute news hasn't been particularly good, it has been better than expected. we're now seeing a few chings in the armor that are appearing as news throws doubt on the question. the question is how much of a bounce we'll be geling, and that's what you're seeing over the last couple days. >> paul: so you're not a full-fledged bull by any means, are you? >> no. i think i can be bullish short-term. but i think long-term these problems will take time to work out. paulds i under you're expecting the markets to suffer from performance anxiety this paul. what do you mean by that? >> performance anxiety means that the market tends to go up, you're go to have a money managers who will be forced to participate in this to keep their jobs of there's a saying on wall street that if you're down when everybody else is down you're not going to get hurt. however if you're down or lagging when everybody else is

outpofing, that's a real danger to your job so, you may have a lot of money managers who are forced to buy into this market. if it continues to go up. even if they really don't believe that this is a lasting rally. >> paul: interesting, and i think you're right on target there. tell me about what you call your three bucket approach to investing, what is that? >> well, in this type of environment where there's a high degree of uncertainty, i believe that investors are to divide their money into three buckets. the first bucket is money that you need immediately, and that should be revery safe, and concerned more with preservation of capital and return of capital than return on capital. then you have your long-term money which can be a bit more aggressive and long-term with. then the third bucket is really money that you have in the middle and you have to view that as more trading money, money that you're going to take profits much more quickly as they arise. >> paul: with that in mind, what is the favorite sector that you have right now in the stock market?

>> right now i believe this is a government trade, really areas that will than benefiting from the government involvement in the economy. which is increasingly on life support with government help, and that's really technology, since technology benefits from really the fact that you can replace jobs with software, with technology solutions, and that's a much cheaper alternative. i think that's going to continue. also you've seen in health care really that's again a government focus, and right now the pharmaceutical industry has determined that they can make money in this environment by lowering their marketing costs. >> paul: so technology and health care. pharmaceuticals. >> exactly. >> paul: very good, doug, our time is up but i want to thank you for being with us. >> thank you, paul, for having me on. >> paul: my guest, doug roberts, chief investment strategist at channel capital research. >> susie: tomorrow, 1.5 million americans may soon lose their unemployment benefits, but only 60% of the out of work are covered. we'll explain.

>> susie: james lockhart, the former head of the agency that supervised fannie mae and freddie mac, is now a turnaround specialist. he is joining wl ross and company, the new york firm known for restructurings and buyouts. until two weeks ago, lockhart oversaw fannie and freddie as they emerged from accounting scandals and guided them as they became government-chartered companies. >> paul: the food and drug administration is launching its center for tobacco products. today, the agency announced that doctor lawrence deyton will head that new division. he was the chief public health officer for veterans affairs, deyton's department will monitor tobacco advertising and promotions and focus on stopping the illegal sales of cigarettes and other tobacco products to kids. euu

>> susie: in the money file tonight some thoughts on boosting the nation's savings rate. here's jason zweig, personal finance columnist at the "wall street journal." >> if the economy is to recover, saving will have to become easier. the personal saving rate has officially risen to around 5% after hovering close to zero for years. but, according to the federal reserve, only 57% of american families saved any money in 2007. here are a few ideas that might help.

tax refunds automatically invested in i.r.a.s all tax refunds could be automatically invested in an ira unless the taxpayer chose to take the refund in cash instead. the money could go into cheap stock and bond index funds modeled after the thrift savings plan used by federal workers. taxpayers would be free to transfer to another i.r.a. at any time, but early withdrawals would be penalized. congress should create d.i.y., or develop & invest in yourself, accounts. d.i.y.s would be available to any household earning less than the u.s. median income currently around $50,000. contributions, growth and withdrawals would all be free of any income tax. the proceeds could be spent only on education or vocational training, buying a home or starting a new business. and the u.s. should revive the thrift stamps that encouraged savings during world war i. in tiny increments of 25 cents each, savers filled a card with $4 worth of thrift stamps. filling 20 cards entitled them to a little bond that paid

roughly 3% interest and was worth $100 five years later. in 1918 alone, americans saved $1.6 billion this way or nearly 23 billion in today's dollars, 25 cents at a time. saving more is all about making it easier for people to spend less. i'm jason zweig. >> susie: and finally tonight, forbes magazine is out with its annual list of the world's most powerful women. eight out of the top ten are c.e.o.'s, while two work in government. angela merkel, germany's chancellor tops the list for the fourth consecutive year. f.d.i.c. chairman sheila bair is the runner up, for her leadership role during the current economic crisis. also in the top five are: all 3 were also on last year's top ten list. and the c.e.o.'s of kraft foods, dupont, wellpoint, areva and sunoco round out the top ten list. paul, the rankings are based on a combination of economic impact, media reach, and career accomplishments.

paupz i heard susie guard ib was 11th on the list, is that true? >> susie: you're too kind, thank you very much. "nightly business report" is made possible by:

this program was made possible by contributions to your pbs station from viewers like you. thank you. üa2?y captioning sponsored by wpbt captioned by media access group at wgbh access.wgbh.org

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