captioning sponsored by wpbt >> we just can't have institutions that are large enough, connected enough, that their failures have catastrophic consequences, and there not be a point accountable for their overall regulation. >> paul: the president's top economic advisor says beefing up financial regulation is still on the administration's to-do list this year. coming up: our exclusive interview with lawrence summers. >> susie: fed-ex delivers for wall street. the overnight shipping giant served up nice stock gains, as it boosts its earnings outlook. >> paul: tonight's market monitor guest says the stock market is keeping pace with the recovery. he's eric ristuben, chief investment officer at russell investments. >> susie: then, it has been eight years since the terror attacks of 9/11, and there's still no memorial at the world trade center site. from politics to the recession, we look at what's holding up the rebuilding process.

>> paul: i'm paul kangas. >> susie: and i'm susie gharib. this is "nightly business report" for friday, september 11. "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. wall street is readying for a visit from president obama. >> he'll be on wall street

delivering a major address about the financial crisis on the anniversary of the collapse of lehmann brothers. it's the event that many believe triggered the greatest economic crisis since the great depression. tonight, the president's top economic advisor, larry summers, updates us on where things stand with the economy and the nation's financial system. washington bureau chief darren gersh met with summers and asked him how we're doing one year after lehmann? >> after lehmann, the economic discussion was whether the recession would turn into depression. today the economic discussion is when the recession is going to end, and most experts are looking for significant economic growth in the third and fourth quarters of the year. so i think we've come a long way. at the same time, with unemployment well above 9%, likely to remain unacceptably high for a few years, no one can be satisfied with where we are. we've got a great deal of work to do, making sure through

stronger financial regulation that this can't happen again, making sure that this expansion is as robust and firmly grounded as it possibly can be. >> i want to ask you, oner aftet of the banks have gotten even bigger. i'm wondering, are we more at risk from banks that are too big to fail now than we were even a year ago? >> we've got a lot to do in terms of financial regulation. we just can't have institutions that are large enough or connected enough that their failure has catastrophic consequences. and there not be a point of accountability for their overall regulation. we've got to have frameworks that enable the management to failure for large financial institutions, just like we do for small banks. we've got to have way of protecting consumers that are more satisfactory than the ones we've had in the past. and, clearly, we need to

eliminate what was just a pervasive problem, even a year and a half ago-- institutions moving from regulator to regulator in an effort to reduce capital requirements, to reduce other kinds of standards. right now, there's still very substantial risk aversion, very substantial inhibition about excessive lending, but that makes this the time to put in place the right kind of regulatory framework so we don't get the kind of bubbles that we've had in the past. >> you talked about a framework to deal with a future lehmann brothers, a resolution authority. that would help unwind these big companies. one of the concerns i've heard from some critics is that this could be seen as a permanent path, a way to use public dollars without congress voting on it in a crise. is that a concern?

is that a fair criticism? >> well, i think it's important design issue, but the crucial feature would be to permit the management ofab unwinding in such a way that you didn't need to bail out all of the creditors but instead make it possible for certain classes of creditors to accept responsibility without being bailed out, and without causing the kind of systemic risk that you saw develop after lehmann. >> unemployment-- you have called the unemployment rate unacceptably high. that means that the administration-- we can expect the administration to have new initiatives on job creation in the coming months or the coming budget? >> the administration's overall economic program, the recovery act, has operated and functioned more rapidly, i think, than any economic expansion program in

memory. but as yet, well under half of the funds under it have been disbursed, and they're going to be disbursed going forward, and disbursed-- disbursed at a growing rate. so these a great deal more we're going to do through the recovery act, through our approaches to the housing market, which are gaining, gang-- >> even with that-- >> so-- >> there's a great deal more i'm sure will come forward as the president talks about subjects like innovation, subjects like the future of the manufacturing sector that will point to undergirding this economy with a strong foundation. >> okay let me ask you this-- some of the people in the markets that i've talked to say the next bubble they're worried about is treasury debt. there's so much out there, and they think that interest rates could go higher and this could be a bubble in treasury debt. is that a fair concern here one

year after lehmann brothers? >> i think it's very important that we manage the nation's finances as carefully and as prudently as we can. that'sy, action going forward to assure that as the economy recovers, the federal deficit comes down on a substantial scale, that we do things like the president's trying very hard to do with his health care legislation, that constrained the growth of major parts of federal cost, of which health care is probably the most important. those are very important things to do if we're going to have a reasonable and sound treasury market going forward. >> larry summers, director of the national economic council, thank you r your time. >> thank you. >> susie: here's a brief rundown of today's top stories. fedex boosted its profit outlook for both the current and next quarters. the shipper says an improving

global economy and stable fuel prices are helping its bottom line. microsoft and yahoo today confirmed the department of justice has asked for more details about their online advertising agreement. both firms are cooperating with the inquiry. and consumers are feeling a little better about their economic prospects. the university of michigan's consumer sentiment survey hit a three-month high early this month, rising to a better than expected reading of 70.2. consumer sentiment is closely watched as a gauge of future spending. >> paul: wall street opened moderately higher as investors attempted to extend their winning streak to six-straight sessions. but an early 15-point advance in the dow turned into an 18-point loss by noon as profit takers moved in. neither that rise in consumer sentiment nor the upbeat forecast from fedex could keep the dow from sinking to a 50- point mid-afternoon loss with the nasdaq off ten points. the relatively mild pullback encouraged a late flurry of buying which trimmed the closing losses. the dow ended the day off 22.07 at 9605.

it advanced in three of this week's four sessions for a net gain of 164.14 points. the nasdaq lost 3.12 to 2080.90 today. it also rose three times this week and added 62.12 points overall. the s&p 500 fell 1.41 to 1042.73 today, and for the shortened week rose 26.33 points. in the bond market, the ten- year note rose 2/32nds to 102-10/32nds, putting the yield at 3.35%. >> susie: on this september 11, americans spent the day reflecting and remembering the

terrorist attacks eight years ago on the world trade center, the pentagon and united airlines flight 93 that crashed in pennsylvania. at ground zero in new york, a crowd of mourners gathered in rainy, windy weather to observe the anniversary of the worst attacks in the nation's history. in washington, president and mrs. obama observed a moment of silence on the white house lawn. meanwhile, the question for many americans today. what's being done to rebuild the world trade center site? scott gurvey reports. >> reporter: eight years and it's still basically a hole in the ground. the walls of what will be the base of the new freedom tower, now officially one world trade center, are finally rising above street level. some day, we are told, there will be a park, a memorial, a museum, retail stores, a performing arts center, a transit station, and other office buildings. but we don't know when. construction is caught in a battle over plans and financing between the port authority, which owns the land.

and larry silverstein, who leases the development rights, neither would talk to us for this story. but nicole gelinas of the manhattan institute for policy research says port authority politics are to blame for the delays. >> they've gotten all of the rules muddled trying to control the real estate development's part of it, in terms of design and construction and timelines, as well as their own part. and it's just all gotten into a big confusion. and starting now, they should say, "we're going to do our part, we'll let mr. silverstein do his part. we'll do out part." and i think this will remove a lot of the uncertainly and help with the financing bottlenecks as well. >> reporter: across the street, on land he controlled, silverstein quickly rebuilt another building destroyed on 9/11. the new world trade center 7 opened in three years ago. insurance money is helping with financing for the freedom tower. but plans to develop other buildings have been hit by the recession and the credit crunch. some experts say the port authority will have to supply financing because commercial lenders fear the recession has reduced the demand for office space. but stephen siegel of c.b.

richard ellis says in this regard, the delays have actually been helpful. >> freedom tower won't come until 2015. and i'm not so sure mainstream tenants will go in there in any great numbers anyway. the next building is building number four, which foundations are in for. but it's going to take at least until 2013 before it hits. and by that time, i fully expect us to be significantly turned around and some real growth again. >> reporter: silverstein is supposed to construct three buildings at the world trade center site in addition to the freedom tower. that could add as much at 11 million square feet of office space to the lower manhattan landscape. scott gurvey, "nightly business report," new york.

>> susie: a former top a.i.g. executive could soon face criminal fraud charges. published reports say federal prosecutors in new york are preparing to impanel a grand jury. joseph cassano, who ran a.i.g.'s financial products unit, is at the center of the investigation. losses from his department left a.i.g. on the verge of collapse last year, and led to a $180 billion bailout for the firm. investigators want to know if cassano and other executives misled investors about the value of mortgage-related contracts. >> paul: susie, cassano says he didn't do anything wrong, and prosecutors are not commenting on the case. now, let's take a look at our stocks in the news tonight.

>> paul: and those are the stocks in the news tonight, susie.

general motors today canceled temporary pay cuts for white collar workers, saying the company needs to keep everyone motivated. this spring the automaker slashed pay for salaried staffers by as much as 10% to preserve cash ahead of its trip through bankruptcy. today's move covers about 27,000 workers. but g.m. c.e.o. fritz henderson and other top managers won't see their pay restored. their salaries are limited because of the terms g.m. agreed to whe accepted loans from the government. >> paul: monday, we kick off our special series "lessons from lehman." we look back at the bank's failure, and ahead to what's next for the financial sector. >> susie: u.s. clinical trials show a single dose of swine flu vaccine is enough to protect healthy adults. the finding could double anticipated vaccine stockpiles this fall and lead to more people getting immunized faster. world health officials had thought two shots would be necessary to protect against the h1n1 virus.

sanofi aventis glaxosmithkline and novartis are among the firms making the vaccine. >> paul: the first liability case involving merck's osteoporosis drug fosamax ended in a mistrial today. jurors said deliberations had grown ugly and they couldn't reach a verdict. in the new york trial, a florida woman claimed the drug caused dental and jaw problems. no word yet on a retrial. merck faces 900 suits related to fosamax, with patients claiming it caused jaw tissue to die.

>> susie: here's a look at what's happening next week. our friday market monitor guest is robert morrow, editor of the institutional advisory service. on the economic calendar: tuesday: july business inventories and the august reports on retail sales and producer prices. wednesday: the consumer price index for august is released with august industrial production. thursday: weekly jobless claims and august housing starts. >> paul: my guest market monitor this week is erik ristuben, chief investment officer for client investment strategies at russell investments in tacoma, washington. >> erik, welcome to "nightly business report". your first visit as a "market monitor." >> delighted to be here, paul. thank you very much. >> paul: many analysts and

investors think the stock market has gotten ahead of itself. what do you think? >> i don't think it has. now, obviously, the future is hard to predict incredibly accurately, but what we think the market has really done is recover from a disaster scenario from kind of march to mid-may. since may it's been really beginning to forecast a recovery economically. consensus has us at a fairly mild recovery, certainly versus historical standards. so we think the market's got it right. there are a let of things we're going to need to see in terms of positive economic data this quarter to confirm that it's got it right but right now we think it's basically got it right. >> paul: what investment strategy are you telling your client to follow right now? >> well, we're-- as you know, we're a well-diversified investor, but when we look at equities, we like equities. we think they're an attractive value in general. and there are some sectors within equities we very much like and financials and technology are two of the leading sectors in that area.

>> paul: financials and technologies are your favorites, right? >> yes, right now. >> paul: yeah, okay, well, of course it changes. how about some individual stock recommendations right now. >> well, in the financials, i'll give you two. i'll start with goldman sachs. goldman sachs has had a very good run recently. >> paul: yes, it has, wow. >> yeah, very good. really you look at that story, they have two of their largest competitors from a year and a half ago, bear stearns and lehmann brothers, no longer exist. they have a steep yield on interest rates. cash is zero. they can lend and do business at a higher rate than zero. that's a good thing for anybody in the financial services business and they should be able to accumulate market share given the fact the competors are not in the space as much as they used to be. >> paul: and the trading symbol is g.h. how about another one? >> sure, same basic area. another one is wells fargo

company, w.f.c. wells is a beneficiary-- in some ways-- of the worst-case scenario that was priced into the market in march. really, people were worried that the financial services sector would collapse and these banks would be worth nothing. they also were-- somebody who actually acquired a large bank in wachovia, they bought that bank at fire sale prices. since disast has been averted there's a lot of upside in terms of their ability to leverage the what could you havia assets on their bbs sheets and still trading well below their three-year high. >> paul: we've seen two of your favorite financial stocks. how about the technology group? what do you like there? >> qualcomm, qco"f," one of the principal chip providers for the mobile technology industry. so you're look at things like

research in motion, blackberryies and iphones. >> paul: they get business from them all. >> they get to sell to all. >> paul: we have time for one more technology favorite. >> we like dell. i think everybody knows dell is dell. there is going to be a systematic restocking oft hardwt the consumer level and at the corporate level. we're already seeing that in some of the guidance dell is providing and it's going to be positive, we think, for them. >> paul: interesting selection there, financial and technology. erik, do you personally own any of the stocks you mention or have other disclosure to make? >> no, i own muscular dystrophyes that own-- mutual naundz own these stocks. i do own them indirectly. >> paul: very interesting. i want to thank you for being with us. >> thank you. >> paul: my guest erik ristuben of russell investment.

>> susie: recapping today's market action: wall street ends a five-day winning streak. the dow drops 22 points and the nasdaq loses three points. to learn more about theñatories 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. can the consumer help pull this economy out of recession and into recovery? tonight's two ways to play takes a look. here's kevin depew of minyanville. >> reporter: it's only september, but pretty soon were going to be inundated with gloom and doom about the upcoming holiday shopping season. a desperately weak consumer is now a foregone conclusion, and for that reason alone bears might want to consider a more optimistic outcome. the idea that the u.s. consumer must retrench due to high debt levels is simply false. let's look at the real numbers. 30% of consumers have no debt whatsoever. 40% to 50% have reasonable debt levels. that leaves just 20% to 30% that have gotten into trouble. if the other 70% to 80% are able to spend and consumers prove more resilient than expected,

look out above. consumer credit for july released this week showed an unprecedented decline in credit demand. consumer credit has now declined for six consecutive months and is falling at the fastest rate since 1944. why is this important? two reasons: first, it shows the extent to which consumers feel like they need to repair the household balance sheet, which is going to pressure consumer spending for the critical holiday season. second, virtually all government attempts to re-ignite the credit boom ultimately depend on consumer demand for credit. if nothing else, i admire the optimism, but the numbers just don't agree with your view. >> susie: that's nightly business report for friday, september 11. i'm susie gharib good night, everyone. and good night to you, paul. >> paul: good night, susie. i'm paul kangas wishing all of you the best of good buys. "nightly business report" is made possible by:

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

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