"nightly business report" is brought to you by: >> this is nbr. >> americans are earning more and spending less. >> what he think that is means for the economic recovery. >> i'm susie gharib. a day of no electricity for india. why the problem could continue even when all the power comes back. >> and from occupy wall street to the big bank fees. how smaller banks are benefitting as we continue our series looking at regionsal banks. >> susie: that and more tonight on nbr. >> tom: worries about the consumers appetite to spend rose today. we're worried about saving more money so we're not

spending it. it was changed again, the second month of no growth. less spending and disappointing profits for coach. is this a summer slowdown or something more serious? erika miller reports. >> reporter: what do coach customers like more than the handbags and accessories. discounts on those items, as much as 30% off at the company's outlet store. coach is going to bring back coupeons in june after eliminating them earlier. >> discounts were needed to get the traffic which was down, and they had trouble converting and getting people to buy once they were in the store. >> the question is why are sales slowing. is the brand losing appeal or is it a more serious indication that consumers are pulling back. >> personally, i don't think it's the start of a slowdown. i think it's just a blip from the summer. >> but the latest data is not

encouraging. spending fell in june for the first time in a year when adjusted for innraigds. the problem is not just the soft labor market. >> there's a lot of balance sheet repairs to do. they borrowed a lot of money in the boom years, and a lot of people have trouble paying that money back. some of the money has to be diverted to paying down debt. >> in the short sterm that's bad news, but longer term it's good for america setting the stage for stronger more sustainable consumer spending. nbr, new york. >> susie: still ahead olt program, we talk to a former inspector general of the tarp bailout. a vocal critic of the government and the banking crisis. nightly business report it brought to you by: :

>> tom: consumers were holding back on spending and home prices were rising for the second month. home prices in 20 metropolitan areas rose from may according to the schiller home price index double what was expected. it was a mild day for wall street. investors still on standby waiting to hear what happens when the federal reserve ends its two day meeting tomorrow afternoon. >> the dow jones industrial average fell. and the s&p 500 also down 6. >> susie: the fed meeting. our guest tonight does not expect central bank policy makers to announce a big new plan to jump start the economy. the senior adviser at blackrock. >> bob, why don't you think the fed is going to announce a big stimulus program tomorrow? >> i think, susie that

stimulus programs of the size qe 1, qe 2, and potentially qe 3 are for emergencies. and while we have a slow economy, it's hardly an emergency like existed before. so i think they're going to need more time to see more slowdown if we're going to see qe 3. they may do things around the edges and extend the time frame, but i don't think the fireworks are coming out. >> you heard the report from erica, that consumers are saving more, spending less, and a sub par news about a jobs report that comes out friday, and what does the fed need so that they feel it's an emergency. >> our economy has been dproing one and a half to two percent, and that's nlts a

record, but it's not so slow that profits are reversing where the fed is going to come out and do something more significant. >> and home prices are increasing, that's a good thing. >> susie: so there's expectations that the fed does something. but if the fed doesing in, could we prepare for a market sell-off? >> well, i don't know. i think it's 50/50 in investor's minds. i think it's more appropriate attention on the european central bank meeting later this week. where expectations are lier. they will do something, and i would argue the fed is ahead of the ecb. maybe the ecb have to catch up, and maybe thootion a disappointment, susie. >> susie: what do you think

they'll do? will they come out with a bold plan to fix the european crisis? what does that mean for us here in the u.s. economy? >> well, as you know, company that is do business outside of the u.s. have struggled more than pure domestic companies, eand consternation is in europe around the debt situation. >> it took years for europe to get into this mess, tell take years to get out. not one ecb meeting is going to soflt the problem. however, mario dragly said we will do what it takes. i don't know what that means, but i think bold measures need to come from the ecb soon like buying bonds from spain and italy. >> what should they do.

stocks, bonds or cash? >> diversification makes sense. that doesn't mean all cash. it means you need to own some equities. >> and stock markets, despite the consternation is up 10% this year, and we're only in the seventh month. i think equities need to be owned. >> all good things. senior adviser at black rock.

>> tom: power is slowly returning to the half of india that lost electricity this week. the power grid took a second hit in as many days. >> grids that supply electricity to 700 million people collapsed. trapping coal miners and bringing the country to a standstill. india's energy minister blamed it on the overburdened grid. they suffered a peak power deficit that has been hurting economy. power shortages have been a drag on india's efforts to industrialized. the global recession forced the country to scale back a trillion dollars in infrastructure. they have generators who protect this power outages, but smaller businesses don't. senior economist at the national institute for public finance says today's outage will have a substashltly adverse effect on india's

economy. the central bank in india cut the economic forecast for the country that ends in march to 6.5%. that's down from 7.3%. eric stein is a portfolio energy at eaton vance where he helps manage the return. eric, does this blackout, the largest in some cases ever that the world has seen -- does it give you pause as an invest horr in india? >> tom, great to be with you. it does give you pause. it's synonymous with a lot of short term problems india has. we have a long term view of india, but there's so many short term problems and this is one of them. >> tom: what does this blackout tell you about the prospects for the india economy in the short term? >> i think in the short term, it's just one of many problems that the indian economy has. they have a lot of problems with the legislature trying to get bills passed to open up the country. and multibrand retailers. they haven't been able to do that. politically india isn't in

good shape. and it's a reason one would want to be bearish on the economy, because the businesses aren't able to get power. >> so how does this look from a foreign trade perspective. >> they have their own power generators. it doesn't really hurt them. but it hurts the smaller companies and x*erpt prizes in india, because they rely on the jbl state of the power grid, and it hurts them. and hurts confidence in the indian economy. right now india need strong reform to get capital and money flowing back into the economy. and this is one of the thing that is india has going wrong for it right now. >> tom: the lack of generators for small companies. that's a short term solution, but the confidence is the long term concern out there.

>> how do you approach it from a long term investment perspective? >> we at eaton vance have a long position in the indian ruepy for a long time, and we've played with it, and reduceed it somewhat and added a little bit, but by in large we want to always keep something there because because of the long term demographic, and the democracy. we've been cautious because of short term problems >> tom: india has held a lot of potential throughout many years. one of the bric country, of course. but never fulfilled that promise of expectations of economic expectations. when could it. when will the vail of uncertainty be lifted? is it a maerlt of decades? >> hopefully not decades. the demographics will be better than china. but i think right now, india -- everyone is so pessimistic. everyone is so bearish. they just need a couple of thicks to turn in the right

drek, and you'll see the confidence and momentum back. but we're not there right now. >> tom: looking from an investment perspective. eric stein from boston eaton advance. >> the government may not be closing the doors come september. the house of representatives and senate leaders struck a deal pushing the deadline back another six months and giving them more time to work out the looming tax hikes and spending cuts. the deal will be voted on in september. and homeowners with fannie mae and freddie mac will have to

look elsewhere for a break in mortgages. regulators say they will not allow troubled loan holders to take part in a white house program to reduce their balances, saying the program is too costly. treasury second, tim gietener is urging the major lenders to be prepared. >> tom: it was a day of the major stock indices marking time before tomorrow's conclusion of the federal reserve meeting we mentioned earlier. with a weaker consumer spending figures we reported unchanged most of the morning, and stayed in negative territory in the afternoon hitting the lowest levels of the session at the closingble. trading volume was higher. with consumer spending in focus. the consumer sector saw the biggest drop. and energy falling 1.1%, and defense was spared in the sell-off. retailer coach's disappointing earnings cast a shadow over

consumers. coach the biggest loser in the consumer sectorment take a look at the results. the high end retailer earning a penny under the average of wall street estimates. sales in north america were much slower than aped. shares fell hard. loews didn't get any help from the report. showing home prices on the rebound. loews fell 5.6% after making an unsolicited offer to buy the canadian home improvement chain. loews offered one and three quarter billion dollars. roana rejected it. and calling the chain a strategic asset for canada. it doesn't want a foreign owner. loews competitor home depot fell two%. home depot as 180 stores in canada holding 16% of the market share in canada. rona is the largest 19% of the

market according to the company. and a leading gainer drug maker pfizer after reported earnings and updating its spin off strategy. first the bottom line. earnings 62% a share well above wall street estimates. sales were down, but costs dropped as well thanks to less spending on research and development. pfizer repeated the financial forecast for the share. shares rebounded 1.4% closing at a four and a half year high. pfizer expects to file regulatory work for the spinoff of the animal health unit, and says it may sell the rest thaf business after that sale. and other stockss moving. u.s. steel shares better than anticipated earnings, even though it warned them second is weaker than the second quarter, and it fell. archer daniels midland fell. aetna shares falling 3% during

the regular session even though results were stronger than expected and it boosted the whole year outlook. after the close, allstate turned in much strongser than anticipated results, benefitting from fewer losses. and had better results from auto and home insurance businesses. shares down into the earnings call, but jumped 4% after the stronger earnings. if that buying holds, it would put the stock at a new 52 week high tomorrow. >> the market flash. all five of the mostanthively traded etfs lower. russell 2000 tracking down nine tenths of one percent. that's tonight's market watch.

we continue our look at regional and community banks. and more than 6800 community banks around the country. rubin ramirez reports. >> bank tellers taking deposits, , customers meeting with loan officers. any bank in any town in the united states. this is eagle bank in a suburb of washington, d.c. most of its customers are local business owners. 40% of loans are made by community and regional banks, even though the smaller banks make up just seven percent of the industry. the bank has been taking market share from larger banks in the small business segment because he says eagle has

continueed to lend through the downturn. >> we have deep roots. >> some of their business also comes from retail customers, traditional home equity loans, and car loans. those are the areas affected by dodd-frank financial reform, and the corn suerm financial protection bureau that came out of it. it's just a small part of their business, but eagle says compliance has been an expense. they've had to double the size of their compliance and accounting department. >> i'm not going to editorialize. but other than adding people to work for you, it's not helping jock creation.

>> >> eagle has come out of the financial ciegz unskailgted. banks in florida, michigan, illinois and arizona have been hard hit, and are still strupgling to recover. the >> the pendulum has swung, and there's pressure to raise more capital and comply with the rules that it makes it difficult to go about daily business. >> no estimate on how much the new rules are affecting small banks. but banking experts say it's having an impact on their bottom lines. reuben ramirez, nbr, bethesda, maryland. >> tom: four years since the taxpayer bailed out the banking industry. billions of dollars are paid back, and the tarp bailout remains a flash point over financial reform in politics. we have the inspector general of tarp, and he's written about his experiences in a new

book entitled bailout. an inside account of how wash wark abandoned main street while rescuing wall street. tarp was sold as a necessary emergency measure that had to happen right now to save banks. banks are open, and the economy has rebounded but not as much as some hoped doesn't that prove the effectiveness of tarp? >> not as great as some would have hoped. that's an understatement. tarp was supposeed to do more than save the banks. when you think about it. hundreds of billions of tarp dollars to the bank along with trillions of dollars of other to preserve a status quo that led into into the great recession wasn't enough. that's why congress required, and treasury promised, in order to get their hands on the bailout money to do a lot more. to take the money that's not just going to the banks, but get the employment back, and

spur the economy and help homeowners. important part of tarp. does not get through congress but for the promise to help hundreds and hundreds of struggling homeowners, and tarp has failed in those aspects. >> tom: is that the heart of the double standard you talk about in the book? >> yes. it was a remarkable thing. at every juncture, the focus with the treasury it deferred to and chose the interest of the large wall street banks. so even the housing program, there was one that was announced. it's pitiful what it has done. and even that one after it started to come off the ground and apparent it was a struggling program wh. we confronted secretary gietener he confessed the program was about solving the banks is the language he used. it was going to extend out the foreclosure crisis so the full flush of foreclosures wouldn't hit the bank, and explain how

we had a program that was good for the banks and enabilityed them to rack up fees and other things for the services arm, but was a disaster for homeowners, in some cases causing them more harm than good. >> you're a former prosecutor, you knew the tarp system. would you recommend criminal or civil charges with what you witnessed? >> we did lock up a number of people. part of my job was to create law enforcement agency. and close to a hundred people have been chargeed and locked up. one ceo for trying to steel a half billion dollars of tarp funds. i think we're succeeded within the scope of tarp of locking people up to tried to defraud or steal from the program. the bigger question is the ongoing financial scandal of the day. libor being the most recent one. money laundering by hsbc. it seems like we should, but

one of the things i saw during my time in washington was from the department of justice. i wor fewe're ever going to see accountability. >> tom: neil, a fascinating recount of what you lived with the tarp bailout four years. neil boroskey, the author of the tarp bailout. >> susie: coming up tomorrow on nbr, as we've been reporting, as the fed wraps up a two day meeting will it take action to boost the economy. we'll get a take on the fed and the upcoming meeting of central bankers in europe. and olympics are underway in london, and along with the games is controversy about the coverage. tonight's beyond the scoreboard. we look at the impact of nbc's decision to delay olympic programming for prime time in the u.s. here's sports analyst. >> this is the ticket for women's gymnastics. most of america watchs on

prime time, but a few hours ago -- i already know the results. i was there, and that's the core of the problem for nbc. it started four years ago where 4 billion world wide households tuned in. and nbc paid a billion and a half for the rights to the olympics and 5 billion for the next four, and want to monetize. what do they do? they're having every event covered but embargoing certain events, swimming, gymnastics, tennis and others and saying we're going to redo them in prime time. and the other thing is vertically integrating. you vu pay the package. at controversial. is it work something 38 million people tuned in over the first weekend. the most ever and nbc says they're selling over a billion in ad sales. significant. the bottom line is, nbc has a successful strategy. not anything like 1924 when

the radio rights for the paris olympics went for $100,000. by the way, i'm not going to tell you the results of this event. i'm rick horrow reporting. >> tom: that's nightly business report on tuesday, july 31st. have a great night. >> susie: hope you enjoy the olympics. thanks for watching everyone. see you online at nbr.com, and right back here tomorrow night. >> announcer: nightly business report is brought to you by:

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