>> susiealmost $3.5 billion-- goldman sachs' latest earngs blow the doors off estimes. so, how'd they do it? some call it the "goman mystique." >> jeff: signs of lifen the beaten down computer iustry-- intes latest results show the beginnings of a reund in demand, and the company sees improving sales onhe horizon. >> susie: about 80 mlion americans use creditnions, and while banks gotanked by the fincial crisis, the nation's credit unioncontinued to lend. coming up, how they're dng now. >> jeff: then,f your annual income tops a million llars a ar, house democrats want to send you the bill r health care refm. they're oposing new taxes on the wealthiest america to pay for heal care coverage.

susie: i'm susie gharib. >> jeff:nd i'm jeff yastine. paul kangas is off tonight this is "nigly business report" for esday, july 14. "nightly biness report" is made possible by: this programas made possible by contributions to ur pbs statiofrom viewers like you. thank you. captioning sponsored by bt >> sus: good evening, everyone. one of tse "green shoots" may be sprouting in the techector. late tay, chip maker intel rolled o much better than expectedecond quarter earnings, but re importantly,

the company had a surprisily upbeat outlook for t second half of e year. exuding a one-time charge for a fine by the eupean union, intel earned 18 nts a share in the quter, ten cents more than expected. thmicrochip giant said it expected improved condions in the comper market, a sign analts took as encouraging. sty smith, intel's chief financiaofficer says the numbers tell a sol story. >> you can seet at the top line-- ua billion dollars. you can see it at thgross margins-- up five points quarter on quart. our inventory vels are down, so i'm real pleased th the execution from the comny. and then as we go intohe second half, we start e ramp of our 32-nanometer faories, ich should extend our produc leadership and allow us toring out a slew of new products tt, pefully, will stimulate some innovation in the rketplace. >> susie: e news sent intel's shares soaring in aftehours trading, ramping up their ghest levels since october. susie: not much of a rally goldman sachs shares tod, despitrecord second quarter earnings.

goldman sodly beat expectatio, thanks to strong trading revenues. but can e momentum continue? as erikailler explains, experts say goldman has important advantag over its rivals >> reporter: call it the gdman mystique, anura created throh secrecy and success. you won't find t company's name oits buildings, let alone a sports sdium, like citi fiel goldman's financial prowesis legendary, and itsecond quarter eaings were no exceion. the bank managed to blow awa expectations in the midst ofhe worst fincial crisis since the great depression. k.b.'s fred cannon says he knows how. >> the short answer isthey're goldman. the longer answe though, is you ve to remember what happened in e quarter, and thats we went from a period of a comptely frozen financial market in the firsquarter to one where liquidity came bk through the gornment programs. so trading activitreally did improve a t in the second arter. >> reporter: b there's growing coern about goldman's dependence on trading revees.

>> we don't consid it's first- halfesults to be sustainable. >> reporter: morningar's michael wong seeother challenges, well. >> the equitunderwriting fees, pent-up demand, pulled fward mand, not likely to continue >> reporr: there are signs of continued trouble in theeal estate markeburied in goldmas results. >> one thing that was small weakness within goldman's earnings, they took $700 milon of write-downsn commercial los. they also took $500 millio of mks on its commercial rl estate. >> reporter: there's ao the threatf increased regulatory ersight, and restrictions on leverage, which could hu profits at goldmannd its rivals. bunew rules could also help stabilizthe sector. >> we are past thecute stage the financial crisis, where everything had seid up. but wh we have entereds we've entered a long, chnic stage of t financial crisis, where we're still hang to work

througa lot of issues. >> reporter:ut for firms like goldman, trouble ithe sector does have it's advantages. when othernvestment banks pullback or go out of busine, goldman swoops in to gra clients. rt of the strategy behind it powerful reputatn. erika miller, ightly business report", new york. jeff: while earnings did little to move stos today, an improvement in rail sales numbers helped wall stet into the blac consumer-relatedtocks, like home depot, prtor and gamble, and disney, roseicely after the commerce deparent said reta sales rose a better than expected six-tenths of one percent in june. and th had stocks trading modestly higher rough the afternn. the dow went on to closeith a gain of almo 28 points at 8,9.49. the nasdaqose 6.52 points to 1,799.73. the s&p 500 rose 4 3 points to 905.84. in the bonmarket, the ten-year note fell 302 to 97 4/32, putting the yielat 3.47%.

>> jf: the banking sector gets most of the inwhen it comes to the nation financial crisis. less well-known the status of the nation'shousands of credit unio. compared to banks, these non profitinancial institutions have largely weaered the storm. >> reporter: cret unions look likeanks and act like banks. but did they lend likeanks during the rl-estate boom? the answers yes and no. for ample, brightstar, in suburban fort lauderdale, go its start in 1946, handling deposits and making loans school teachers. with more than $30million in assets and 40,000 member brightstarrites lots of loans. buc.e.o. and president ralph

crockett says brhtstar was cautioushile others chased the real estate boom. >> we were nev involved in sub-primlending, we were never involved in investments associated with sub-ime loans. we've had a conservave lending practice and sets of polics, and we'valways adhered to those policies and programs. >> reporte not all credit ions can make that claim. an industrreport shows about 8% of credit uons, or roughly 800, have suprime exposure, carrying a tot of $18 billion inxotic mortgages on their books. threcredit unions have failed this year,ut that's small compared to the 45 banks tha failed in the fit half of the ye. still, commuty banking experts ke ken thomas say it's a wak up call for cred unions. >> some the credit unions out there ha significant exposure to these exotimortgages. the same mortgages-- option- arms-- that got washgton

mual, wachovia, and others in troubl many credit unions have the same mortgages. >> reporter:here's also oprtunity for credit unions wi money to lend, when consumers need imost. >> we're loong for borrowers. people who need loans e welcome toome to brightstar. we're writing mortge loans every day, c loans, home uity loans, consolidation los for high debt consolidatns, credit cards-- you name it. we've been ailable, we're conservative. we're not taking on addional risks. we've done this as we've done them always and our dos are open >>eff: some experts see another sk ahead for credit unions. they're worried the wave of b lossest big companies, school systs and local governments will make it harder for member to stay rrent on loans. >> susie: ining us now to talk more abo this, dan mica, the c.e.o. of the credit uon national association, the washgton trade group

representing most of the tion's credit unions. mr. mica, welcome t"nightly busine report". >> thank you,ood to be with you. >> susie: sounds like credit union, final being impact bid thisinancial crisis. how sious is i >> i wouldn'tall it serious at all. i would put it in perspective. our default rate is around 1 to 1.5%. other financial institutions would love to have that. edit unions areoing extremely well. were like everyone i this onomyeeing some collateral damage. but we'reery strong, were lending, we're growing, in fact theopulation of the u.s.s growing at 1% of the year. this first halof this year we've gro at 1.5 savings is flong in the highest we've se in 18 years. so there a a few spo, as there are in every industry or business, thatave some rough edge bucredit unions by and large are doing extremelyell. >> susie: but you her jeff's report where he's saying that

with many credit union members are now risk of losing their jobs many of them there's ahance ey'll default on their loans. so aren't se credit unions at risk of failure? >> any bank, any cred union, y company that is dependent on payments from a conser whlosesheir job is going to have problems. but we've been very fortuna. as was mentioned we' very conservative iour underwriting, an we've wked th our members and our customers are our membs and they'rour owners. where as oths may just write off a loan, we try to mod file i extend the terms, change the tms. we do everying we cano rk with a member, d therefore we haven't hadthe ki of default rates. i indicated, 1 t 1.5%on mortgages is extremely low in thisinancial situation. >> sus: what about credit unions thatre operati in the big housing hot spots lik

florida, california, nada? w exposedre they? >> well, obvisly those are ouareas of conce. but even there we're seeing whate uld call green oots. we'r seeing areashere it's starting to stablize, it's not as good as i should be, but many cret unions in these areas are dng very well. some are having difficult time, but ty're working it outwith their members. their capital ratios are pretty strong. yes,e'll haveome concerns in some sprefk areas. but nationwide, credit unions are dog extrely wel >> susie: asou know, the big banks had to go through the stress tests that were mandatedy the u.s. easury. why it that credit unis ven't been stress test? >>ell, first of all, we are credit uons are the most highly regularited financial institutions in the ited states. >> susie: so are banks. >> actually the feral government d a toy and sai credit unions are regulat even more than the banks. second, we didn't cause any of this probl. didn't do the no-doc lns,

we didn't the liar loans, stuck to our andards by and large and t chairman of the house financial services committee, barney fra, put it succinctl he said ifveryonees in the finaial servic industry condted themselves like credit unis, we wouldn't are this sittion in the first place. so ty're saying in effect, and heaid you're the dog that didn't bark, you did evything right. you we getting a few problems, but you'r the example, not the oblem. >> sieyou know ttin washington there's thi whole move afoot have w relations, new rules forthe financial system. and i knowou're posed to any new regulatn for cdit unions. tell us why. >> well,e have not said we're oosed to any new regulation for credit unions. and i wil tell you t administration, just met with officls yesterday, said that some of e regulatns they'r proposing wouldt be on top of current regulations, but they wou be in place of. and we'd be inrested in that. if they could eliminate it.

but idon't care whether you're a credit union or a bank, if you have 50 pous of regulations and th they want to put another 50 on it, you say wait a minute, e burden gets too heavy. we wanto do what's be for nsumers, and that'sho we work for weant to dowhat's best for our members. but we want a reanable amou of regulation. and we want complete transparen and cess for ourmembers. and simplity in forms, all of what the administratn is talking about. but that extra 50 pounds, if it'sot needed,saying we're going work againstt and work to modify it so it works to everyo's advantage and od public policy. >> susie: all right. let's lee it there, a subject toe continued, than you very muchr. mica, for comi on the program. thank you. >> my gut tonight, dan mica, c.e.o. of the creditnion nation association.

>> susie: missed the credit crisis, and the bernard mado ponzi scheme. some say more money uld solve the prlem; others say the agency just needs to think smarter. but as dren gersh reports, chairman mary schapiro says e s.e.c. is improving the y it does busines >> repter: to many members of congress, the securities a exange commission is almost a troubled teenar. after each badeport card, it offers a long list oexcuses. today, congressman scott gartt asd s.e.c. chairman mary schapiro why investorshould

believe this time will be different. >> iseems like the s.e.c. is always comg in after the fact to the table, ways a different chaian, saying, "we realized our errors and now wre going try to correct them." >> reporter: in response, schapiro offer a long list of rrections. the s.e.c. is focusing enforcement on what italls "high impact ces" that could hu the most investors; it's increasg training for emoyees; and hiring more expeenced market professionals; and tightenin controls on invement advisers. but schapiro cauoned there will always be crimina like bernie madofwho are caught afr the fact. >> to some extent, all regulators, t just the s.e.c., playatch up with the audsters. and perhaps that wl always be the unfortunate way r us to operate. >> reporter: lawmars like jackie speier also pressed f ronger regulations on the credit ring agencies who contbuted to the credit crisis. >> shod there be some kind of liability thathe rating agencies incur wn they rate an i.g. as a triple-a, or a

lehman aan a-minus, and then two days later, both of the instutions are defunct? >> reporter: schapiro says h agency is loing at ways to increase competition ang ratings firms. and when asked, she saidhe mit support legislation to hold cdit rating agencies liable when they d't do their homerk by properly checking theifinancial facts. >> i think private lbility woul.. could have a very important effect on the quity the efforts rating agencies are making. >> reporr: the s.e.c.'s mistakes are also hang an portant effect on the qualit of its efforts. every day,chapiro says, she thinks about madf's victims, and how she can ep other vestors from becoming victim as well. darren gersh, "nightly busins report," washiton.

>>usie: house democrats unveiledoday their plan to revamp the hlth care system. it would creata government-run insurance option, d penalize businesses who don't off health insurce and individuals who refuse tbuy it. to pay for the orhaul, the bill wou cut medicare and medicaid, and raise taxes more than 5% ocouples earning more than a milliodollars a year. ngressman henry waxman says health carreform can't wait. >> we caot allow this issue to delayed. we cannot t it off again. we, quite frankly, cant go home for a recess unss the house and the sena both pass billto reform and restructure our health carsystem. >> susie: democrats still fa staunch opsition from republicans, w today called the proposed tax incases "onerousduring a recession.

>> jeff: tomorro "street critique" guest paick o'hare goes bargain hunting amo the retailers. he's chief market anyst at briefing.com. >> susie: bernard madoffs spending the first night of e rest of his fe at butner federal ison near raleigh, north carolina. inmate number 61727-4 checked in this morning to starterving a 150-year sentence. othewell-known prisoners there incle adelphia communications founder john rig and his son, tithy. madoff pleaded guilty in mch to running a ponzicheme that wid out thousands of investors. >> jeff: developed cntries are excted to lose nearly 30 million jobs by the timehe global receson is over. that prediction ca today from the organizaon for economic cooperation and delopment. it's aroup of 30 countries working together to fight poverty. many experts think t global economy willecover next year, despe high unemployment.

>> sus: here's a look at what's happening tomorrow: the june repor for consumer pricesnd industrial production are reased, as well as the weekly rort on crude oil and gasoline inventories. also, quartey results from american airlines pant, a.m.r. tonight's coentator has a few

thoughts on what he calls he washington way he's allan sloan, nior editor at large at "fortune". >> therere simple, raightforward, and honest wa do things; then, there's th washington way. consider theay washington is ying to reduce gasoline usag and carbon dioxide essions. the easiest, most straightforward and honestay to do this would be to tax gasoline and carboemissions. that way, people would seehat things cost, andould make intelligt decisions on what to buy and use. and the governme could give rebates to the peoe who can't afford the higher taxes. t no one in washington wants to be cused of raising taxes on anyone her than the rich, whoever they are. so instead osimple, straightforwartaxes, they give rules that the insiders can game. instd of taxing gasoline, washington gives auto makers mileage standards. the standards e wasteful, complicated, and game-abley

big players, and me expensive for the economy an putting a g tax on gasoline would be. instead of ting carbon dioxide,ashington went the cap-and-trade route. that's gre for wall street, which will makbillions trading carbonights; and great for lobbsts and lawyers, who'll write the rules. it wont be greator anyone else. i certainly don't nt to pay higher taxes. but ok-- we'd all be better off paying tes directly than paying for mileage standar and carbon trading indirecy. let's hope that our suppos leaders wisep and try to do these things t right way, not the washington w. i'm allan sloa susie: and finally tonight, it was paws-up arepublic airport in farmingdale, ne york, today pet airways made its inaugural flht. it's the fst all-pet airline. a new yorkouple came up with the id after their jack russell terrier made his fst and last trip in a trational airliner's cgo hold. at pet airways, dogs and cs

fly in t main cabin of a freighplane fitted with carriers in ace of seats. the one-way flights st $250. t airways flies animals between w york, washington, chicago,enver and los angeles. and jeff, thresponse has been good. flights are alady booked up for the next two months. >> jeff: there's only e thing i want tknow, how many pieces of carry-on luggageo the pets get. >> susie: a they ev have a firsclass or business cla tion. >> jeff: that'going to the dogs >> jeff: that'"nightly businesseport" for tuesday, july 14. i'm jeff yastine good night, eryone, and good ght to you, susie. susie: good night, jeff. i'm susie gharib. we hope to see all oyou again tomorr evening. "nigly business report" is made possible by:

this programas made possible by ctributions to your pbs station from viewers le you. thank u. captning sponsored by wpbt caioned by mediaccess group at wgbh access.wgbh.org