captioning sponsoredy wpbt >> paul: from big banks to insurer a.i.g. and cmakers g.m. and chrysr some top exutives could soon see eir paycheckcut in half. we've learned the treasury pay czar is ordeng steep pay cuts for companies taking ch from uncle sam. >> to spur lding to small businesses, it's essenti that we make mo credit available to the smaller banks and mmunity financial initutions that the businesses depend on. >> susie: the prident moves to break the credit crunch grping the nation's sll businesses get the latest from white house visor jared bernstein. >> paul: tonight's "reet critique" guest says he' worried fure generations will pay an a and a leg for today's governnt aid. he's michael farr, authoof "a million isot enough."

>> susie: en, turbulent times for boeing as dreamler delays turn io a nightmare for boeing bottom line. comingp, a look at the aviaon giant's big earnings disappointment. >> pau i'm paul kangas. >> susieand i'm susie gharib. this is "nightly busines repo" for wednesday, october 21. "nightly biness report" is made possible by:

this program w made possible by contrutions to your pbs station fr viewers like you. thank you. 7//& >> susie: goodvening everyone. pay cuts are coming to corrate amera, big pay cuts. the treasury is expeed to order companiethat received gornment bailout money to slash salaes of their 25 highest-paid employees kenneth feinberg, e obama administration's so-lled "pay czar" is planning toake the announcent in the next few days. some of the most sior executives in thfinancial and to industries would be force to drastically ruce their lavish pay packas. seven compies will be affected: a.i.g.bank of

america, citigroup, general motors, g.m.a.c., chryslerroup d chrysler financial. no cment from any of them, they said they are waing for the formalnnouncement. we've lened, overall executive pay will be cut half. but the ca salaries for the 25 be-paid executives in those companies will drop by0%. feinberg alswants a say on any perkvalued at over $25,000. today'developments come just days after feinberg manded that bank ofmerica ceo ken lewis forgo s salary and bonus fothis year. lewis agreed paul: meanwhile president obamwants to make more money available to small busesses. the ea is to solve the credit crunch hampering main reet entrepreneur the ite house will earmark more fds in the so-called tarp program for small bas, lending the money at 3% interest rate. the administtion also wants coress to beef up to $5- million the money e small busine administration can loan on real estatend other assets.

>> susie: but all banks say thosmeasures may not be enough to bst lending to small businesses. white use initiative, darren gersh spoke with jed bernstein, a top economic adviser in the obama administration. >> reporter: somof the small banks and lent, out there are wonding why it took the administration 7 mths to come up with ts program. >> wel i think it's importt to recognize that the recovery act, which psed last februy, had man imrtant measures to help boost nding to small business. this is not our first effo to help ease the credit con traintsn small businesses face. unr the revery act we've help to support over 30,000 lor cost loans wve exemed fees, we' guaranteedome of those loans to the tune of 90%. wh this is about is adding on another, i think, important andeeded dimension to help free up credit to mall businees. >> reporter: that 90% figur you mentioned isery imrtant to small busiss

lenders, they say i makes it possib for them toend. and it's unclear whether this program ll include a 90% guarante wi the new pgram include a 90% an guarant? >> you know, that's a decision that small business administration is going to have to tal about. rit now the componts of this program as announced today are a significant higher caps so that mall businesss can finance larger projects, the caps of two of the main programs under the s. b. a. are goi from 2 milln to 5 million. and then, that's a legislative change. bua change that we can make fair quickly in the next few weeks, is to take some ofhe tarpunds, wind down me of th big bk parts of the tarp and introduce part of the tarp that will provide lower co financg to smaller banks under a billion dollars of asset. >> reporter: small busines leblers are concerned that the tarp program comeswith lots of strgs atthed. so will you support a change in the law t make it easier

for smallusinesses to be part of th program? >> well, se of the laws will facilitate a easier lift for the smaller bks. for example, we take warrants from banks when we lend them tarp fund. but they're browing is less than 100 million, and some of that will the case, in some of the community development banks, then weon't take any warrants from them secondlywe're going to let banks finance this borrowing at a rate of 3%, not 5 >> reporter:ne of the biggest concer i've heard from small banks is that the regulators are bng too tough, forcing them to write dow loans and makes it rd for them to make new loans. so is that a fair criticism that regulators are too tough? >> it has to be taken case by case. i can't peek to theerdict asity of thatcriticism broadly. i thin probably wha you're seei is that there was, as we now all too well know a long period where relators

were reallyleap at the switch that got us into ts mess under the firstlace, underwriting loansased on whetr someone was breathing or not and sometimes wasn't sure if they had that correct. so the ct thatregulators are being a little more careful in their underwriti is a gd thing. >> repter: we're just hearing thathe treasury pay czar ken feinberg will be forcing the largest ban that took the tarp money to cut the overll compensation of their top executivesy 50%. why that 50% figure? >> the white house isot able to yet confirm that. i will say th, but i think you and i have talked about this before, l be clear abt who we're taing about. it's a sma numberf the largest rp ripients. think about this f a second. these are big banks who in the absence of massive, we're talking hureds of billion of dlars of infused liquidy from taxpayer funds, were pulled back from the brk, from near death experiences, aow many of thes institution are

offering compention levels that a so many multiples above that of th average worker strgling through this downturn, that that's precisely what ken feinberg is supposed to doing on this small lect number of institutionsho are big tarp recipients >> reporter:ared bertein, thank you for yourtime. >> sure. >> paul: wall street got a early lift from ronger than expeed earnings from morgan stany and wells fargo while the tech-heavy nasdaq s riding high on cent strong results from yah! and apple. an hour into trading t dow posted a 55 point gainith the nasdaq u21 points. the rally slow evaporated ring the early afternoon whe the dollar broke to record low agait the euro while gold surg to a record high. and the final hour otrading saw a stp selloff led by the financials.

>> susie: aircraft maker boeg had a bumpy ri in the third quter. the company sted a larger than expected loss of $1.6 billioor .23 a share it also lowered its full-year earngs guidance. a big problem is cost erruns on the mucdelayed 787- dreainer. as erika mler explains a lot is riding on that aircraft wch is being touted as notng short of revolionary. >> reporter: when you ink of revolution images like the lling of the berl wall probably come to mind.

or maybe the social upheav of the counter-lture movement in the 60s. now boeing is poised to her in a technolocal revolution wi its 787-dreamliner. analyst alexamilton predicts it will transform aviation >> the 787 is a gamehanger. it's a game anger on many lels. one, sorof the way you fly. the facthat this is an all- composite aircraft. most aircraft are de with metal. also the way that ey produce the aircraft. virtually the whole thg is outsourced. >> reporter: butike many revolutis, this one is not happening quickly or easily. boeing's 787-dreamlir is more than t years behind schedule and $4-billion over budg. today boeing conrmed the timeline forhe plane's maiden voyage. analyst hord rubel says that's a confence booster. >> it's encouragg that they've reiterated. ven the multiple number of slips,t's important that they continue to ste that they are ing to fly the aircraft by t

end of the year. >> rorter: if the dreamliner doesn't fly as plannedanalysts say would tarnish the company's reputation, castg doubts omanagement's ability to deliver. the drmliner isn't boeing's only hurdle. its 747-8 freiter is also behind schedule. and e company is seeing more commercial aircraft client cancel ords due to the global recession. yet,n spite of today's declines in boeing sck, the shares a up more than 70% from a 5-yearow hit in march. analyst alexamilton has rates the stock, "hold." >> we have to see them deliv results. until they do, i tnk there's going be a tremendous amount of skepticism. the one problem on wall reet, wall streehates uncertainty. and when you destroynvestor expectations or vestor confence, it takes a long time to get that back. >> reporte many analysts beeve next year could even be more challenging f boeing. less the global economy turn around quickly, ey predict more bing's customers will cancelr delay aircraft orders.

erika mill, "nightly business rert", new york. >> paul:t looks like the end of the line for hedge fund fm galleon grou in a letter tonvestors today thfirm said it's shutting all of its funds whileooking for other ths for the business. the move comes less an a week ter founder raj rajaratnam w arsted and charged with running one ofhe biggest insider trader schemes ever involving a hedge nd. those chars spurred many gaeon investors to withdraw their money. rajaratnam says he's notuilty.

>>usie: if you're looking for music online, you'll sn be able to find it on google. according to publied reports, the search giant willaunch muc pages next week for consumers to buyongs or listen toarts of them for free. it's a new way f google and music retails la-la and i-like to compete with apple's i-tus. four mor record labels: warner music, e.i., sony and vivendi universal muc group are suppting the google plan. >> paul: susie, googleon't get a share of song sales. buit will collect revenue from advertisinshown alongside music search results. now t's take a look at some of our other stocks in e news tonight.

>>aul: tonight's street critique guest says he's concerned abt the economy recovery's dependence on governmenttimulus efforts. he'sichael farr, president of the money managementirm, farr, millernd washington and author of "a million is not eugh." michael, gd to see you again. >> thank you, paul, great to be he. >> pau in your latest news letter you raise a redlag out the nation's stimulu efforts, and today w saw the esident moving tooost credit to sll businesses. whare you concerned?

>> pl, i'm concerned because we've had such extraordina amnts of stimulus come into the economy, it has importanted the economy nicely, t typicallyhat we loo for is for csumerdemand, end unit dand toecover, and ta over for the stimulus so that t stimulus doesn'have to do all the wor any more. ifhat demand doesn't show up, i dot know how long the government c keep it up and i think we m havenother lull ithe economic recovery. won't have a double dip but i thk it could be a long pat t. >> pl: now, you were bearish on stocks east time we spoke in july. but the market has ctinued to move higher. what's your take on the current mark? >>bearish. w wait, i s cauous. >> paul: cautiously beari. >> always cautiously optimistic. any time stocks run up 40, 50, 60% i'm always carb and concerned. we've seenrice to earnings multiples go from11 times on

the p to ove 19 times this year's estimate. that sort move makes me cautious. i've stayed invested and my stocks have been doing pretty well. you make a big mistake if you get in front of a momentu trd as powerul as this on >> paul: right. what about corporate earnin, so far they've bn decent. e they real earnings? >> that's a good question. 've seen inventory rebuilds, some of the tech.arnings have been very good. some of the medical earnings, striker had good earnings day. they feel ay, but we're still t seeing the topline revenue growth tt i would like to see. >> paul: in january you gave us a 10-stock portfolioilled with a lot of defensive issues like johnson and johnson an co ga pamolive. let see yore doing versus the andard and poors your stocksre up about 26% versus the s&p, cgratulations, u're beating the&p.

>> by about 600 some odd bases points, whic is good. d this is aefensive list in the p. e. average on this li is well ler than the maet. paulgz just want to tel our viewers u can find all o yo picks on theearn more ction of our websit michl, are you still recommending these 10stocks? >> i still own them, paul, and i stl own them in portlios i nage. i want to makeure that it' appropriate for every client and everyclient should check with tir investment advisor. i own them too in r mutual fund,e manage lely as a new tual fund. so io own tm personally and for family, and i'm holding th. >> paul: okay, that makest quite clear that u believe in yourwn cooking, ashey say. >> i do indeed. when i g through t valuatns on these stocks, there's stil broadly lower than the rest ofhe market, i think their defensi and i like them. >> paul: okay, very good. thanks for sharing you insights once agai >> thank you, paul. >> pl: my guest, m >> paul: my guest chael farr of farmiller and washington. >> susie: torrow will windows

7 be lucky for microsoft? we'll ask c.e.o. ste ballmer about thnew operating system. susie: forget that mad crus of shopperat the mall. a new survey finds u.s. employs plan to spend nearly 2 days shopping online wle at work this liday season. that's aording to a poll by a non-profitssociation of informatn technology pressionals. ny of the workers surveyed justified thr behavior saying corpate cutbacks have them workinlonger hours with less time for personal tasks ke opping. >> paul: southwestirlines is expandg, adding flights and cutting costs. the carrier is testing whait calls a een plane complete with eco-friendly seat cover and carpets to savfuel and cut emisons. southwest will alsbegin flights next year from a new international airpornear panama city orida. the airline islso adding nine new daily ights from saint uis. euu

>> susie: here's a lk at what's happeng tomorrow: >> sie: in the money file

tonight, what happens wh evything you thought you knew about your money, goesaywire. here's harriet johns brackey personal finance columst at the "southlorida sun sentin." >> some of the most basic les for how your financial life supposed to unfo seem to be brok. the first broken re: over te, your income should go up. but a recenteport out of the census bureau says o income went dow over a decade. specifically, amerans inflation-adsted household incomeat the end of 2008 were lor than in 1998. the ma reason is the recession 2008 gave all of us the biggest drop in incomen 40 years. here's another broken rule: e value of your house will ris about the rate of inflation or better. that was true for thlast 15 ars, but not now. inact, in the hardest-hit housing maets, home values are lower than they were five or more years ago. my third broken ru: over the long-r, stocks rise.

stocks have seriously taed twice in the last ten years,he long-run record, at leasfor the p 500, was flat over five years and down over decade. these three broken res have left us with personal financ that are sck somewhere between neutral and negative. the only question : are these rules broken foreverr just for now? because if ian't count on my come, my house or my invements to shore me up, and to grow angrow the economy, then i'm not se what i can counon. i'm harriet hnson brackey. >> sie: and finally tonight, do you have questions out investing theconomy, your buness, or your finances? we'll try to answer em for you. it's part of a new segme called "can you ll me." we're using a new way for yoto nnect with us. want you to contact us via

skype, the free softwa that lets you veo chat over the ternet. tomorrow, between 2:00 pm an 3:00 pm eastern me, you can reach us via skype at nightly.busiss.report or email us at tellme@nbr.m d let us know the best time th we can skype you. that's "nightlbusiness report" r wednesday, october 21. i'm susie gharib goodnight, everye. and good nighto you, pau >> paul: goodnig susie. i'm paul kangas wiing all of you t best of good bu. "nightlyusiness report" is made possible by:

this program was made poible by contrutions to your pbs station from viewers likyou. thank yo captioning snsored by wpbt caioned by mediaccess group at wgbh access.wgbh.org