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YOUR BOTTOM LINE

Obama Meets Banks, Consumer Protection Laws, Safe Holiday Decorating, A 'Green' Christmas

Aired December 12, 2009 - 09:30   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


GERRI WILLIS, HOST: Hello, I'm Gerri Willis and this is YOUR BOTTOM LINE, the show that saves you money.

Know your rights. We'll tell you how you can use consumer protection laws to your advantage. Deck the halls without the falls, we're talking holiday redecorating. And I'm dreaming of a green Christmas, how to save cash and the environment this holiday season. The show that saves you money starts right now.

President Obama is set to meet with bank CEOs on Monday to discuss ways to increase lending for consumers. The big question, will that make it easier for you to borrow money? Eamon Javers, financial correspondent for "Politico," joins us from Washington. And in North Palm Beach, Florida is Greg McBride, senior analyst with BankRate.com.

Welcome to you both. All right, so, you know, this looks like it's going to be a real showdown in the White House with the president and as many as 12 banks represented there, Eamon, that's what you are reported as shown -- all the big ones: Bank of America, City, you name it, they're all going to be in the same room. What do you think's going to happen?

EAMON JAVERS, POLITICO: Well, you know, I'd love to be a fly on the wall for this conversation. You know, they haven't been in the White House together as a group since March 27, the last time there was a big banker showdown. That got a little bit tense and of course, you remember that the president invited all these CEOs over for lunch and then didn't serve them any food, all that got was a glass of warm water with no ice. So, there's symbolic details here that are kind of important. I would expect similar treatment on Monday.

But, what he's doing to talk about is the fact he wants these banks to be lending more. He's concerned that small businesses, in particular, aren't getting enough credit that they need to go out and generate economic activity. He's going to try to crack the whip on some of these banking executives and get them to do that. They're resisting that idea, though, a little bit. So, it's going to be tense.

WILLIS: Greg, I got to turn to you now, these are the same banks that are either have already or are in the process of repaying their TARP money, they haven't worked well with the program to save homes, the mortgage help program that the government has put together. Why would we think at this point, that the government would have any leverage with these banks?

GREG MCBRIDE, BANKRATE.COM: Well, here's what I think the position that the banks are going to raise, they're going to say, hey wait a minute, while the government's shouting from the mountain tops about lenders needing to do more lending, regulators are whispering in the other ear about banks being undercapitalized. And you look, for example, at the repayment of the TARP money. Banks, before they're even allowed to repay the TARP money, they have to meet certain capital thresholds. Well, any money that you need to boost that capital threshold is not money that's going to get lent out, and as a result, a lot of banks have a lot of money parked at the Federal Reserve and that's money that's not being lent out. Now, I think that's the other side of the argument that the banks are going to raise whenever they're called on the carpet about how much they're not lending that money out.

WILLIS: Eamon, do you agree with that? I mean, the other argument I hear is that there aren't good borrowers out there actually trying to get loans. Do you buy these arguments that we're hearing from the lending community?

JAVERS: Well, the banks make both of those arguments and they say that, you know, what you don't want is you don't want a repeat of the subprime mortgage fiasco where banks were too eager to lend money and then threw it out there to anybody on the street who could come in. Some of these liar loans where people just sort of signed a piece of paper and swore that their salary was such and such without ever providing any documentation to back that up. You know, that's on extreme.

But, what President Obama says is that what's happened in the industry is it swung like a pendulum from the liar loan extreme, subprime loan thing, to another extreme, where they're not lending money even to qualified, small businesses.

The truth is probably somewhere in middle here, but the bankers do complain that they're being caught between the political folks over at the White House and the regulators, the federal government telling them two different things at the same time. They're really uncomfortable with that and it's going to be interesting to see how comfortable they are, sort of, voicing that face-to-face with the president of the United States.

WILLIS: Greg, what would make a really big difference in the marketplace, so you think? I mean, we see mortgage rates, for example, very important to consumers, at lows. They're so attractive, right now. What would get these banks lending, do you think?

MCBRIDE: In many cases, and I think the jumbo mortgage market is a great example of this. If you had a viable secondary market, a market where the banks could then sell loans to investors, that would really open up a lot more lending. And you know, again, that jumbo mortgage market is a great example, because without that viable secondary market, credit has been very restrictive, rates higher, terms to qualify are much tougher, and you see rates all over the board. So, I think that's another example, however, we're not likely to see a revival of the secondary markets anytime soon because default levels still remain so high across many forms of credit.

WILLIS: Eamon, you know, I think that Greg makes a good point. There are barriers, institutional barriers, physical barriers, to some of this business getting done. And yet, I also wonder, it would seem that the office of the president has a lot of pull with banks, but does Obama have a lot of clout with these characters?

JAVERS: Well, he does and you know, this is the great power of the presidency. Right? I mean, you have the best convening power in the world. You can call meet with anybody that you want when you're the president of the United States. And he's going to jawbone them a little bit. He's going to jawbone them on lending, he's going to jawbone them and ask them not to oppose his financial reform legislation, which is making his way through Congress, now. And he's doing the talk to them about bonuses and salaries and compensation, asking them not to be too egregious with their payouts this year. Because, politically, it's very bad for the banks to be paying such huge bonuses at a time when unemployment is over 10 percent in this country, that's just very painful for many Americans to watch that happening.

And Obama told the bank executives last time, he said, look, I'm the only one between you and the pitch forks, here. And what meant by that was that he was holding back sort of the populous anger at the banks with one hand and dealing with the banks themselves, the other hand. And he was sort of positioning himself in between the two. We might hear a similar message again on Monday, but a lot of water has gone under the bridge since them.

WILLIS: Right , you know, Greg, there has been so much consumer anger over this and it seems to me, given what you predicted, you've talk about how lending might not come back this year or even next year. That anger might even build more. Do you think we're going to have a real reaction against these institutions from consumers? When is lending going to come back and how are consumers going to deal with that?

MCBRIDE: Well, if you're a consumer sitting at home wondering what the lending landscape is going to look like in 2010, I think it's going to look a lot like it did in 2009. Don't expect the floodgates to open and a new wave of lending to take place. The credit that's available is going to be made available to the highest quality borrowers. And so the three rule of the road, if you will, are going to be good credit, proof of income and money for a down payment. And there are really no substitutes for each of those three. So, I think those are the key ingredients as far as the consumers are concerned, and that's going to be that way for the foreseeable future.

WILLIS: Yeah, and those have been the pillars forever, right, of getting that loan. You know, we just saw TARP extended, Eamon, is there anything in it for us?

JAVERS: Well look, I mean, what folks in Washington are saying is that TARP has done what it set out to do. And the president called it one of the least loved government programs in history and that is certainly true, but they also make the argument that it really staved out off global economic crash and depression 2.0. So, in that sense, there is something in it for us in that we don't have a depression right now. So, that's a good thing.

But, there's incredible political anger, right now, about this TARP program, about the bailouts, in general, and so politicians in Washington are eager to like shut it down as quickly as they can and really move on from the bailout era as fast as they can. The question is whether they can do that, because folks at Treasury are keeping a mindful eye on the economy and looking to see if there's not some kind of separate, downward leg to where they might have to do yet another bailout next year. We're still not out of the woods yet, here.

WILLIS: Well, I hope they do wrap it up. And I hope they start lending. I know everybody out there wants to see that happen and the economy improve. Eamon, Greg, thank you so much for your time today, really appreciate it your input.

JAVERS: Thanks a lot.

MCBRIDE: Thank you.

WILLIS: We've all heard stories, maybe you've experienced it yourself, of credit card issuers raising interest rates to the sky. Ever wonder just how much we're paying in those higher rates? Well, the folks at BillShrink.com crunched some numbers recently and here's what they came up with.

They say that on average, the major credit card issuers have raised rates 15 percent since January. And that means the credit card holder has paid 110 bucks extra in interest just since the beginning of the year. And that, my friends, is a grand total of $10 billion in credit card interest alone. So, if you're feeling a little flat broke, you know why.

OK, next, you hear the term, consumer protection laws, but what does it mean? Grab a pen and paper, we'll explain what they are and why they can save you a whole lot of money down the road.

(COMMERCIAL BREAK)

WILLIS: Well, if you've been ripped off by a retailer, the law might just be on your side. Here are some tips on how to get the most out of consumer protection laws. Mandy Walker is here to help, she's senior editor at "Consumer Reports."

OK, welcome, Mandy. We have some tough scenarios for you here to help us figure out. OK, lots of people ordering online, right now, particularly during the holiday season. Let's say that you order an MP3 player online, holiday gift, right, you want to get it there by Christmas. The merchant promises they're going to get it there by Christmas day. Guess what? It's two days late. What can you do? What are your rights?

MANDY WALKER, CONSUMER REPORTS: There's a federal rule that says merchants have to ship you an item within 30 days of your order, once the order is completed, once the transaction is completed. If it arrives later, then they tell you it's going to, you can cancel the sale, you have the right to give it back.

WILLIS: But, 30 days, so that means...

WALKER: Thirty days, unless you apply for credit, in which case it's 50 days.

WILLIS: All right, so I'm getting confused now, because now we're already past that 30 day mark.

WALKER: So, if you're past the 30-day mark, you have the right to send it back and they have to accept it back. If they let you know that it's going to be late and you say that's OK, then they have to get it by whatever that new date is.

WILLIS: All right, OK, so, here's one that happens all the time, right? You see something in the paper, it's a deal for say spaghetti sauce, you can get it for a special price, right? And you go to pick it up and there's none there. Come on, you're advertising it, you should have it in the store.

WALKER: And there's a federal rule that says, yes, that's right, you should get a rain check or an equivalent item if they have run out. They have a little way of getting around that, however, and that's if the advertisement says there's a limited quantity, then they might be able to get out of giving you a rain check. But complain. Complain. If they want to keep customers, they'll probably give you a rain check.

WILLIS: So, that's what that fine print is for.

WALKER: Read the fine print on the ad. And your state may apply that to all different kinds of retailers, so you can check that out, as well.

WILLIS: All right, here's another hard one. OK, you have a brand new TV. It breaks down. The company says it's going to fix it under the manufacturers' warranty. Sounds pretty normal, but you have to pay to ship it back to the manufacturer.

WALKER: That may not be the case. It depends on what kind of warranty you have. If you have a limited warranty, it may specify that you've got to pay for the return. If you've got a full warranty, no, you should not have to pay.

But there is something called an implied warranty, which means that something should work for a reasonable amount of time in a way that any reasonable person thinks it should. You TV breaks down after just a few weeks, that means it should be covered under the implied warranty, that should not happen, in which case, they should pay for shipping.

WILLIS: Wow. OK, so there is a way to get free shipping, it's just really tough.

WALKER: You got to make a lot of noise, probably.

WILLIS: All right, so you go to buy a new washing machine and after explaining it to the salesperson that you need it to handle 15- pound loads, that's what you typically wash, you buy the one he recommends and he knows what your needs. Right? You've described it already, and then you take it home and find out, hey guess what, it's not working for you.

WALKER: Yeah, won't handle that much a load. They should take it back, again under the implied warranty rule. You were told it was going to handle a 15-pound load, you should reasonable assume that it will and it didn't. Now, it is your word against the salespersons, which could be a little bit of a problem. So, the deal is, whenever you've got a specific need like that, get the fact that it will handle it in writing on your sales slip or wherever, somewhere so that then you can say, hey, this is what I was told, you've got to take it back.

WILLIS: All right, Mandy, what do you need to know if you're a consumer and you're worried that you're going to have a problem with the product? You've got to have the warranty, you've got to have proof of purchase. What else should people know?

WALKER: Right, you want to keep those things on hand. And what you really want to read it. You know, you get the warranty, read it. You probably stick it in the drawer. You want to read it, you want to read all that fine print because there can be rules that you have to follow to make sure you get your money back.

WILLIS: Great advice, Mandy, thank you so much for helping us out today.

WALKER: Sure.

WILLIS: Next, deck the halls without the falls. We're talking about holiday safety and we'll make sure you have a green Christmas that's friendly on your wallet, too.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: I give you the Griswold family Christmas tree. Lot of sap in here.

(END VIDEO CLIP)

WILLIS: What a mess. Well, nobody wants to end up like Clark Griswold from National Lampoon's "Christmas Vacation."From the lights to under the tree, our next guest has some tips to keep you and your family safe this holiday season. Earlier, I spoke with Lou Manfredini, home improvement's expert and ACE Hardware's "Helpful Hardware Man."

(BEGIN VIDEOTAPE)

So Lou, thanks for bringing all this stuff. It's just great. We have lights, we have everything. But my question is, if you want to be safe, how many of these can you plug together?

LOU MANFREDINI, ACE HELPFUL HARDWARE MAN: All right, what you're holding are LED lights and this is the future of lighting. Aren't they pretty? Not only for holiday lights, but the future of lighting for our homes. These, you could probably string together, I don't know, 20, 30 in a row, safely, because they use such little amounts of energy when you plug them in. They're very durable. It really is the future of decorating in the sense that you can put these things away, season after season, and put them back.

Now, conventional light...

WILLIS: These are cool.

MANFREDINI: Yeah, they're cool to the touch. They come in different colors. One of the knocks, Gerri, has been the LED light, the white lights, you had mentioned, oh, do they make them in white, was a little too bright, a little too blue, and people didn't like the color temperature. That has changed, so now they have come out with a warm white light that looks nice.

Now, conventional lights that you have right there, you can only plug four together.

WILLIS: Oh, so you have to be much more careful.

MANFREDINI: Well, right. But what you can do to offset that -- now, I'm holding a cord here, I brought an extension cord. Here's the typical end of an extension cord. OK? But these heavy-duty cords, now, to your right, is another point that is six feet away to plug in the cords, so when you're decorating behind the bushes this is the whole idea of staying safe, you're going to string this out behind the bushes and you have different points to be able to plug the lights into. There's four different points, four per socket, OK, so you can put multiple lights on safely as long as it's plugged into a GFCI receptacle. That's the one with the little buttons.

WILLIS: Tell me about this pole. What is this for?

MANFREDINI: For safety, this is great, because it keeps you on the ground. Now, you keep tightening and loosening and tightening and keep getting bigger and bigger. This pole allows to you grab onto your lights, OK, so you are on the ground. You can take the lights right here, I can clip it on the end and now I can reach up, here where are you, where we looking, where we looking? Here, go down there.

Come on up with me, up, Tina. And here we go, we keep going, and we go all the way up and stay on the ground the whole time. So, this is perfect.

WILLIS: That's perfect. My husband would love that.

MANFREDINI: Now you pull the branch and pull it off and it's good to go. Now, if you are going to get on the ladder, which most people are.

WILLIS: What do I need to know about the ladder, Lou?

MANFREDINI: Well here, you need to know that 500,000 people go to the hospital every year...

WILLIS: I almost have, myself.

MANFREDINI: Because of accidents on the ladder. This is a typical 6-footstep ladder, fiberglass. This is the key element on this. Once you open it up, you also want to take a look at this rating. All ladders are rated. This particular one, 300 pounds. A 6-foot ladder makes you can't go on the tippy top. People make this mistake. This is, that third step down from the top is your top reaching point and on the actual sticker here it will tell you how high you can go on there to safely use this ladder. And keep this in mind if you don't do a lot of work on ladders, get some help. Have someone stand on the end of this thing while you're up there reaching...

WILLIS: Stabilize it.

MANFREDINI: Don't overreach. Work, move the ladder where you need it, so that when you're decking the halls, you don't end up falling.

WILLIS: All right, so you want to talk us about the Christmas tree stand, too. Which I always thought, you know, what's to know about the Christmas tree stand?

MANFREDINI: The widest base you can possibly get based on your tree. They are rated for the size, if you're using a natural tree inside the home, you want to make sure you not only keep it wide, but you also keep it watered. And keep this in mind, trees typically last four weeks. So, from the time you buy a real Christmas tree, and bring it home and you cut the end so it sucks the water in, and all that good stuff, you got about four weeks. But, you want to keep it watered, because when it gets dry, it's a huge fire hazard, which leads me to making sure that you have a working smoke detector and carbon monoxide detector in the home.

WILLIS: Make sure the batteries are fresh. Anything else about tree lights that we need to know for safety sake? MANFREDINI: Well, same thing. with tree lights on natural trees, the watering to make sure it doesn't over dry is key, because these do get hot and I would also make sure that when you leave the house, you don't leave the tree plugged in. Unplug it, put it on a timer if you want, but if you're going to be gone for any amount of time, don't leave it plugged in.

WILLIS: And no candles.

MANFREDINI: No candles. Candles for the mood, not on your tree.

WILLIS: All right, thank you for the help today.

MANFREDINI: My pleasure.

(END VIDEOTAPE)

WILLIS: If you're not careful, all that decorating could cost you a lot. Well, we have some tips on how to save cash and save the planet holiday season.

(COMMERCIAL BREAK)

WILLIS: Whether it's spending too much on holiday decorations or mountains of leftover gift wrapping, the holidays can be a pain for both your wallet and the environment. Our next guest has some ideas for saving money and going green this season. Anna Getty is author of "I'm Dreaming of a Green Christmas."

Anna, welcome, great to see you.

ANNA GETTY, AUTHOR: Hi. Thanks for having me.

WILLIS: I want to start the conversation by talking about something that people really like this year and it's the LED Lights. They really save you a lot of money over time. Because they can be kind of a big upfront cost, but they work so much better.

GETTY: Yes, the LED light it's the low-emitting diode lights, and initially your upfront cost might be about double the price of regular incandescent lights. However, they last about 100,000 to 200,000 hours, vs. 1,000 to 2,000 with regular incandescent lights. You're also saving 90 percent energy. So, in about two seasons, you will be earning your money back.

WILLIS: OK, that's great news. Now, I'm going to tell our viewers a little secret you have about wrapping paper, which is that you haven't bought any in five years. How did you do that?

GETTY: This is true. You know, I just made a commitment about five years ago to stop buying virgin tree paper wrapping paper, which is not recyclable and I found I was spending so much money. So I decided to get creative and make my own wrapping paper using newspaper, old sheet music, maps, magazines, catalogs and really just had fun with it. So, now I also save wrapping paper from all of the gifts that I receive throughout the year and from holidays past and just incorporate it into the holidays and spend no money on wrapping paper.

WILLIS: That's fantastic, I think it's a great idea and really creative. You also have some creative ideas for saving money on parties, because, you can spend so much money entertaining folks.

GETTY: Yes. You know, one of the most important things with parties is properly meal planning, so you're not making too much food and therefore going out and spending so much money on food. I also think it's a great opportunity to have potlucks, so you don't bear the entire burden of the cost, and you employ all your friends and another great thing I like to do, I invested in a set of white dishes, you know, just very neutral, and I use them throughout the year and bring them out at the holidays, as well. So, avoiding costs on all of the disposables.

WILLIS: All right, let's talk about decorating, because that's key. People spend a lot of money decorating their houses for the holidays. How do you save money there?

GETTY: Well, in terms of decorating your trees, you know, go into your cupboards and your attics, your garage, make your own ornaments. I do a wonderful tree skirt. It's in my book, it's super easy. I take an old, round tablecloth and you cut a hole in the center of it, and then from the hole to the edge of the tablecloth, you cut a line and you just wrap it around the tree. You never have to go out and buy another tree skirt again. You can use an old tablecloth that might have a stain somewhere and tuck in the back.

WILLIS: All right, great ideas. I love those ideas. You know, I get pinecones out of my yard and bring them in the house to help decorate at this time of year. So, that's a lot of fun.

GETTY: Yeah, it's great. You can talk to tree yards and ask them for old scraps and you know, just decorate the whole house with free foliage.

WILLIS: I love that idea. Anna, thank you so much for coming in, today. We appreciate it.

As always, we thank you for spending part of your Saturday with us. YOUR BOTTOM LINE will be back next week, right here on CNN. You can also catch us on HLN, every Saturday and Sunday at 3:30 p.m. Eastern Time. Don't go anywhere, your top stories are next in the "CNN Newsroom."

Have a great weekend.