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YOUR MONEY

Goldman Sachs Under Fire on Capitol Hill; IRA Conversion and How You Can Save Money; T. Boone Pickens Talks About the Oil Spill

Aired May 1, 2010 - 13:00   ET

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


CHRISTINE ROMANS, CNN HOST: Welcome to YOUR MONEY. I'm Christine Romans.

ALI VELSHI, CNN HOST: And I'm Ali Velshi. Has debt free college education, a small change that could give you more money for retirement and the winds of change in the energy industry. It is going to be a busy hour for us.

ROMANS: It definitely will be. But we begin with another week of Wall Street under fire. I went to Washington to speak with the man at the center of the storm, embattled Goldman Sachs CEO Lloyd Blankfein.

(BEGIN VIDEO CLIP)

LLOYD BLANKFEIN, CEO, GOLDMAN SACHS: A huge trauma to this country related to the economic collapse and financial institutions played a big role in that and we share some of that burden.

(END VIDEO CLIP)

VELSHI: Well Blankfein was in Washington being grilled by Senators against a backdrop of those S.E.C. fraud charges that have been filed against Goldman Sachs. Now there is talk about federal criminal investigation. The timing of these charges by the way has led some people to question whether Goldman and those charges against them is being used to spur the package or to the passage of President Obama's Wall Street reform plan.

And that legislation is not without its share of critics either.

(BEGIN VIDEO CLIP)

SEN. MITCH MCCONNELL, (R) MINORITY LEADER: The reform plan may have locked up the support of the folks at Goldman Sachs. Goldman Sachs is behind this bill. But Republicans aren't about to push this bill just because Lloyd Blankfein is happy. And not before there is an hour clash protection against any taxpayer funding of Wall Street firms like his. Americans want to know that this bill will protect them too.

(END VIDEO CLIP)

ROMANS: We all want to know what's going to protect Americans from what happened over the past few years. And to talk about that Gillian Tett, U.S. managing editor of the Financial Times and David Gergen, CNN senior political analyst.

David, let's start with you, where are we now on all this? The remarkable day on Tuesday of Senator Levin and Lloyd Blankfein, as Ali said, two prize fighters punching around each other for hours, where does that put us on regulatory reform?

DAVID GERGEN, CNN SENIOR POLITICAL ANALYST: The investigation of Goldman Sachs has clearly propelled regulatory reforms forward, the Democrats who are pushing regulatory reforms have public opinion, the wind at their backs, unlike health care when they were down 10 to 20 percent on public opinion polls, on this one they're up 10 to 20 percent.

They know it and they treated Goldman Sachs accordingly, they put them in their hearings, Goldman Sachs got a black eye in those hearings, there are some that thought that the Senate bullied them too much.

But nonetheless, there's no question that Goldman Sachs came out with a black eye and now this next chapter that we learn that the Justice Department is exploring a criminal -- is conducting a criminal probe in deciding whether to prosecute, that really raises the stakes for Goldman Sachs, it hurts them at a public relations side. We'll have to see where it goes on a legal side.

VELSHI: Yes, they have got a real public relations black eye on there part. Gillian, the Republicans walking a very fine line as David said, Americans are overwhelmingly in favor of more regulation of Wall Street and even this legislation they're in favor of, here's the issue, how do you walk this line and say that there are legitimate concerns to the way the Democrats are going about this and not look like you're on Wall Street's side?

GILLIAN TETT, U.S. MANAGING EDITOR, FINANCIAL TIMES: Well that is a big problem, and what an extraordinary reversal we have had right now, for years and years, politicians haven't really dared to slam Wall Street because Wall Street has been funding so much of the American political scene, but now we're actually getting into a situation, where never mind about toxic loans, it's all of a sudden toxic bankers.

I mean it is very hard for any politician right now to stand up in front of Wall Street. And knowing the danger that that actually ends up obscuring some of the fundamental issues about the way that financial reform is being conducted.

ROMANS: Gillian, do you think that Lloyd Blankfein and Goldman Sachs got a black eye in that hearing? I mean people related to the banking industry, mostly say to me, who did their job better over the past ten years, Congress or Goldman Sachs? All Goldman Sachs ever said it was going to do is make money, congress oh my gosh, who do you think came out on top there?

TETT: I think the reality is that whatever the outcome of this current criminal probe and the actions the S.E.C. has launched, that in the court of public opinion, Goldman Sachs has already been deemed guilty because what we saw on Tuesday was a bank that really wasn't giving straight answers to most of the questions, that looked pretty evasive, that were talking about things that most Americans believe are conflicts of interest.

ROMANS: And you know what is interesting is a lot of people were pointing out loud, during the testimony, I have no idea what they were talking about.

VELSHI: Christine, you asked Goldman Sachs, you asked Lloyd Blankfein about how he felt about public reception, whether he thought it was fair. Listen to what he said.

(BEGIN VIDEO CLIP)

BLANKFEIN: There certainly is a rise in suspicion that something is broken here and that we don't have those old standards and the industry and Goldman Sachs have a lot of work ahead of themselves to make the kind of changes, not just to convince people, but to make the kinds of changes that are warranted, from the lessons of the last several years.

(END VIDEO CLIP)

ROMANS: They do have a lot of work to do and they admit it, but I saw more contrition Ali in that interview after than I did when he was sparring with Senator Levin and when his other fellow bankers were.

VELSHI: Yes, he was going at it. David you were in Washington with me when we were watching some of that happen. I guess here is the question, are we in danger because two to one Americans support regulation of Wall Street because as Gillian said Goldman Sachs being deemed guilty in the court of public opinion. Are we in danger of what some Republican Senators are saying of overreaching on regulations somehow hurting U.S. business competitiveness?

GERGEN: That danger certainly exists, Ali and I think the consensus is widespread among Republicans and Democrats that reform is needed. We need to put more referees on the field from the government. But you don't want to put so many referees on the field that you kill the game itself. And that is a danger out there, how do you draw that balance?

More reform, but not strangle the industry, after all, the financial industry has been a lynch pin of American prosperity in recent years, it has clearly become way too zealous in it's trading, it's irresponsible. But we have to remember that it's been important for the American economy to have the financial center of the world in New York City.

If that financial center moves to Asia, and there's every prospect that it might, that's going to diminish up as a society, so how do you strike that balance, on derivatives, on consumer protection, on the bail out of $50 billion, I think all of those are very sensible system. Questions that deserve to be answered in a quiet, calm sensible way, not in a rush to judgment. VELSHI: I think that is a good way to think about it and I hope that's exactly what happened. Gillian Tett is the U.S. managing editor of the Financial Times. Thanks for joining us Gillian. David Gergen is our CNN senior political analyst.

In this case that we're talking about the, the Goldman Sachs case has caused, you know quite a bit of controversy, we're about to tell you, the next scandal that could be just around the corner.

(COMMERCIAL BREAK)

VELSHI: Christine, you and I were both in Washington for this testimony of Goldman Sachs, you were interviewing Lloyd Blankfein; I was sort of covering the rest of the story. Judging by Tuesday in Washington, you would think that in the investment banking industry and Goldman Sachs in particular, were solely responsible for the financial meltdown. Those were some of the attacks and questions that they were getting from Senators.

ROMANS: Yes, there are a lot of people who had a hand in this, and there's one particular quarter where we haven't spent a lot of time examining a very important role in the meltdown, our Allan Chernoff is going to break down the mortgage scandal that rocked our economy. He is going to tell you about who else you can be mad at -- Allan.

ALLAN CHERNOFF, CNN SENIIOR CORRESPONDENT: Lots of pain all over place, in fact that pain stretches from home buyers to pensioners who depend upon their monthly checks, it's a result of the way that Wall Street sold mortgage investments. To do that, the Wall Street firms relied on endorsement from the credit rating agencies. Moody, Standard and Poors, Fitch, our story begins with a home buyer in the Bronx, New York.

(BEGIN VIDEOTAPE)

CHERNOFF (voice over): Geselle James got a mortgage she couldn't afford.

Did you think you could afford this house?

GESELLE JAMES, HOMEOWNER: No, no.

CHERNOFF: But when James fell behind on her payments, the lender didn't have to worry, that lender Alliance Mortgage had already sold the mortgage to investment bank Morgan Stanley.

PROF. LAWRENCE WHITE, STERNS SCHOOL OF BUSINESS: The basic idea was let's take a bunch of mortgages.

CHERNOFF: Professor Lawrence White teaches economics at New York's University Sterns School of Business.

WHITE: Here is these 100 mortgages; they have been packaged up into what we're now going to call a security. CHERNOFF: Securities consisting of anticipated mortgage payments that Morgan Stanley, Goldman Sachs, and other Wall Street firms then sold to investors. That's where the credit ratings agencies come in. There are three players, Standard and Poors, Moody's and Fitch. It is they're job to rate the credit worthiness of those mortgage investments, to tell investors what is the likelihood James and other home buyers can make their monthly payments. Which are suppose to flow to the investors.

The rating agencies said homeowners like James were likely to pay their mortgages, very likely. So they gave those mortgage securities their top marks. An effort, critics say to generate more lucrative deals from Wall Street.

SYLVAIN RAYNES, FORMER, MOODY'S ANALYST: The rating agencies, if you want to betray the people by relaxing their standards, by having models that did not recognize the objective risk conditions in the field.

CHERNOFF: Geselle James was a poor credit risk; she fell into foreclosure, just like millions of other home buyers who also could not afford their mortgages.

WHITE: It turned out that, no, this wasn't so safe, and these ratings firms had been way overoptimistic.

CHERNOFF: Some analysts at the rating agencies knew it. Let's hope we're all wealthy and retired by the time this house of cards falters emailed one analyst. Based on AAA ratings, Ohio's pension funds bought 263 of the mortgage securities, when the housing bubble popped, the investments plummeted. S & P, Moody's and Fitch quickly cut their ratings from super safe to junk, but it was too late, Ohio's pension plans lost $456 million.

RICHARD CORDRAY, OHIO ATTORNEY GENERAL: Our investors and retirees were certainly victims of what the rating agencies did here. It is very upsetting for our investors and retirees. Many of them know that the systems have been hurt; they worry about getting their checks every day.

(END VIDEOTAPE)

CHERNOFF: Ohio was not alone, Connecticut and California also lost millions and they along with Ohio are suing the rating agencies. That's why the rating agencies are getting heated in Congress and also why the financial reform bill now before the Senate would create a new office at the Securities and Exchange Commission to oversee and require more transparency of those rating agencies.

ROMANS: I mean it seems incredible now, but subprime mortgages, subprime meaning these are the mortgages that are most likely to have someone not be able to pay them back. Subprime mortgages like Geselle James' were rated AAA, super safe. Probably none of them should have gotten that kind of rating in the first place.

CHERNOFF: Yes, the whole concept is kind of an oxymoron, an AAA subprime, I mean subprime means it's not a quality mortgage to begin with. So this in a way really never should have happened. But everybody, virtually everybody on Wall Street was in on it and the rating agencies allowed it to happen.

ROMANS: They're making news this week because they're rating the sovereign debt of countries and it's very, very important what they say, yet they really fell down on the job during the bubble. All right. Allan Chernoff, thank you so much Allan.

All right. Listen up everyone, we're talking about IRA's, it might not sound exciting, but there are some exciting new rules out there for you and we're going to help you make a big difference in the amount of money you're going to need to retire.

(COMMERCIAL BREAK)

VELSHI: It's kind of unfortunate, but most people, Christine, don't muck around with their investment plans too much. In fact they do it far too little. They certainly don't think of changing from a 401(k) to an IRA, and if you do that usually it's before tax time which was a few weeks ago. But there's some big changes happening this year with respect to how you can use a Roth IRA. We want to talk a little about that.

ROMANS: That is right and they're calling it the IRA Conversion, Ali, and there are a lot of questions about it. A lot of people qualify for this and actually can save some major money by the time you retire. It's a little complicated so we brought in our investment experts, Doug Flynn, the president of Flynn Zito Capital Management and Ryan Mack, president of Optimum Capital.

First of all, Doug tell me why do we want to do this? What is the IRA Conversion? It's happening right now, so you've got to seize the moment if you're going to do it. What is it and who is it for?

DOUG FLYNN, PRESIDENT, FLYNN ZITO CAPITAL MANAGEMENT: This year people who earn less than 100,000 a year can also convert, in the past you could below that. But what it gives you an opportunity to do is take your old tax deferred money from your old 401(k) and your IRAs if they were in an IRA and then put them into a Roth IRA. That will allow you to grow tax free.

There's a big difference down the road when you take that money out of from a Roth with no taxes versus a traditional IRA or 401(k) when you have to pay the taxes. You can argument that tax rates are going to be higher then, so that's an opportunity to do that change right now, but you have to pay attention to the taxes that you're going to have to pay if you convert right now.

VELSHI: So this is kind of like a pay now and don't pay later idea. Who watching us, Ryan should be thinking about doing this? Under what circumstance you should be saying, hey, look, I've got a 401(k), and by the way does this apply to my current 401(k) with my company or past money that I have?

RYAN MACK, PRESIDENT, OPTIMUM CAPITAL: If you have a current 401(k), but if you have left your job and you have a 401(k) and you're eligible to roll it over, you're definitely eligible to roll it over into a Roth IRA. You are going to have pay your taxes, I guess the most ideal candidate are individual who are younger, and individuals who have a lot of time left till retirement, individuals who feel that as time goes on they're going to be getting into slightly higher tax brackets and their income is going to be increasing.

So those are the individuals you want to ask yourself, as you said, do I want to pay my taxes now on my seed now or when I harvest when I take those finances out? So I think it's a great opportunity to get some tax deferred returns, you don't have to pay taxes that you can withdraw. You can leave your money to your beneficiary's tax free. So there's a lot of good advantaging for you.

ROMANS: You say a younger person, what's younger? The older I get the different younger means.

MACK: Well I would say that essentially if you have two years in retirement, it might not necessarily be the right thing for you, but if you're 40 years old, if you're 35 years old, you still have a lot of time, you think your tax bracket is going to go up, tax brackets are going to be increasing so you're going to be paying higher taxes if you don't roll them over more than likely if you try to wait until a later date.

VELSHI: Let me understand this, Doug, if I put money into my 401(k), that is tax deferred now so I don't pay taxes on it now, I'll pay taxes on it when I'm 70 and a half when I start taking that money out, in theory I'm not going to be earning as much or I won't be in a higher tax bracket then. In this case I can take money out of a Roth IRA, substantially earlier than that, 10 years earlier than that?

FLYNN: Well you can. You can take it at 59 and a half and there's also an opportunity to take out earnings after five years. But listen it's really important whenever we do a calculation, and you can do Roth conversion calculations, they're available online, but when you do these calculations, the trick is to make them work, you have to have the money when you convert, the taxes that you're going to pay on the side from another place.

You don't want to have to use the tax money from within the IRA whenever I run a calculation, if you have to take the money out of the plan that you're converting, the numbers don't work, you are better leaving it in, because of the compound that you are going to get.

So when you convert is really important that you know hey if I convert $10,000 it might cost me $4,000 to convert, I have to have that $4,000 on the side. In the long run when you do that, it certainly makes a lot more sense to diversify your tax strategy down the road. Have a bucket of money that will never ever be taxed and that is where the Roth has power.

ROMANS: All right. Guys that is a fantastic discussion. We can revisit it again because this is something that a lot of people are going to be trying to research and think about what they should do it this year. Ryan Mack, Optimum Capital Management and Doug Flynn from Flynn Zito Capital management. Ali.

VELSHI: Definitely worth doing a little extra research on this.

Listen, there is oil in the Gulf of Mexico, it is come ashore, this is putting the drilling of oil in question, we are about to talk to a man who's been drilling for oil for decades, what has he got to say about all this? When we come back.

(COMMERCIAL BREAK)

ROMANS: A bad situation turning much worse in the Gulf of Mexico this weekend.

VELSHI: This massive oil slick from that leak in the Gulf of Mexico has reached land. Let's bring this conversation over to T. Boon Pickens, he is joining us now, he's the founder of B.P. Capital, he's been in the oil business for as long as there's been an oil business, Boone.

T. BOONE PICKENS, FOUNDER, BP CAPITAL: For about 100 years.

VELSHI: Let's talk about this, we get, I think the U.S. produces about a third of its own oil, we import the rest of it and about a quarter of that oil that we produce comes from the Gulf of Mexico. How big a deal is it that we have had this massive spill in the Gulf of Mexico both for our oil supply and politically?

PICKENS: Well, you know, these things are -- it was a bad accident is what it was. This is not something that we haven't seen around the world before so, yes, we're leaking about 5,000 barrels a day, which is a lot of oil, but they're picking it up pretty fast, so you're not going to have; it's not going to be like Prince William sound up in Alaska that was an entirely different accident up there.

ROMANS: Boone does this affect you know the president recently said that he was open to more drilling in some places, does this embolden the people who say, hey, wait a minute, this is an ecological disaster waiting to happen, or does this have no political ramifications at all?

PICKENS: When you say none, of course it's going to have some, because it's on every station every day, it has everything stirred up but I think when he's says he is going to shut down, I think he is talking about the outer continental shelf which is off the east and west coast and he talked about opening up off the west coast of Florida and now I think that governor down there, Crist has said no, we're not going to do this or somebody has.

Let's just watch it, don't go crazy over it because the sad part of it is its losing 11 guys there on the Trans ocean rig. So hold your breath because I don't think that the damage we're going to have from the oil is going to be somewhat minimum when you finally analyze it.

VELSHI: Let's bring in something that you also know a lot about. I want to play a little bit of what the president said this week when he was in Missouri about America's role in alternative energy. Listen to this.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: I don't accept second place for the United States of America. I want us to be first in wind power, first in solar power and I want us to be first when it comes to bio diesel and the technologies that are being developed in places like Poland. And that's why my energy security plan has been one of the top priorities of my administration since the day I took office.

(END VIDEO CLIP)

ROMANS: How are we doing on that being first in all those technologies of alternative energy?

PICKENS: Well I'm with him on the renewables, the solar and the wind, that is good. But solar and wind do not replace foreign oil. I mean that is for power generation. And when he talks about bio-diesel that is a very, very low volume addition to what we need.

I don't understand why he doesn't mention -- you see back when he accepted the nomination and in the fourth debate when asked the question about foreign oil, he said at that time in ten years, we will not import any oil from the mid east. I have not seen any plan from him yet that addresses those remarks. And he's going to have to talk about that at some point. So the only thing that we have that replaces oil from the mid east will be to use natural gas.

ROMANS: All right. Boone Pickens, a lot to chew over in deed on our energy needs our energy dependents and how we're going to fix that going forward. Thanks, Boone Pickens.

You are really going to like this next one too. We're going to tell you how to get a college degree, a college degree and stay out of debt. A degree with no debt all at the same time next.

(COMMERCIAL BREAK)

ROMANS: All right most college kids know all about those sleepless nights cramming for a big examine or finishing a term paper.

VELSHI: But community colleges across the country enrollment have been sky rocking. And students are experiencing a whole different kind of sleepless nights.

Mary Snow has this.

(BEGIN VIDEOTAPE)

MARY SNOW, CNN CORRESPONDENT (voice over): It's not exactly how 37-year-old Tanneke Burns pictured going to college. But timing is everything, literally. Take the sociology class, Burns can only make the 12 a.m. class that is 12 a.m. part of the burning the midnight oil classes that Mass chutes Bunker Hill Community College added a class when space during the daytime became low. While caffeine keeps both teachers and students awake, it's the drive to get a better job in health care that keeps Burns going. She works at a blood bank but her hours were scaled back when the economy soured, and as a mother of five kids ranging from 7 to 22. Midnight classes made sense for her. She signed up for three a week.

TANNEKE BURNS, STUDENT, BUNKER HILL COMMUNITY COLLEGE: My co- workers are supportive, yet they think I'm crazy. A lot of people say I don't know highway you do it. But I say you do what needs to be done.

SNOW: When did you first start to see a spike in the enrollment here?

MARY FIFIELD, PRESIDENT, BUNKER HILL COMMUNITY COLLEGE: If a spike means a 20 percent increase, we saw it just last year.

SNOW: Mary Fifield is the president of Bunker Hill Community College she says besides working adults like Tanneke coming back to school, there's also been a jump in high school graduates who can't afford other schools. Tuition for a full time student here cost about $3,000 a year, half of what it is at a state university.

FIFIELD: I believe that community colleges are a force in our country and the reason I say that is because they provide an opportunity for anyone to everyone to go to college.

SNOW: At the same time, community colleges like this one have seen their enrollments multiply. State budgets are shrinking.

DAVID BAIME, AMERICAN ASSN. OF COMMUNITY COLLEGES: Imagine trying to deliver services to your student where you've got a quarter more full-time students and your budget has been cut by 4 percent each of the last four years. It is a very challenging combination for our administrators.

SNOW: David Baime of the American Assn. of Community Colleges says some community colleges have had to cut coursers or have students wait to take classes, Bunker Hill has gotten help from stimulus money, but it has waiting lists, too, 500 people are on a waiting list for a nursing program. The program that brought Tanneke to this community college. There's certainly no waiting list for midnight classes, but she worries about courses she's required to take that aren't offered in the middle of the night.

BURNS: My only fear is that next semester, what am I going to take? I've run through the five classes, so I don't know what I'm going to do, so that's my fear right now.

SNOW: Mary Snow, CNN, Boston.

(END VIDEOTAPE)

ROMANS: Community college is just one way students can get a degree without racking up too much debt. But our next guest says there are plenty of other strategies Ali to keep your costs down. VELSHI: And she is our good friend Lynnette Khalfani-Cox, is the author of "Zero Debt for College Grads, from student loans to financial freedom." Before I ask for alternatives Lynnette, I have to ask you. Of the kinds of debt that people can have, we often think of student debt as the one of the better ones because it actually is an investment in your future. Why are we telling people that we want to avoid student debt?

LYNNETTE KHALFANI-COX, PERSONAL FINANCE AUTHOR: Well the problem is that tuition has skyrocketed over the last decade. So now the typical college graduate comes out of college with more than $20,000 in student loan debt and it is taking on average about 15 years to pay off that debt. So there are good forms of debt, whether that's mortgage debt or student loan debt, if you borrow to excess and you can't afford to pay it that becomes a problem.

ROMANS: There are some important strategies that you can use in college while the kid is in college, and even before they go to college to try to keep their debt down. One of the things that you recommend is trying to choose a university or a college that is tuition free. If you've got a bright kid who's well rounded, what about the Navel Academy? What about Cooper Union here in New York City? Tell us about some of these.

KHALFANI-COX: That is right. This is I think a great new trend that a lot of people frankly don't know about. A lot of these tuition free colleges are primarily military type academies, for the Air Force, for the Navel Academy, for the army, that kind of thing.

But there's also other colleges, you mentioned Cooper Union in New York City, engineering colleges as well that offer this, there are about 11 across the country and they have all essentially said listen, we have got you covered, we'll take care of the tuition for you, as long as you get admitted and as long as you maintain a good grade point average, etc. and as long as you meet a certain standard with regard to family income.

I think it's a great opportunity for someone who might have been looking at some of these alternatives in any event to go free of charge. You still got to cover things like room and board, but at least the primary expense, tuition, will in fact be covered.

VELSHI: And there are some colleges that really are good at designing an entire package for you of grants or loans but some kind of a financial package that could have you paying a whole lot less than you might expect.

KHALFANI-COX: Right. This is another growing trend; this is regard to loan free colleges. Essentially there's about 50 colleges all across the country that have pledged, they have said listen, we do not want to burden the next generation, we'll create a financial aid package for you that is entirely free of student loans or at least reduced greatly reduced student loans.

And we're talking really great schools all across the country, from Arizona State to Yale, Stanford is on the list, Princeton University, Harvard, et cetera, so some top colleges all across the country and frankly I think this is another thing that families are looking at a lot more closely because they're trying to make the cost of higher education a lot more affordable.

ROMANS: You just got to get into Yale first, before you can get that -- project on student debt by the way has a list of all of those and a few have dropped off the list, but most of them are pledging they're going to keep going on this. Also Lynnette you make a point that I say this college students or high school students and college students all the time. If you're applying for two or three or four scholarships, it's not enough. You've got to be applying like crazy for scholarships.

KHALFANI-COX: Right. What I tell families, and I do some workshops to tell people about how to pay for college with out going broke. I tell families, listen, the scholarship hunt, the grant hunt, that has to become essentially kind of a full-time job, especially during the summer months, take three to four weeks at a minimum and spend 30 hours or so a week to look for scholarships, go to your websites, get online to places like Fastweb.com, go to Scholarships.com.

Those are great resources to connect you with potential scholarship opportunities, they'll look at things like your educational background, your interests, personal family history, some of those things that might qualify you, but you should be applying for I think as many as two dozen or so, 20 to 24 scholarships that will greatly increase your chances of getting some.

VELSHI: Might as well do all the work at the front end, could avoid you paying for it for the rest of your life.

ROMANS: Seriously, the pizza place I worked for in high school, I didn't get the scholarship, but the pizza place I worked for in high school actually had a really good scholarship for the kids-the high school kids who worked there and other companies for the children of the people who work for those companies, you know, they have $500 grants available, $1,000 grants available if you've got decent grades. All money that adds up.

KHALFANI-COX: I know a student who actually got over $100,000 worth of scholarships because she was tenacious about it; she was able to pay for all four years of her college just with her scholarships and grants so it can be done.

VELSHI: Do the work on the front end. Lynnette great to see you as always. Lynnette Khalfani-Cox always a pleasure to talk to you.

All right. Coming up next the call to boycott one U.S. state and one country's warning not to travel to that state.

(COMMERCIAL BREAK)

ROMANS: All right, time now to take a look behind the headlines; our good friend Richard Quest joins us from across the pond. He is the host of "Quest means business." And boy am I glad I have both of you guys here because we're going to take a little trip to Greece and it's not the kind of trip to Greece you want to take, a big credit ratings slash this week, we're talking about Greece, we're talking about Portugal, we're talking about Spain, why do you care?

Well here's the deal, when you are maxed out and have a lot of debt and can't pay your bills, what happens? Your credit score drops, it is harder for you to borrow money, you have to pay more to borrow money. That is what is happening here and there is a big concern about its domino affect around Europe. One OECD European official basically said it's like the Ola virus. Why do we care here in the U.S.?

It can hit U.S. exports, growth, jobs, people are holding up the mirror, saying mirror, mirror on the wall who else has too much debt overall? People are worried a little bit about who ultimately pays for Europe's rescue, conservatives here concerned about who funds the IMF and will the IMF have to do a big rescue. Ali, speaking of mirror, mirror on the wall, brings me to the Roman numeral 9.9 percent; Greece's budget deficit to GDP is 13.6 percent. Guess whose budget deficit to GDP is 9.9 percent?

VELSHI: Ours, the United States.

ROMANS: So some people ...

VELSHI: Doesn't seem that far off does it?

ROMANS: No. Some people are saying you know when you have sovereign debt concerns like this; it just kind of makes you ponder debt situations elsewhere.

VELSHI: I love the way you describe that, but let me ask Richard, the difference is if you've got a credit card and you can't pay it and your credit rating is downgraded, the credit card company might be the one who's out of money, if you're Greece or Spain, its other countries who hold your debt.

RICHARD QUEST, CNN HOST, "QUEST MEANS BUISNESS:" It's investors, its other countries, its pension funds; it's a variety of people. The thing about Greece is not only it's debt to GDP or deficit to GDP, it's also its total public and private debt to GDP is at very high levels and what is worse, its cost base is high as well in relation to its competitiveness to the rest of the euros.

Now Ali, why do you care about it? Look in Friday's "New York Times," the editorial in that paper, that basically makes the point that unless the IMF and the euro zone countries get their act together, this contagion will go further and the damage that will be created to nation's recoveries including the United States will soon start to be felt. This is not something that you can just look at and think you're a long way from.

VELSHI: I think that's the issue, we didn't know, most of our viewers didn't really know much about the economies of Greece and Portugal and Spain before this and some how it became central to what we do. Which by the way the story of the entire financial crises. ROMANS: And Greece's economy is one/fifth the size of California, so that's a small economy. Spain has 1.2 trillion economy; Spain is a really big deal. And we know the Spanish unemployment just topped 20 percent. So it is something that bears watching no matter where you are here.

VELSHI: Hey listen, let's talk about this, Richard, you may have been following this from the other side of the pond, I don't know if it got that far, but immigration is a big story here, illegal immigration, it's also at the center of the debate in the upcoming UK elections, have been making headlines about a comment that Prime Minister Gordon Brown made after talking to somebody about immigration.

But listen, back here on this side, critics say the law that Arizona enacted by immigration is going to encourage racial profiling; it's got some people calling for boycotts of the state and the travel industry. What do you make of that, Richard?

QUEST: It's very simple. The immigration question, no matter how you try to be liberal or whatever about it is on the agenda and is on the minds of ordinary people. That is what we have seen in the UK general election. It was an ordinary voter that raised the question of immigration, particularly people from the European Union who have the right to work in Britain, coming here; taking jobs that they believe are for Brits. Now in the debates of the party leaders, again and again, no matter how much you may try to avoid the issue, ordinary people really care about it.

That is why here in the UK, and I suspect if you take the Arizona example, it's very easy to say that something's racist or bigoted or whatever, but underneath it, you tend to find there is a genuine swell of concern by voters.

ROMANS: And there is also a feeling that the elites don't get it, or the elites aren't really seeing the way people are living and feeling. We are seeing that in this country. I think this whole Gordon Brown thing has showed that there, as well. It could make for some very interesting politics in both countries I think gentleman.

VELSHI: A disconectiveness between people and their elective politics.

ROMANS: It is true. OK next guys. Ali is mad. Ali is not going to take it anymore. I can't wait for you guys to hear this one. This is Ali's grand plan for how airlines should handle those long delays on the runways.

VELSHI: But first, in this week's "Turnaround" we take a look at in good company. A New York shared work space company that provides female entrepanaurs with a place to learn and connect. And when it comes to growing a small business its owners are leading by example.

(BEGIN VIDEOTAPE)

ADELAIDE LANCASTER, FOUNDER, IN GOOD COMPANY WORKPLACES: You can rent a meeting room and you can rent a conference room. For those members that need more regular and frequent access we have different monthly packages.

AMY ABRAMS, FOUNDER, IN GOOD COMPANY WORKPLACES: A good way to describe it is zip car meets your yoga punch card meets ...

UNIDENTIFIED FEMALE: My company is E. Wall for A Ignitions Consulting.

UNIDENTIFED FEMALE: I started Urban Girl Spot.

UNIDENTIFED FEMALE: I'm an executive coach.

EMILY WOLPER, MEMBER, IN GOOD COMPANY: What I get is a sense of community. I get to interact with other women business owners. I get to learn from them and I get to share my experiences.

ABRAMS: Our initial business plan was to open the New York office, and then the goal was to be in many different cities.

LANCASTER: We had at that point really invested a significant amount of time and energy and capital into the franchise process. The first quarter of 2009 is when we began to reevaluate that plan with the franchise model it would be a new business for whoever we would be franchising to. It wasn't a very good environment to be securing capital for start up in that way.

ABRAMS: We had to really come up with various ways that we would expand that would be different than we initially planned to do.

LANCASTER: We reconsidered the New York market. We are in touch with so many women here and we have a really strong platform. We considered staying in New York and having a larger foot print. We will be opening a second space in a couple of months that will offer full- time offices and dedicated desks.

ABRAMS: Any time a new member signs up or existing member renews and stays a part of the community, I feel really proud that we've created something they feel is really valuable, where they're growing as a business owner which has informed our ability to grow as a business.

(END VIDEOTAPE)

(COMMERCIAL BREAK)

ROMANS: We are back with our very good friend Richard Quest. You Richard, Ali and I were in Washington together this weekend. I left him on Wednesday morning and headed to the airport. Ali, I never told you but it took me nine hours to get home.

VELSHI: Well listen, things are changing. It's a new dawn for airline passengers as rules go into place that are going to fine airlines up to $27,000 per passenger if a plane stays on the tarmac more than three hours once you're loaded into it. It is a no win situation because airlines do not want to pay this fine and passengers frankly don't want to be on the plane. So I have come up Richard, as a guy who travels about as much as I do with some ideas that will make these tarmac delays more enjoyable.

First of all, free writing therapy. Providing stationary and envelopes and invite frustrated passengers to write letters of complaint to the Department of Transportation. Because that's who the airline blames for these delays. The best letters get published in the next month's edition of the In-flight Magazine.

Here is one Richard that you wouldn't know about because you never have to sit in the back like the rest of us. Always keep one seat in first class available. Invite passengers in coach to come up front and deliver an impromptu, unscripted two minute speech entitled, "Why I should sit up here with you fat cats." And then the passengers already sitting in first class get to vote which one of the peasants gets the upgrade.

The third one Richard which you can maybe help me with is the crack berry crack down. Explain to me one more time why I have to shut off all my electronics when the door is closed. Because I'm still unclear as to how my little blackberry is some how going to interfere with your multibillion dollar navigational system. But I really enjoy hearing the speech over and over again. What do you think, Richard?

QUEST: The fascinating part about that is, I always think if my little $200 phone or even worse my pay as you go $30 phone can affect your $250 million plane we are in deep trouble. The truth of the matter is you missed one out. The one you really need to get is take the instructions that say, take out the motion sickness bag, cut holes for the eyes and nose and mouth and put it over your head. So you can't be seen during the delay.

ROMANS: My very favorite Ali is sort of, I guess you call it American Airlines idol where you keep the first class seat open and wait for somebody to go for it. That is very clever.

VELSHI: We'll have to see how this thing all unfolds and who gets the first fight. Good to see you, Richard as always. Thank you to you viewers for joining us for YOUR MONEY. You can hear all about my ideas about making those delays more enjoyable. I've got ten of them on my pod cast at CNN.com/yourmoney and by the way if you think you have a better idea let us know. You can always join our running conversation. Christine and I are on facebook and on twitter, I'm at Alivelshi and she is at Christineromans.

ROMANS: That is right. Make sure you join us every week for YOUR MONEY, Saturdays at 1:00 p.m. Eastern, Sundays at 3:00. Log on 24/7 to CNNMONEY.com. Hey everybody have a great weekend, you too Ali.

VELSHI: You too Christine.