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YOUR MONEY

Exceptional War of Words; The War at Home; Saudi America; iPhame or iPhlop?; To the Brink and Back; Five Years After Collapse; Home Mortgages Still a Problem for Americans; Costs of Higher Education Assessed

Aired September 15, 2013 - 15:00   ET

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


CHRISTINE ROMANS, CNN HOST: A war half way around the world redefining President Obama's second term. I'm Christine Romans. This is "YOUR MONEY."

In a moment, I'll be joined by John King, CNN's chief national correspondent, and Nick Kristof, a Pulitzer Prize-winning columnist for "The New York Times."

But, first, Candidate Obama campaigned on getting the U.S. out of wars in the Middle East. He argued it was vital to focus on a domestic agenda meant to help Americans reeling during the financial crisis. President Obama is now making the case for military action in Syria.

A president accused of apologizing for America now touting America's greatness.

Here is what CNN "CROSSFIRE" co-host Newt Gingrich said during his run for the Republican presidential nomination back in 2012.

(BEGIN VIDEO CLIP)

NEWT GINGRICH, FORMER PRESIDENTIAL CANDIDATE: I stand for American exceptionalism. I believe in the Declaration of Independence. I believe in the Constitution. I believe in the Federalist Papers.

It's clear the president believes in Saul Alinsky and European socialism. The gap is this big.

(END VIDEO CLIP)

ROMANS: But this week, President Obama cited America's exceptionalism as he made his case for action in Syria in his address to the nation.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: But when with modest effort and risk, we can stop children from being gassed to death and thereby make our own children safer over the long run, I believe we should act. That's what makes America different. That's what makes us exceptional.

(END VIDEO CLIP) ROMANS: Russian President Vladimir Putin takes exception with President Obama's claim of American exceptionalism. He responded to the president's speech in an op-ed in "The New York Times" titled, "A Plea for Caution from Russia."

Quote, "I would rather disagree with the case he made on American exceptionalism, stating that the United States' policy is what makes America different. It's what makes us exceptional. It is extremely dangerous to encourage people to see themselves as exceptional, whatever the motivation."

John King, it's five years after Lehman's collapsed, yes we can and bail out. Guantanamo is still open and President Obama is making a case to launch missiles into Syria, while citing America's exceptionalism.

Is Putin somehow more in touch with the feelings of Democrats who made this president a two-termer?

JOHN KING, CNN CHIEF NATIONAL CORRESPONDENT: Well, Democrats are angry at President Putin, even though many of them might share some of his observations. Look, Christine, the president is in a very difficult box here. George H.W. Bush left a note for Bill Clinton when he was leaving office, saying you may want to focus on domestic issues. But every problem in the world is going to cross your desk.

And President Obama is dealing with that now -- a man who defined himself in national politics by being anti-war, get the American military presence out of the Middle East as soon as possible. Now, contemplating military strikes in the Middle East, at a time, let's be honest, he was struggling in his presidency before this. He is in his second term. The economy is recovering, but not in as robust a fashion as he would like.

The American people are split on his leadership. The country is divided politically anyway. You have the IRS controversy. You have the NSA controversy.

So, the president was in a political box anyway. And then comes this, very, very difficult.

ROMANS: A war-weary population, also a jobs-weary population.

Nick Kristof, the polls show the public still favors focusing on a domestic agenda over intervention in Syria. Has Putin managed to outmaneuver the president here?

NICHOLAS KRISTOF, "THE NEW YORK TIMES": Well, I mean, I think Putin a little bit overplayed his hand. I wonder when you have an op-ed like this, whether it's really written by a public figure like Putin or whether this came out of his press advisors.

And, frankly, I thought it seemed authentic because no press advisor would ever suggest denouncing American exceptionalism in a message to Americans. And so, I think there really was a kind of a backlash that weakened his case. I thought he came across as, you know, very smart and very shrewd and kind of arrogant himself.

ROMANS: You know, John, public opinion and many of the president's fellow Democrats in Congress frankly remained opposed to military action in Syria. So, that immigration reform, gun control, avoiding a government shutdown this month, creating jobs. Does an uphill battle on rallying support for Syria put the president's domestic agenda at risk, John?

KING: A bit in the sense that Washington, whether you like it or not, tends to only be able to do one thing at a time. That's not right. It shouldn't be the case. But it often is the case in Washington.

As I noted, Christine, the president was in a tough political position anyway. Immigration reform already was a huge question mark. He is trying to just keep the government running. There is nothing on the horizon right now.

Remember, there was once supposed to be a grand bargain. The president was going to get to the structure problems and entitlements that are such an issue in our economy. The president was going to get to the tax questions in our economy -- in our government that are such a big question to the economy.

Forget about all that right now. The president is trying to keep the government open, keep the status quo with the Republicans who run the House of Representatives right now and get into the midterm election campaign. His health care law is a controversy again. And now this.

In an odd way, in an odd way, let me be somewhat of an optimist after being such a pessimist for a moment there. At least in the Syria debate, people are having conversations, most of this debate -- some of it is politics, but much of it is a debate about the power of the presidency versus Congress, whether Syria is in the U.S. national interest. There have been public hearings.

It's not all perfect, but at least there have been conversations. If the members of Congress who disagree on profound issues like this could have these conversations on the other issues, it would be helpful. Will it happen?

ROMANS: You know, Nick, it's interesting, the idea of this is Syrian and U.S. interests. I mean, for many Americans what's in their interests is a job market that's doing better. They are war weary and they are jobs weary. And that's what it really comes down to. It's hard for them to focus on this idea of the president and military action in Syria when they want action on jobs, Nick.

KRISTOF: Yes. And, you know, I think frankly it seems to me as if there is something, that the backdrop is a bit of a wave of isolationism.

And we periodically have seen this in history. Pew Survey says that this is coming in waves. But right now, it's the biggest they have seen in 50 years.

I was struck by one survey earlier this year when Democrats and Republicans alike agreed that the single area of government that should be cut the most is foreign humanitarian aid, which accounts for only about 1/2 of 1 percent of the budget.

The second choice for budget cutting was the State Department and, you know, the foreign service, and who recently has had fewer members than the Pentagon has had in its bans.

So, these are kind of tiny areas.

But there is this weariness with the world, weariness with fighting, kind of a compassion fatigue, as well, a sense that if we're going to do nation-building, we should do it right here at home. At the end of the day, though, I mean, I sympathize with that, I share that view, but you can't turn your back on the world or it will come back and bite you.

ROMANS: I like to think that Washington can do more than just one thing at a time. And maybe they're only talking and fighting politically about one thing at a time, but we've got a whole host of things coming up, budget fights, debt ceiling, all this drama and what's happening overseas. So they will be forced to do more than one thing at once.

Nick Kristof and John King, so nice to see both of you. Have a great weekend, guys.

KRISTOF: Thank you.

ROMANS: It's a nightmare scenario. The world's biggest oil producers dragged into the conflict in Syria, Saudi Arabia and Qatar backing the rebels, Iran and Russia backing the al-Assad regime. But are your gas and energy prices finally immune to Middle East conflict?

Former energy secretary and U.N. ambassador, Bill Richardson, joins me next. We're going to find out if promises of U.S. energy independence are now finally a reality.

(COMMERCIAL BREAK)

ROMANS: Volatility is back. Events are moving fast as a possible diplomatic solution could now potentially avert a U.S. military strike on Syria. And in both the oil market and the stock market, investors still on edge, fears of potential U.S. military action, ongoing instability in the Middle East pushed oil prices to a two-year high.

Now, Syria isn't a major oil producer. But some investors worry that the conflict could spread to neighboring countries.

(BEGIN VIDEO CLIP)

TOM KLOZA, CHIEF OIL ANALYST, OPIS: The nightmare scenario is if you have an all out Mid Eastern war that includes the Persian Gulf. And under those circumstances, you could see the price of crude be an abstraction and go to $140, $150 a barrel.

(END VIDEO CLIP)

ROMANS: Oh, and that would not be good for drivers, of course.

Now, the threat of fighting in the Middle East brings up those images, those old images, like these from the 1970s, cars stretched around the block waiting for gas.

But the U.S. is not as dependent on Middle Eastern oil as it used to be. America is producing more of its own oil. It is using less and that means fewer imports from overseas. Today, imports account for about 40 percent of the oil and gas consumed in the U.S. That is down from 60 percent as recently as 2005.

Most of the oil coming in isn't from the Middle East. In fact, the top exporter to the U.S. is -- that's right -- Canada. Canada is the largest exporter to the U.S., Saudi Arabia is number two, followed by Mexico, Venezuela and Russia.

Bill Richardson was energy secretary under President Clinton. He's also the former governor of New Mexico and served as U.S. ambassador to the United Nations.

So nice to see you, Governor Richardson.

You know, it's a big question. Whenever you see the kinds of concerns about Syria, for example, it brings to mind those pictures of the 1970s. This isn't the 1970s. America is closer to energy independence.

How does that change the calculation for this president?

BILL RICHARDSON, FORMER ENERGY SECRETARY: Well, short-range, Middle East instability, what's happening now, the volatility is going to rail -- is going to increase oil prices more -- higher prices at the pump.

Our base is strong. Long range it looks good, but short range, this instability --

ROMANS: Yes.

RICHARDSON: -- is a problem, not just for a producer country like us, but for consumer countries, Europe and Japan.

ROMANS: You know, the president has made this U.S. energy independence. He's made that a key goal.

I want to play a little bit of something he said during the State of the Union.

(BEGIN VIDEO CLIP)

OBAMA: Today, no area holds more promise than our investments in American energy. After years of talking about it, we're finally poised to control our own energy future.

(END VIDEO CLIP)

ROMANS: At the same time, he has infuriated many Republicans by delaying approval of the Keystone pipeline. Former House Speaker Newt Gingrich recently tweeted this, where he said, "Keystone pipeline, yes. Attacking Syria, no. Obama has it exactly backwards. America's interest is to increase American energy and jobs."

So, I ask you, does another potential Mideast (sic) war make the case for more domestic energy production and put pressure on this president to approve Keystone?

RICHARDSON: No, I don't think it's related. I think what we have is a dramatic increase in shale gas and natural gas that is going to cover us, that is going to make it OK. The president can make a Keystone decision independent on that. The supply is going to be sufficient.

What I think is happening in this country, which is positive, is again more oil and gas extraction, but also a dramatic growth and renewables and solar, wind, biofuels, the standards for gasoline, electric cars.

ROMANS: You know, you were U.S. ambassador to the United Nations. How would you deal with Syria right here?

RICHARDSON: Well, I support the president. I think we should proceed with the military strikes. At the same time, if there is a diplomatic solution, yes.

I'm very skeptical of Russia. I'm very skeptical of Syria. I think there have to be international inspectors in a diplomatic solution. Not political inspectors, very technical. I think it's got to be comprehensive.

But across the board, I think the longer range is this man Assad is not good for the international community.

ROMANS: Public opinion is just not there, yet, though, to support a strike. You look at the polls. Public opinion is just not there.

RICHARDSON: We are very war weary -- Iraq, Afghanistan, people want money spent at home on education, on issues relating to job creation. I don't blame them.

But at the same time, we do have international responsibilities and it does affect American national security. It affects Israel, a close ally. It affects the region that you've mentioned is critical in terms of energy supply, United Arab Emirates, Saudi Arabia, our allies in the region. Europe receives a lot of this oil, Japan.

So, America is still the indispensable nation. We have to do the stuff that nobody else wants to do because it's our international responsibility because of our size and power and moral leadership. This is a human rights issue. This was a war crime. These strikes were limited. We're not getting boots on the ground. But, again, it's extremely, extremely volatile.

ROMANS: Governor Richardson, thank you for joining us.

Coming up, what do you think of that new iPhone? Investors were not impressed. And what about that fingerprint sensor? How secure is it? We fire up the iPhone, next.

(COMMERCIAL BREAK)

ROMANS: In less than 140 characters, Twitter announced it's filing to become a public company and sell shares to the public. But shh, this filing is confidential. The microblogging site is able to keep details of its finances private for now under a provision of the Jobs Act because it makes less than $1 billion in revenue a year.

Twitter will have to make some of that information public 21 days before it starts pitching the stock sale to investors. And with the recent run-up on shares of Facebook and LinkedIn, Twitter could be the next hot property.

But the week in tech belonged to Apple, the biggest day of the year for Apple. That's how one analyst described Tuesday's event. It was a colorful launch, for not one but two new iPhones.

By Wednesday, Apple shareholders were seeing nothing but red, though, as the stock dropped 5 percent and some responses on social media, they weren't so bright, either. But still, this is Apple we're talking about.

(BEGIN VIDEOTAPE)

ROMANS (voice-over): Here it is, in a highly anticipated event at Apple headquarters in California, CEO Tim Cook unveiled Apple's newest flagship device, the iPhone 5S.

The main features? It will come in three colors -- silver, gold, and space gray. It has a new A7 chip inside, which Apple says makes it twice as fast as the previous iPhone. And improved camera features a better image stabilizer and bigger flash, and as rumored, a fingerprint sensor called Touch ID.

BOB O'DONNELL, VICE PRESIDENT, IDC: The history of fingerprint sensors on notebooks, to be honest with you, is not very good, but this is a different technology. So, until people have a chance to use it for a while, that will be the big question.

ROMANS (voice-over): One of the best features? Pricing. The new iPhone 5S stays the same as previous models, starting at $199 for the 16 gigabytes with a two-year contract. Apple also unveiled a new cheaper model, the 5C. It's made of plastic with a four-inch display, comes in a rainbow of colors -- green, white, blue, red and yellow. The 16 gigabyte model is just $99 with a two-year contract.

Online reaction was mixed. One tweeter posted, "iPhone 5C made from hard-coated polycarbonate, fancy name for cheap plastic." Another asks, "When can I get my fingerprints on this thing?"

The new iPhones hit stores September 20th.

(END VIDEOTAPE)

ROMANS: There's a lot of buzz online about that fingerprint sensor. In particular, Zain Asher is here to take us through some of the details.

What if you want someone else to be able to access your phone, like your spouse, or you want to be able to read your teenage daughter's phone material, for example?

Are there, I would say, caveats for that?

ZAIN ASHER, CNN BUSINESS CORRESPONDENT: Yes, absolutely. So, you can actually register more than one thumbprint. If you want your husband or your wife to have access to your phone, that's certainly not a problem.

Secondly, you can actually bypass the thumbprint sensor. So, you can opt for a traditional passcode instead. So don't worry, Apple has thought of all of these things.

(LAUGHTER)

ROMANS: The other thing people talk about is security, how vulnerable will this be if the sensors can be hacked, to cyber thieves?

ASHER: OK. So, you have to remember the thumbprint is going to be encrypted and it's going to be stored on the actual phone in a chip on the actual phone. It's not going to be stored on Apple's server somewhere or somewhere in the iCloud. It's going to be on the actual phone. So that gives you some degree of protection. But one thing we don't know is how advanced the thumbprint sensor actually is.

So for example, a high-end thumbprint sensor might analyze 12 different points on your thumb to figure out that it's you.

Experts say the iPhone 5S probably won't use that many. But you've got to remember, the fewer the number of points, there is a chance that someone else somewhere might have a thumbprint that could, in theory, pass for yours. But it's highly unlikely. Right it's highly unlikely that you will ever meet them or they'll have access to your phone.

ROMANS: Oh, absolutely.

So, is it a safety upgrade then or just a different way to protect users?

ASHER: You know, it's safe to say that this is probably more about sales than it is about safety. But, you know, experts I spoke to said that a thumbprint sensor is probably going to be more secure than a four-digit passcode. A four-digit passcode typically has about 10,000 possible different combinations, and if a hacker was going to go through every single one of those combinations, it would take them about 15 minutes to break into your phone, right?

On the other end of the spectrum, if you had a nine-digit pass code, for example, it would take a hacker who was going through every different combination about 2 1/2 years, right? A thumbprint sensor probably falls somewhere in the middle.

ROMANS: And the nine -- the nine-digit passcode is something I will forget over and over and over again.

ASHER: You can actually use that on your iPhone. I don't think people actually know that. You can actually do like a 10, a 20 -- I was playing around with it last night. So yes.

ROMANS: I didn't know you could.

What about the Post-It note where it's written on the back -- no, no, that's not safe. Don't do that.

Thanks, Zain.

What do James Bond, Victoria's Secret, and marijuana have to do with your money? That's next.

(COMMERCIAL BREAK)

ROMANS: Are you going to an NFL game this season? Bring some extra cash. Here's the score. The average NFL ticket price is up 3 percent from last year. That's according to Team Marketing Report. The New England Patriots have the highest average ticket, $117 a ticket. The Cleveland Browns have the lowest at $54.

That's not even enough to park at a Dallas Cowboys game. The price tag? $75. That's the highest in the league, 75 bucks to park.

The most expensive beer -- Redskins, Rams, and Bills fans will have to shell out nine bucks for their brew at their home stadium.

But the $5 beer is making a comeback, including the Jets and Giants here in notoriously expensive New York.

Finally, consider this. The median household income in this country, $50,000. That's for the whole year, right?

Floyd "Money" Mayweather, he earned that in 31/2 seconds of the first round of his championship fight this weekend. That's if you spread his record $41.5 million purse over the 12 rounds it's scheduled for. That's all guaranteed, win or lose. He'll also get a cut of the pay- per-view profits which will likely mean millions more.

All right. ObamaCare opponents are invading Times Square this week. The Right-leaning Heritage Foundation unveiled a six-story billboard in Times Square in New York. It reads, "Warning, ObamaCare may be hazardous to your health."

The warning comes as the Obama administration touts state insurance exchanges; enrollment starts October 1st. My prediction? You have not seen the end of the big-money lobbying against ObamaCare. Stay tuned.

For more stories that matter to your money, give me 60 seconds. It's "Money Time."

(BEGIN VIDEOTAPE)

ROMANS (voice-over): From crisis to bailout to billions in profit. Five years after the financial meltdown, Citigroup's bailout is officially over. And congratulations, taxpayers, you made a $15 billion profit.

Who replaces Ben Bernanke? It's widely thought to be a heavyweight fight between Janet Yellin and former Treasury Secretary Larry Summers. The latest haymaker, a letter signed by more than 300 economists urging President Obama to choose Yellin.

From fast food to Walmart to women's underwear, part-time employees at Victoria's Secret's flagship store in New York City joining the fight for more pay. The result? The secret is out. The workers won raises across the board.

The latest so-called hot investment could leave your portfolio up in smoke. Online offerings of stocks related to all things weed are everywhere. Federal regulators are warning consumers to be on the lookout for scams.

Remember this submarine car used in the James Bond movie, "The Spy Who Loved Me"? Imagine the surprise -- ah! For one lucky couple who found it in a storage locker they bought in a blind auction for just 100 bucks. The car sold for $920,000.

(END VIDEOTAPE)

ROMANS: Up next, five years since the fall of Lehman Brothers. But has anything really changed on Wall Street? We're going to take a long, hard look, next.

(MUSIC PLAYING)

(COMMERCIAL BREAK)

ROMANS: Five years after the meltdown and the banks are back. Are you?

I'm Christine Romans. This is YOUR MONEY.

(BEGIN VIDEOTAPE)

ROMANS (voice-over): Five years ago this week, America and the world marched to the edge of the economic abyss.

GEORGE W. BUSH, FORMER PRESIDENT: Major sectors of America's financial system are at risk of shutting down.

UNIDENTIFIED MALE: We did not mislead our investors.

ROMANS (voice-over): The fall of Lehman Brothers nearly brought several of the world's financial institutions to their knees. Some like Bear Stearns disappeared forever. Others like Wachovia and Merrill Lynch were swallowed by bigger banks in sell-offs orchestrated by the federal government.

ROMANS: What a week, the bailout debate reaching a fever pitch from Wall Street to Capitol Hill to Main Street.

The crisis spread and morphed into a global freeze of credit that threatened the world with economic depression. Millions of jobs were lost, millions of homes foreclosed. Congress was presented with one choice and one choice only -- bail out those banks, the banks that got us into the mess in the first place. Saber-rattling from more oversight of the financial industry spread.

BARNEY FRANK, FORMER U.S. CONGRESSMAN: The problem here was not deregulation but non-regulation.

ROMANS: And regulate they did, thousands of pages of new rules in the form of the Dodd-Frank Wall Street Reform and Consumer Protection Act. The bill proposed 398 new rules for banks, credit card companies and other financial institutions.

But more than three years later, only 40 percent of those proposals have actually gone into effect, and not a single senior executive from any Wall Street bank faced criminal charges. Sure, there have been billions paid in fines, a new consumer watchdog in Washington, higher capital requirements imposed on the banks.

NEIL BAROFSKY, PARTNER, JENNER AND BLOCK: A lot of the bad incentives that were baked into our system going into 2008 unfortunately are still there. So I think we're still in a very dangerous place.

ROMANS (voice-over): Five years after panic took hold, is your money any safer?

(END VIDEOTAPE)

ROMANS: We're going to answer that question.

Ken Rogoff is a professor of economics at Harvard University and an expert on financial crises.

Five years ago this week Lehman failed. About six weeks or two months before that collapse, Ken predicted a major American investment bank would fail. He saw it coming.

Rana Foroohar wrote this week's "Time" cover story, "How Wall Street Won Five Years after the Crash." It could happen all over again.

Rana, let's talk about the crisis that happened here. It appears to be a crisis that was wasted, an opportunity that was wasted for change. Too-big-to-fail banks now are up to 40 percent bigger today than they were five years ago, depending on how you measure it. And you ask Americans how they feel. Polls show Americans sure don't feel safer. So how did Wall Street win?

RANA FOROOHAR, ASSISTANT MANAGING EDITOR, "TIME": Well, in a word, lobbying. There's been a tremendous amount of time and money on the part of the banks put against lobbying for Dodd-Frank rules to be watered down, delayed, made weaker.

I mean, you know, the stat that only 40 percent of the rules have been written so far is very telling. Banks are complaining about rules that would require them to use only 5 percent of their own capital on risky deals, you know, when the rest of America wouldn't dream of borrowing 50 percent. So it's just really unbelievable, five years on, we have all these problems still in the system.

ROMANS: Are we safer, Ken?

KEN ROGOFF, PROFESSOR, HARVARD UNIVERSITY: We're safer at this moment. I mean if you go back five years, we were on the brink and really we could have had a second Great Depression. It could have fallen apart. And the authorities, they did some imaginative, creative things, and we didn't.

But on the other hand, I completely agree with Rana, that they were very timid. I think lobbying was a big issue, but I also think they're scared that if they rough it up too much, nothing will replace that.

FOROOHAR: I think that you actually bring up a great point because in a way we did a great job of saving the banks and averting this catastrophic moment. What we did not do a good job of is making the underlying structural nature of the system safer five years on.

ROMANS: We were making up the rules as we went along. And I want to go back. You said let's go back five years. I want to walk down Memory Lane. The people who fixed this crisis, they did not see it coming. Let's be honest. This is 2007. Listen.

(BEGIN VIDEO CLIP)

BEN BERNANKE, FEDERAL RESERVE CHAIRMAN: We do not expect significant spillovers in the subprime market to the rest of the economy or to the financial system.

HENRY PAULSON, FORMER TREASURY SECRETARY: This is happening against the backdrop of an economy that which in other respects is very solid.

(END VIDEO CLIP)

ROMANS: From that day, October 20th, 2007, just through the first two months of 2008, that solid economy that Henry Paulson, the Treasury secretary, was talking about, take a look. The S&P 500 down 12 percent. Bear Stearns evaporates.

In the first quarter of 2008, GDP, the economy, economic growth cratered 2.7 percent, and it was the start of the Great Recession. Here's Alan Greenspan then later explaining why he missed it.

(BEGIN VIDEO CLIP)

ALAN GREENSPAN, FORMER FEDERAL RESERVE CHAIRMAN: I was right 70 percent of the time, but I was wrong 30 percent of the time. And there are an awful lot of mistakes in 21 years.

(END VIDEO CLIP)

ROMANS: Some of those very people who were helping us through the crisis are now going to be advising or helping Ben Bernanke and the big Fed stimulus that we have seen.

How do we know they're getting it right this time? If my plumber got it right -- no offense to economists -- if my plumber got it right 70 percent of the time, I wouldn't hire him again. These are the people telling us how to fix this mess.

ROGOFF: Well, first of all, I do agree, they're not doing it completely right. But also we don't face these things very often, once every 80, 100 years.

There are a lot of things we don't know. There are people who say if you do what I said, if you just say spent a lot more money, if you did a lot more of this, everything would have been fine. If we hadn't let Lehman fail, everything would have been fine.

We don't know. And you certainly want some continuity in the leadership.

FOROOHAR: You know, one thing, Christine, we could start by paying regulators as much as your plumber gets paid, you know? I mean, that would help. There are a number of things we can still do. We can come up with a new system of how you pay credit agencies. They're still being paid by the banks --

(CROSSTALK)

ROMANS: Restrictions on bank lobbying.

FOROOHAR: Exactly. The money culture in Washington, there are things we can do to curb that.

ROMANS: One of the things as we move forward, and why I wanted to walk down Memory Lane a bit, while looking forward, is because we're going to have to taper. We're going to have to pull back the reins on all of this Fed influence in the economy. And we've never been here before.

How do we know we're doing it right, Ken?

ROGOFF: We don't. It works well on my blackboard. I've been teaching it for 20 years. But it's a theory. It just hasn't been done, and we don't know what will happen. I must say, I'm not sure why they're doing it so soon, given the high unemployment and continuing fragility in the economy. ROMANS: So what is the biggest risk the economy faces right now? An economist yesterday told me that the kindling has just started to burn. Taking away the Fed stimulus right now would be blowing it out.

Do you agree?

ROGOFF: We don't know. I mean, I think it's fair to say I think it's early. I don't think they should be doing it so soon. But am I sure that everything's going to blow up? I'm more worried about Europe, China, emerging markets and some are spilling over here. We'll see. But I don't think the end of the tapering is the end of the world, but I don't see why --

ROMANS: Meantime, the American people, when you ask the question are you safer today than you were five years ago, they don't think they were. They haven't recovered. Your cover piece says Wall Street won, the banks won. The American people don't feel like they won.

FOROOHAR: Absolutely not. And I think that this goes to the disconnect between Wall Street and Main Street. If you ask what the biggest risk is to the economy right now, I don't think necessarily think it's another Lehman-style blowup.

The banks have offloaded a lot of the worst assets, and we have increased capital. It's the fact that the finance and the real economy are still disconnected. Banks are not doing what they were set up to do, which is loan money to real people and real businesses. They are off in the world of high-flying finance, and we need to re- moor them in the real economy.

ROMANS: How do we make them lend more?

ROGOFF: It's still held up by the government, I want to add. As you said, the government went in there and said, you know what, we backed all these banks after the financial crisis. We think they're healthy now and we're never going to do it again. And if anybody believed it, they would fall apart.

You know, I think to get credit going again, it really necessary to restructure the financial system more. There's a lot of what we call legacy, that old debt that's hanging over and the banks are still improving their balance sheets to try to get profits better.

And I think if we did thing to increase competitiveness in the financial sector, that would help.

ROMANS: No question, the most powerful person in the world -- I would say the most powerful person in the world is the Fed chief, Ben Bernanke right now. But he's going to be gone. He's going to be facing a new Fed sheet.

Who's better, Yellin or Summers?

ROGOFF: I think they're both great. I don't want to sound like old Coke, new Coke, but I mean I think they're both very good. They're both brilliant. UNIDENTIFIED FEMALE: Well, old Coke is better than new Coke.

(LAUGHTER)

ROMANS: But I mean you -- so you're not going to -- the professor will not pick a lane here because you're colleagues and friends, I'm sure.

ROGOFF: I'm friends with both of them, but I think they're both brilliant. Janet Yellin is just as brilliant as Larry Summers. They both have great leadership qualities.

ROMANS: Hundreds of economists, however, say that they would like to see Janet Yellin.

FOROOHAR: That's right. And I myself wrote a column saying I think she's the right choice for the moment. I agree with Ken, they're both brilliant economists. But if you think about this connection between finance and the real economy and who is best positioned to create that and to regulate the banking system, I think Janet Yellin's a great choice.

ROMANS: I sure don't want my Fed chief to be right just 70 percent of the time. I know that's the way it goes and I know it's why it's called a dismal science.

ROGOFF: Try to find another country that's better.

ROMANS: I know. All right.

Rana, thank you so much.

Nice to see you again, Ken. Thanks.

ROGOFF: Thank you.

ROMANS: Five years after the collapse of Lehman Brothers, many everyday Americans are still struggling in this economy.

But what about the very public faces of the men and women who ushered in the downfall and those who tried to fix it? Zain Asher joins us now with a look.

(END VIDEOTAPE)

ZAIN ASHER, CNN CORRESPONDENT: Hi, Christine. You may, of course, remember Dick Fuld, the former CEO of Lehman Brothers. He led his company to the largest bankruptcy in American history.

Five years on, like many Americans, Fuld has struggled to land a full- time job since the crisis. He launched his own financial advisory firm in 2009 and serves as an adviser to a green technology company. He made headlines again this summer after suing his ex-son-in-law for not paying back a $9 million loan.

Next up is Angelo Mozilo, he was the former CEO of Countrywide Financial, one of the largest subprime mortgage lenders in the country. Many people blamed him for issuing loans to people who clearly could not afford them. Now he's kept a low profile since the crisis after being banned from ever running a public company.

Next up, Henry Paulson, back in 2008 he was the Treasury secretary. He made the difficult call to let Lehman Brothers collapse. Today Paulson heads up a think tank he founded in 2011 to promote a cleaner environment.

And next up is, of course, Timothy Geithner. Back at the time of the financial crisis he was running the New York Federal Reserve Bank. He, of course, went on to become Treasury secretary.

After leaving his post, he joined the Council on Foreign Relations. He reportedly now rakes in hundreds of thousands of dollars for his speaking engagements.

And next up is Elizabeth Warren. She was tapped in 2008 to oversee the $700 billion bailout program. She's now a senator from Massachusetts.

And what about you, the American consumer? Before the crisis, a lot of us were splurging on home loans we clearly could not afford. Many of us ended up out of work and in foreclosure. Five years on we're not borrowing quite as much, but we're not earning quite as much either. Christine?

(END VIDEOTAPE)

ROMANS: Thanks, Zain.

Coming up, five years after the financial crisis, housing is slowly recovering. But break out the aspirin, folks -- why there's still a housing hangover in some spots. That's next.

(COMMERCIAL BREAK)

ROMANS: Five years after the collapse of Lehman Brothers, America's housing market is improving. And every happy headline has a "but." Foreclosures have fallen year over year for 35 months in a row, but they're still happening with alarming frequency in some places.

One in every 359 Nevada homes is in foreclosure. In Florida, it's one every 383. Home prices are up 12 percent from a year ago. But they're still 23 percent below the peak. Thanks to those rising home prices, 2.5 million more mortgage borrowers no longer owe more on their homes than the home is worth. But 7 million Americans are still underwater.

And mortgage rates are very, very low right now. Still low, rising, but low. But for many of those underwater homeowners, they're stuck. I spent some time recently with a small business owner who was left behind by this housing recovery.

(BEGIN VIDEOTAPE)

ROMANS (voice-over): The math on Katie's house is upside down. And her family is feeling queasy.

MICHAEL KAWULA, CAN'T REFINANCE HIS MORTGAGES: It makes us nauseous. We're paying almost $1,000 more a month than what we should be.

ROMANS (voice-over): And 4.57 percent is the average rate for a 30- year fixed mortgage. But the Kawulas aren't paying that. They have one mortgage over 6 percent and a second one that's even higher.

KAWULA: It's 11 percent.

UNIDENTIFIED FEMALE: It's 11 percent, 11.25 percent.

ROMANS: That's almost three times -- that's almost three times what is the going rate for a 30-year fixed-rate mortgage.

So you haven't been able to lower these?

KAWULA: No. We've tried three times.

ROMANS (voice-over): They can't refinance because they owe too much. Banks generally won't loan or refinance more than 80 percent of a home's worth, even if you're not a risky bet.

ROMANS: The rates are astonishing. And you've never been late on these?

UNIDENTIFIED FEMALE: Never. Early, actually.

ROMANS (voice-over): Because their loans aren't backed by Fannie Mae or Freddie Mac, the family isn't eligible for President Obama's refinancing program known as HARP. And a universal re-fi option, something the president wants badly, would require new legislation.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Congress should give every American the chance to refinance at today's low rates.

ROMANS: Do you think that he'll be able to help you? That Washington is the answer here?

KAWULA: I've never found them to be the answer for anything as a business owner.

ROMANS (voice-over): A business owner with few options.

BOB MOULTON, CEO, AMERICANA MORTGAGE GROUP: You have to live with it. You have to put money into it, or you have to sell.

ROMANS (voice-over): The girls may be dancing, but Mom and Dad can't dance around this.

KAWULA: And $50,000 is what they're saying we need to give to them to be able to lower it. So I don't know if I want to part with $50,000.

ROMANS (voice-over): They've even thought about walking away.

ROMANS: Would it hurt your reputation as a small business owner? KAWULA: Definitely.

UNIDENTIFIED FEMALE: Oh, yes.

KAWULA: There's no doubt about it. I recently sold a business and I've just opened another business. And it's my name.

ROMANS (voice-over): For now, they're staying put and feeling frustrated.

KAWULA: We've called our bank. She's called them multiple times to see what we could do. They won't even work with us.

ROMANS (voice-over): And with mortgage rates creeping higher, families locked into high rates of the past may have missed a real opportunity for the future.

(END VIDEOTAPE)

ROMANS: All right, impossible to refinance for people like the Kawulas, and soon harder to get a loan in the first place.

Next year the government is expected to cut the maximum size of mortgages backed by Fannie and Freddie. That means you won't be able to borrow as much money and be covered.

At the same time, new mortgage rules from the Consumer Financial Protection Bureau go into effect. Those restrict the types of mortgages lenders can provide. We'll be watching all of these developments very closely here on YOUR MONEY to really help guide you through the changes in the real estate market.

Coming up, if you're buried under crushing student debt, help is out there. We're going to tell you how to get it next.

(COMMERCIAL BREAK)

ROMANS: The next loan crisis is coming to a college campus near you. You've probably heard the student loan horror stories. It's only a small portion of borrowers, really, but it does happen -- $60,000, 70,000, 80,000, even $100,000 in student debt. Then graduation, and for some a low-paying job.

We've talked a lot about the problem of the low-wage recovery on this show, but for students with high loan balances and low wages, there is a solution no one is talking about. The income-based repayment program gives borrowers a break, and that break is about to get bigger.

Here's how it works. Those with government-backed student loans can apply, then the government considers their income and their family size, then does some calculations and reduces monthly payments, depending on the amount of the loan for those who qualify.

But borrowers must reapply each year. The reduced payments won't be more than 15 percent of discretionary income. But thanks to a bill passed along with ObamaCare, that amount will drop to 10 percent starting next summer. Imagine that, 10 percent of your discretionary income goes to student loans. That's it, 10 percent, cap there.

So if you've got a kid in high school or middle school, check this out and show it to them. It's not a long-term solution to rising college costs and ballooning student debt. Higher education is still the gateway to the middle class, but that gateway is getting narrower every day. I spent some time recently with a mother struggling to help her son step through that gateway.

(BEGIN VIDEO CLIP)

PATRICIA RODRIGUEZ, STRUGGLING TO PAY FOR SON'S COLLEGE EDUCATION: I started saving when he was 2. And he's 19, and it's never enough. Anywhere you can cut corners and save money.

ROMANS (voice-over): Patricia Rodriguez needs $13,000.

RODRIGUEZ: Where do you get an extra $1,200 a month?

ROMANS: Don't you worry about borrowing all that money?

RODRIGUEZ: Yes.

ROMANS (voice-over): Her son, Jason, is a sophomore at the University of Hartford, but Patricia's savings are gone.

How are you going to get it?

RODRIGUEZ: I don't know.

ROMANS (voice-over): Nothing in American life has risen in price so quickly as the cost of college, up more than 500 percent since 1985.

STEPHEN MOORE, "THE WALL STREET JOURNAL": I think the universities are the biggest scam going in America. The costs -- there's no reason a college education should cost $30,000, $40,000, $50,000 a year.

ROMANS (voice-over): Why is it so expensive? Some say the easy money available to students has created a tuition bubble. Others say it's simple economics.

RICK NEWMAN, COLUMNIST, YAHOO! FINANCE: You have to go to college to get ahead. At the same time, it's not as if new colleges are opening up all over. We basically have a fixed amount of supply, and when demand is going up and supply isn't, prices rise.

ROMANS (voice-over): And so does debt. Grants and scholarships only cover about 30 percent of college costs. So students have to find or borrow the rest. Two-thirds of college grads have loan debt now averaging more than $26,000. Others have much more.

RACHEL BOHR, COLUMBIA STUDENT: Right now I'm almost $60,000 in debt, which will affect my ability to get a mortgage, to have children and put them through a good education. And it will affect what kinds of jobs that I choose. ROMANS (voice-over): And jobs are what it's all about. Americans with a college education are more likely to be employed and they earn more money. But in this economy, there are no guarantees. More than 36 percent of recent grads are working in jobs that do not require a college degree.

UNIDENTIFIED FEMALE: Have a good day. Thanks.

ROMANS (voice-over): That's why the country's most famous student loan recipient wants to hold colleges accountable.

OBAMA: What we want to do is rate them on who's offering the best value so students and taxpayers get a bigger bang for their buck.

(APPLAUSE)

RODRIGUEZ: He likes to come home and seeing his friends, but he does also have a great time in college.

ROMANS (voice-over): But finding the bucks in the first place, that's the real struggle for parents like Patricia.

RODRIGUEZ: All you want is your kid to go to school and do well, and that's what he's doing, and we don't have the money.

ROMANS (voice-over): Few Americans will if college costs keep rising.

(END VIDEOTAPE)

ROMANS: She's doing everything she can, and it's just running right out of her reach, just running away from her, the cost of college.

It may be the beginning of the next crisis, but college is still worth it. You saw the numbers there -- lower unemployment rates and much higher wages. Salaries for the class of 2013 rose 2.4 percent from last year. That's according to a new report out this week from the National Association of Colleges and Employers.

And the extra help from the government will hopefully make it easier for grads who need it.

That's it for this week's YOUR MONEY, as you get ready to watch Eli and Peyton face off in the Manning Bowl. Want you to head to our blog at CNN.com/yourmoney. I'm going to tell you all about the business of being a big-time NFL quarterback.

We're going to see you here next week. Have a great weekend.