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YOUR MONEY

Wall Street Excesses Examined; NFL Bullying Scandal Continues; Wal-Mart Accused of Paying Unfair Wages; Janet Yellen Likely Next Federal Reserve Chair; Interview With Rep. Jan Schakowsky

Aired November 16, 2013 - 14:00   ET

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


CHRISTINE ROMANS, CNN HOST: In the '80s, Oliver Stone gave a glimpse of the wild Wall Street culture.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: You do good, you get perks, lots and lots of perks. Lewis?

UNIDENTIFIED MALE: Yes, sir.

UNIDENTIFIED MALE: Take care of my friend.

(END VIDEO CLIP)

ROMANS: Charlie Sheen, that is some inspired casting, right? In the upcoming Martin Scorsese movie "The Wolf of Wall Street" starring Leonardo DiCaprio will probably further capitalize on the public's fascination with the excesses of Wall Street, from wild office parties to throwing away $100 bills.

Lee Munson was a wildly successful broker in Wall Street's wild days. He saw it all, may have done it all, I don't know, before walking away. Today he is the founder and chief investment officer of Portfolio LLC. And I'm also joined by former New York Giants star Tiki Barber. He has a look at the locker room culture in football. Guys, thanks so much.

We've found so many parallels between Wall Street and football, really. Lee, you left and the stories continue to develop out of Miami back in 2001. You describe being a wealthy broker, saying it takes a certain type of person. Very few make it, but the ones that do feel like rock stars entitled to behave however they see fit. It sounds pretty familiar to the complaints we hear about athletes making it into the headlines for all of the wrong reasons. Do you believe the Wall Street culture has truly changed today or is it a bit underground?

LEE MUNSON, AUTHOR, "RIGGED MONEY": I think it is more underground. The structure of Wall Street changed. A lot of reforms have now with the dot com bust, the financial crisis. I think what people have to remember is that back in 2001, we had a huge expansion of dot com bubble. And we still had this 1980s culture where everyone is watching Wall Street and trying to emulate that. I think what the general public needs to understand is when you look at stuff relatively true, like "The Wolf of Wall Street" coming out soon, is that while a lot of that happened, a lot of that doesn't exist anymore, and part of it is regulation, and part of it is people had to grow up. That's why I left New York, went to the city so I could start a family and be a normal human.

ROMANS: A normal human. Here is what's interesting, Tiki. Some of the behavior I saw was ending when I first started on Wall Street, covering Wall Street. Then I see what's happening, reports surfacing about the Miami Dolphins and what's happening in the locker room, the player, Richie Incognito, accused of repeatedly bullying his teammate, Jonathan Martin. I am going to show you this quote so you can see it. Look, this is really -- why would any organization want to have somebody working for them that says things like this?

TIKI BARBER, FORMER NFL PLAYER: I think the idea is to create toughness and shared sense of struggle that ultimately makes you more cohesive as a team. That's the old way of thinking about things. I think with the Richie Incognito, Jonathan Martin thing it just went a little bit too far. Unlike Wall Street because there isn't much regulation in locker rooms in the NFL, and a lot of sports, a lot of stuff stays behind closed doors. If there's a problem, it gets handled indoors. That doesn't happen so much in corporate America.

ROMANS: It did on Wall Street, this was behind closed doors in strip clubs, I guess, for the '80s and '90s or whatever, but Tiki, do you think this is the moment for football when people start to say this is a multi -- this is a very big business. There are labor laws for how you can treat people.

BARBER: Of course, because the brand of football means something. It's a $10 billion plus business. And the individual brands of players matter. Football will end for everybody at some point. And how you are perceived on the field and in the locker room is going to ultimately determine what you do with the rest of your life. I don't think the money will ever leave the NFL, it is such a big part of our culture, but it is important to send the right image, and the NFL focuses on that relentlessly.

ROMANS: I am pretty sure in the NFL no one sent a text like the one we have been hearing about, and I am sure there are people, coaches and the like who are pretty upset about that. So let me ask you, Lee, this early tough treatment I guess when you're young, call it hazing, toughen them up, I don't know, on Wall Street, that's something can make somebody a leader. Football it can make somebody a leader, can make them better. But you can't treat your interns that way. So where is the balance?

MUNSON: I think what you have to do is what we do with our interns in my experience, I had two experiences on Wall Street, one was very positive, one horribly negative and led to me walking off the field, so to speak. I believe and condone extreme, intense mentoring. But what we do is explain to people, explain to me when I got on Wall Street that this is going to be tough. We're going to push you to your limit and it is going to be like hell. But we're coming from a place of support to make you more competitive.

My mentor said if you work this hard three to five years and you put up with this, you'll be more successful and richer than you ever believed. And then you walk back onto the field, into that brokerage firm, and it's tough. So I think what you have to do with interns, I say go get the boss coffee, pick up their lunch. Never pay for it because senior people should never pay for junior people, but that's a moment where you can vet out that mentor and say is this a sociopath that I work for, or is this guy coming from a place of love and support and hassling me?

So I say interns need to get coffee for people because it is that rare glimpse where you can say did this guy winked at me, say I want that report on and hustle --

ROMANS: I'll tell you, it is one of the reasons I think women for a long time felt they couldn't fit in in Wall Street because they weren't playing the game like that, or because so much of the social activity at Wall Street was happening in places that weren't conducive to a working mom, for example.

MUNSON: That's huge, definitely made reforms. Meryl Lynch got sued.

ROMANS: But, Tiki, the similarity is there are a lot of women in the locker room, are there?

BARBER: No, reporters are in the locker room but not in the sense you would expect them working side by side. But a lot of the similarities are the same. The important thing that's going to come out of this is that some of the culture that we're hearing about is going to change. It's going to change because there's awareness about it. Just like seven years ago, there wasn't awareness about the importance of concussions.

ROMANS: Yes, yes.

BARBER: The awareness of treating your teammates the right way I think is the benefit of this Miami Dolphins situation.

ROMANS: I think locker rooms are the Wall Street of the '80s. I think you'll see changes again. And I think that's sort of the way it is. All right, Tiki, nice to see you, Lee, thank you for a fascinating conversation.

Get ready to party like 2010. Gas prices are at a two-year low. Set to keep falling. Wal-Mart says lower gas prices are helping its core customer. And Wal-Mart this week unveiled an aggressive new holiday sales strategy. Its critics, they just won't let up. Makers, takers and welfare kings, next.

(COMMERCIAL BREAK)

ROMANS: Are you a maker or a taker? Are you in the 1 percent or the 99 percent? Conservatives and liberals agree the economy is broken, but for different reasons. First, put on your blue tinted glasses for the liberal view if you will. Corporate profits as a share of the economy are surging up 114 percent over the past 20 years. But workers don't share that trend. Worker pay is down nearly five percent over the same period.

All right, now put on your red tinted glasses for the conservative view. The conservative Tax Foundation said the rich are subsidizing the poor. If you make $17,000 a year or less, for every dollar you pay in taxes, you get back $8.13 in government services. But the other end, if you make $120,000 or more a year, you get back only 25 cents.

The makers versus the takers, complicated further, according to liberal Democrats, by corporations they call welfare kings, their biggest target, Wal-Mart. A report earlier this year from Democrats on the House Committee on Education in the Workforce charged that one Wal-Mart supercenter with 300 workers would cost taxpayers $904,000 each year in Medicare and welfare subsidies. Congresswoman Jan Schakowsky is an Illinois Democrat who has called Wal-Mart bosses welfare kings. She joins me now. Congresswoman, thanks for joining us.

REP. JAN SCHAKOWSKY, (D) ILLINOIS: Thank you.

ROMANS: I asked Wal-Mart's U.S. CEO Bill Simon about your contention that taxpayers are subsidizing Wal-Mart workers. I want you to listen to his response.

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BILL SIMON, PRESIDENT AND CEO, WAL-MART U.S.: The congresswoman has her perspective. And it comes from an angle that is misinformed completely -- not completely, but in part by the groups that are feeding her the information.

ROMANS: By what, the pro-union groups?

SIMON: Yes.

(END VIDEO CLIP)

ROMANS: So he says hour misinformed, and that's simply not the case. Is he wrong?

SCHAKOWSKY: He is absolutely wrong. Almost half the Wal-Mart workers make less than $10 an hour. So what do they have to do in order to make ends meet? They go to the government and ask for Medicaid. They ask for food stamps. They ask for subsidized housing. And why? Because they are paid poverty wages by the largest private employer in the country.

So, yes, let's talk about the makers and the takers. It seems to me that Wal-Mart is benefiting by having the government, having taxpayers subsidize their workers that they pay in unfair wage to.

ROMANS: So the average wage, they point out, you know, is higher than the minimum wage, and they pay above average wages for the retail industry. They also like to point out they provide an opportunity to rise up and build a career.

SCHAKOWSKY: Let me just say, no, their only claim is for full-time workers that they pay above the minimum wage. But it is not always true for their increasing numbers of part-time and temp workers who are not allowed to work full time. They'd like to and get a higher wage. And so they're relying more and more on team that they can pay well less than the --

ROMANS: So that's Wal-Mart. So what you can do about it? I mean, you can try to push for a higher minimum wage, right?

SCHAKOWSKY: Yes.

ROMANS: How can you do -- what can Washington do about it? Obviously, congresswoman, there's not a lot of faith in getting anything done out of Washington these days.

SCHAKOWSKY: Well, I think there are things besides Washington, although I very much support raising the minimum wage, which raises wages really for all workers by pushing up the wages even of people who are not minimum wage workers. And by the way, two-thirds of minimum wage workers are women. Often, they're trying to raise their families on part-time jobs and low wages. I think the answer is really, I've been working with unions that are trying to help organize workers and demand of Wal-Mart $25,000 a year, a very modest, barely a living wage.

ROMANS: Congresswoman Jan Schakowsky, thanks for joining us. If you want to see more of our interview with Bill Simon, who addresses the minimum wage issue among others, you can head to our website CNN.com/yourmoney. Thank you.

Coming up, Ben Bernanke threw the party, and Janet Yellen isn't likely to pull away from the punchbowl too soon. Everyone's worried about the bubbles, but for now, the champagne tastes good.

(COMMERCIAL BREAK)

ROMANS: Ben Bernanke invited everyone to drink from the Fed's punchbowl. Janet Yellen will have to figure out when to take it away. Call it a job interview for the position of party pooper. Yellen was questioned Thursday by members of the Senate banking committee. Her ultimate confirmation as the next chair of the Federal Reserve is not really in doubt. But Republicans senators made it clear how much they dislike the Fed's historic stimulus program.

(BEGIN VIDEO CLIP)

SEN. MIKE JOHANNS, (R) NEBRASKA: I think the economy has gotten use to the sugar you've put up there, and I just worry we're on a sugar high.

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ROMANS: A sugar high that could be causing acid bubbles to form. All that stimulus is driving up the stock market. The S&P 500 and Dow Industrial hitting record highs this week, and the NASDAQ up more tha 30 percent this year, and housing website Zillow said low mortgage rates courtesy of the Fed are creating potential bubbles in some housing markets.

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STAN HUMPHRIES, CHIEF ECONOMIST, ZILLOW: What's fueling the bubbles that we're looking at right now at prices through this lens of incredibly low mortgage rates. So in a sense it's like a carnival funhouse mirror where you think you're looking at reality, but you're not really.

(END VIDEO CLIP)

ROMANS: Sugar high, carnival fun house mirror. Zillow says there's no national bubble, but it also says across the country homes are selling 30 days faster than a year ago.

Richard Quest is the host of "QUEST MEANS BUSINESS" on CNN International, John Bermen is my friend and the host of CNN's "EARLY START." Gentlemen, Rich, let me start with you. Janet Yellen said she doesn't see any bubbles but she also said the fed won't be afraid to prick them in necessary. Is the party pooper here or does the party keep going Richard?

RICHARD QUEST, CNN HOST, "QUEST MEANS BUSINESS": Oh, the party keeps going for some time to come because nobody wants to take any risks with this recovery. But this question of whether or not there are bubbles around, it's always an ex post facto. You only realize a bubble is there after it's gone and you're sweeping up the mess. When the price got sky high, people still thought they were a good bargain. The problem is, how do you prick the bubble without deflating it completely? How do you take the air out of the balloon gently?

JOHN BERMAN, CNN ANCHOR: If only I had an answer.

ROMANS: Very, very carefully. Especially in a place, John, where you have all the dysfunction, right? It's going pretty gentle going over there. Have they decided this would be the next Fed sheet?

BERMAN: Yes. You heard Republican senators complaining about a sugar high with the Fed stimulus. In reality they were giving her a little bit of sugar right there. Republican Senator Dean Heller from Nevada actually said, complemented her on the fact that she was giving more complete answers than what will be her predecessor Ben Bernanke.

You have predicable criticism on both sides. Republicans complained a little bit about the stimulus. You heard Democrat Elizabeth Warren, potential presidential candidate Elizabeth Warren, calling on the fed to regulate more. She'll get through this committee. The nomination could be delay but because of nothing to do with her. You could have Lindsey Graham of South Carolina putting a hold on it because of Benghazi.

ROMANS: Taper comes when, Richard? QUEST: Taper comes, I'm guessing first quarter of '14. Sometime after the New Year. It's too risky to do it soon. The growth levels are there, but there are too many uncertainties, particularly bearing in mind the Washington shenanigans. The core point is, though, on this bubble, I'm coming back to bubbles again. The problem with bubbles is what's the alternative other than to let them create this particular point in the economic cycle?

ROMANS: The point is you're underwater. I mean --

QUEST: It's destroying the housing market once again. So you've got to let these things move along.

ROMANS: This is a woman who is very clear that unemployment is a big problem for her, a priority for the Fed. She's someone who has been ben Bernanke's right-hand woman now. She knows how she got into this stimulus. It's so shocking to me, this Q.E., the third one mentioned to get us through, could end up being the biggest one of all.

BERMAN: She's willing to accept inflation also. She knows her way around Washington. She obviously has her rapport with both the Senate and the inside the Fed language with is something a lot of people don't understand.

ROMANS: Who knew we'd be talking about Q.E., quantitative easing, for so, so long. Thanks, guys. You guys are not party poopers. Ring your bell.

Of course, Janet Yellen will be the first woman to serve as the Fed chair, but apparently most people would rather work for a man. According to a new Gallup poll, gentlemen, 35 percent of Americans favor a male boss. Only 23 percent favor a female. But you've still come a long way, baby. The gap has closed significantly since the 1950s.

For more stories that matter to your money, give me 60 second on the clock. It's "Money Time."

(BEGIN VIDEOTAPE)

ROMANS: One America, two economies. Rich people get cheaper mortgages than average Joes. Some lenders are offering lower rates on jumbo mortgages to attract wealthy clients.

A few lucky gamers are getting a sneak peek. Some Xbox one consoles were accidently shipped early by Target thanks to a computer glitch. But Microsoft has locked the consoles from logging on to the Xbox live platform until the November 22nd launch date.

Is this appropriate for a teenager? According to a new study gun violence in PG-13 movies has tripled since 1985 and even exceeds the amount found in R rated films.

Your boss' bad habits could be slowing down your company's network. According to a new survey 40 percent of tech support employees have cleaned up an executive's computer after the boss visited an infected porn site.

Someone is bringing home the bacon. Painting "Three Studies of Lucian Freud" by Francis Bacon sold for $142 million at Christie's in New York. That's the most expensive piece of art ever auctioned.

It's official, New York City's One World Trade Center will be the nation's tallest building when it's completed next year.

(END VIDEOTAPE)

ROMANS: Up next, Tea Party politics. Actress Jennifer Garner played pretend on Capitol Hill this week with preschoolers. We'll tell you why, next.

(COMMERCIAL BREAK)

ROMANS: There's been quite a bit of childish behavior on Capitol Hill this year, so no one probably batted an eye on Wednesday when actress Jennifer Garner joined a handful of lawmakers to play pretend with these preschoolers. Garner was there to drum up support for a new bill introduced this week, The Strong Start for America's Children's Act. It's goal is to expand pre-school to every four year old in the country. It's an issue mom and actress Garner has championed in her role as a save the children ambassador.

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JENNIFER GARNER, ACTRESS: There's 16 million kids growing up with poverty in America, and without starting from the very beginning and getting an earlier start on education, they have very little chance of catching up.

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ROMANS: The legislation is a bipartisan push, mirroring a promise the president made at his state of the union address.

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BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Tonight, I propose working with states to make high-quality preschool available to every single child in America.

(APPLAUSE)

(END VIDEO CLIP)

ROMANS: So what's standing in the way? Well, the cost, About $30 billion over the first five years And no language in the Bill on how to pay for it. But it can be a worthwhile investment, sponsors argue. In a speech the president cited a study that found every dollar invested in high-quality early childhood learning saves the economy more than $7 down the road. Pay a dollar now, save seven later. That's by boosting graduation rates, reducing teenage pregnancy and violent crime. Critics have pointed out that study was too narrow and high quality too difficult to define. Either way, cash-strapped Washington is unlikely to make this sort of investment, and that's despite lagging performance of U.S. students, ranking 14th in reading, 17th in science, 25th in math. Business leaders starting to recognize the importance of early childhood education, early learning. And 360 business leaders and executives signed an open letter to the president this spring. They argue early childhood education is, quote, "not a partisan issue. It is an American competitiveness issue." And they're right. The country with the best workforce and the best infrastructure will lead the 21st century. We deserve to be that leader. We deserve to invest in our kids to make sure America leads the century.

All right, in a weak economy with 7.3 percent unemployment, millions still out of work, the list of best jobs in America takes on even more importance. These are the jobs with big growth, great pay and satisfying work. You can find them all on CNNmoney.com, including the one with the median salary, $288,000 a year. So make sure you check out CNNmoney.com for the best jobs in America.

I'll see you back here next Saturday at 9:30 a.m. eastern for a brand- new "YOUR MONEY." Have a great weekend, everybody.