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Mortgage Market Problems Hurt Economy; Loans Affected by Lender Failure; Portfolios in Volatile Markets

Aired August 26, 2007 - 15:00   ET


ROMANS: I'm Christine Romans. Coming up on today's program, see why you should care what liquidity means whether you're putting down the plastic or take something out a mortgage.

VELSHI: Plus weather proofing your 401(k) or your retirement against the storm on Wall Street.

ROMANS: How a scandal in the sporting world like the one involving Michael Vick and dog fighting how that affects your spending on the game.

VELSHI: Which is interesting because my spending on the game seems to be going up every year, I'm a sports fan. I like going to games. Everything seems to make it go up.

ROMANS: Figure out this. Figures out this week from realty track show foreclosures up a full 9 percent in July versus the previous month. But here is the big number, compared with last year foreclosures have jumped 93 percent.

VELSHI: A lot of people are using the word credit crunch as shorthand for what's happening in the market out there. But that mysterious thing called liquidity is also part of the picture. What does all of this mean? Mark Zandi is going to break it down for us in plain english. What on earth are we talking about, liquidity crises, and credit crunch? What does this have to do with people watching the show?

MARK ZANDI, MOODY'S ECONOMY.COM: It determines how easy or not easy to get credit. If it's not easy and lenders are nervous and aren't extending out a loan, that's a lack of liquidity or credit squeeze or crunch. If it's easy to get a loan, which was the case a year ago, then there's lots of liquidity and people are able to get those loans.

ROMANS: The ability to borrow money, the ability to borrow money quickly is important for a lot of businesses. It's important for a lot of consumers. The sub prime liquidity problem, credit crunch, mortgage crises, think again if you think it doesn't affect you. It will affect how much it costs and how easy it is for all of us to borrow money. Is that right?

ZANDI: That's correct particularly if you have a blemish record history, if you don't have much you can put down in the way of a down payment. If your job history is a little spotty. It's going to be very difficult to get a mortgage loan at this point. It's a credit crunch because there's just no credit for you at any price.

VELSHI: I've had a liquidity crisis since I was a kid. I thought I needed more allowance, didn't have enough money through college, never thought I'd earn enough. I was talking to one of our colleagues, Jennifer Westhoven, who will be on the show later on. She said it's not always a bad thing when everybody in the world doesn't have access to all the money they all think they need all the time.

ZANDI: Yes, that's absolutely true. We're seeing that today. A lot of the folks that got loans a year ago probably shouldn't have gotten them. They're having a great deal of difficulty making their payments and in many cases they're losing their home. That goes back to that foreclosure statistic you began with. There will be a lot more foreclosures because money was too easy, there was too much liquidity.

ROMANS: Mark, if I'm trying to get a first mortgage now or I'm trying to refinance or take money out of my house, what's it going to mean for somebody who wants to be in the market borrowing money in the home market?

ZANDI: Well, you need to have a very good credit history, no problems in paying your debt. You need to have some form of down payment. You need to have a good job history. You need to show the lender that you're making the income that you say you're making.

ROMANS: Mark, this sounds really normal -- this sounds normal to me. Did we get away from this over the past few years? I mean maybe coming back to a more rational situation in the housing market might be painful in the near term but isn't that a good thing in the end?

ZADI: Yes, I think that's a case. If you go back a year, year and a half ago, lenders lost their minds. They were giving away loans with no down payment.

VELSHI: No documentation that you had a job or an income.

ROMANS: No job, no assets, no house.

ZANDI: You could argue the pendulum swung a bit too far. Lenders are nervous about extending credit even people in more normal environment to get a loan. I think things will settle down and in a couple of three months the road the pendulum will be right where it should be.

VELSHI: Mark, people were a month ago calling for the Fed to cut interest rates and then they cut the obscure discount window and then injecting liquidity which the Fed says it does. Now we've had executives on Wall Street calling for the Fed or the government to actually bail out homeowners, borrowers. Should they be doing that? Is that the right thing? Are they going to do that?

ZANDI: No, I don't think there will be a bailout. I don't think there should be a bail-out. I do think there are some borrowers who got defrauded in that they can make good on their mortgage payments with a little help. Those folks we should help. The FHA should help them and there is some talk of allowing Fannie and Freddie to extend out more mortgage credit. I think that's a reasonable good idea. I also think the Federal Reserve will lower rates ultimately not based on what's happening in the mortgage market directly but what it means in the economy. The economy will be weaker as a result of all this and I do think the Federal Reserve will lower rates. And that will be helpful to everybody.

ROMANS: Mark, the average consumer, the average stock investor can't control the Feds. So a couple of things that you point out that are important this is not the time to put your assets on auto pilot. You've got to be disciplined. You cannot be negligent. And, also, you have got to pay your bills and stay on top of those mortgage payments because they're not giving you any slack.

ZANDI: That's absolutely right. I think this is the time to be very disciplined. Make sure that you're making your payments on time. Do not be late. Don't run up on your credit line because, if you do the lenders may pull the rest of the credit line from you. So be very, very careful. Lenders are on high alert and you've got to be careful not to give them a reason to pull that credit.

VELSHI: Mark, good conversation. Thanks very much. We're going to spend some time today not only talking about what you need to do to protect your mortgage and your loans but your investments. We're going to be talking about that, Mark Zandi chief economist at Moody'

ROMANS: Thanks Mark.

Up next on YOUR MONEY, what happens to your home loan if your lender goes belly up?


VELSHI: So there were warnings out this week that Countrywide Financial, which is the nation's biggest mortgage lender, could be in further financial trouble. Its credit rating might be lowered. Despite a $2 billion cash infusion by the Bank of America, which is the country's biggest retail bank.

ROMANS: The loan crises are slamming other banks, too. Lehman this week shut its sub prime unit and HSBC shut down one of the mortgage offices. News like that may have you wondering if trouble is in store for your lender does that leave you vulnerable as a mortgage holder.

VELSHI: It is a good question. Ray Hooper joins us now to talk about that, he is with the Consumer Credit Counseling Service of greater Dallas. Ray thanks for being with us. Question on everybody's mind. They are shutting down some of these mortgage lending operations. We've been hearing for months about this whole concept of selling your mortgage to a second lender. What has that got to do with you as a borrower if your mortgage is shifted around or the company that holds that mortgage goes under.

RAY HOOPER, COMSUMER CREDIT COUNSELING SERVICE: Actually, very little. As a matter of fact, selling mortgages to other lenders is a normal practice. It's just a routine practice. A lot of lenders who originate mortgages actually sell them off to a servicer or to some other agency to service it later on. So it's not an unusual process at all.

ROMANS: You can see, though, how people are starting to get concerned because they go to maybe check in and refinance with the people who did their mortgage and suddenly find out that that place is out of business or they're not doing any refinancing. What should you do if you find out where you got your deal isn't even in business anymore?

HOOPER: Well, you just look for another lender. Other lenders are willing and anxious to loan money, of course.

VELSHI: Now, on the other side of this deal, if you hear that your lender is in trouble, it doesn't absolve you of any responsibility. No point in waiting around to see whether they'll be around to take your payment. There will always be someone around to take your payment I take it.

HOOPER: Absolutely. Even if they go bankrupt, the bankruptcy court will have those assets to parcel out. Your mortgage loan is actually an asset for the company who is either in trouble or going bankrupt. So you're still going to have a loan and whoever owns that loan at the time, you'll still be responsible for payment and keeping up the contract that you made.

ROMANS: And, Ray, let's stress this again, because if anybody thinks that because who you got your mortgage through isn't doing it anymore or out of business, it doesn't mean you can't pay your mortgage bill. And we just heard that there's no room for error in this environment. You got to pay that mortgage payment on time.

HOOPER: That's exactly right. You have an obligation under contract for that 15, 20, 30 year mortgage loan and you must continue to make it. Even if there is a change in lender from the servicer that you formerly had to the one now holding the loan, you still must maintain that. There may be a month or two transition period in there and if that's the case and you don't know where to send your money, you still need to put it away in a bank account so you can have that available whenever you get back into the new servicer.

VELSHI: But that's going to be whoever holds the mortgage, that's their responsibility to tell you that. You'll get something in the mail or someone will inform you, that you no longer write it to this company you write it to this one or this is where your money is coming out of. For most people, they're not going to have to actively hunt.

HOOPER: That's exactly true. You should get two letters. You should get a notification from your former servicer. And then you should get one from the new servicer. So you should get a notification from each one what transition has happened and where your new payment should go.

ROMANS: Ray, what are you hearing from people who are maybe trying to tap into their home equity right now to pay for college this fall or people who are trying to get some money out of their house or people who are trying to refinance? Is it tough? HOOPER: Well, only because the change in the underwriting. The credit crunch, as we call it, has tightened up the credit requirements. So even though who were in the process of buying a home for the first time, had already been preapproved, may go back to that lender and find they've tightened up their underwriting requirements and they may have to make some changes now. So the credit requirements are tightened up because of the loose credit requirements we have had in the past.

VELSHI: Ray, when I was growing up, my folks used to tell me that your relationship with your banker was important. You had various different accounts at one place. That's just clearly not the case anymore. Is there some damage to me if my mortgage lender goes under? Does that somehow affect my credit rating?

HOOPER: Absolutely not. You are responsible for your credit, and it will not be reflected at all on your credit report. If you keep up your end of the bargain. Your credit report reflects what you do, not what they do.

ROMANS: Ray, bottom line, your advice for folks, make sure you pay your bills. Don't get worried if your lender goes under. What's your sort of parting advice to folks?

HOOPER: That's always been our advice. Make sure you pay your bills on time every time and don't get overloaded with credit and debt so that your credit score comes down. Maintain that good credit score, credit report, so that any time you need credit it will be there and be valuable for you.

VELSHI: Ray good to talk to you. Thanks for being with us.

HOOPER: Thank you.

VELSHI: Ray Hooper is the housing director at Consumer Credit Counseling Service of greater Dallas.

We're going to take a break but just ahead taking a risk and hoping for a reward. Find out if now is a good time to get a little more aggressive with your retirement money.

Stay with us we are coming right back.


ROMANS: The mortgage meltdown has shaken up the markets and brought risk back to Wall Street. For investors with an appetite for it, it might mean it's time to get a little more aggressive and take advantage of maybe some bargains.

VELSHI: As they call it on Wall Street, stocks that are on sale. But risk doesn't always equal reward. I recently sat down with TD Ameritrade's CEO Joe Moglia and I asked him what he thinks investors need to know about risk before they dive right into this market.

(BEGIN VIDEO CLIP) JOE MOGLIA, CEO, TD AMERITRADE: It's not just what you can afford to lose in a particular market or in a particular stock. It's what you emotionally feel comfortable as well. When we talk about risk tolerance there's certainly a financial element to that. Then there's another piece that happens to be reasonably emotional. I have people with reasonable amount of money afraid to pay a dollar on the golf course. Some of that carries over into their approach to actual investment.

VELSHI (voice over): It's a tough line to walk when you want to be invested in this market. People look at these markets and say, I want to take part in that. But trading stocks is a committed thing. You really have to know what you're doing. So tell me what these options are with ETFs. Why do you recommend people get involved with ETFs.

MOGLIA: Well first it's interesting. I still think the individual investor needs an education when it comes to ETFs. Seventy percent of all mutual funds under perform the market over a period of time. The index matches whatever that respective part of the market is over a period of time. ETFs or indices, multiple ETFs, multiple indices give you diversification. And unless you absolutely know what you're doing as an investor and you want to have a significant concentrated position in one or two stocks, diversification is the way to play that.

VELSHI: But for people who do something else for a living and don't work in the markets, the last ten years has been a pretty good lesson about why you should put your gambling money in there if you really want to play specific names unless you know something somebody else doesn't?

MOGLIA: I think for the individual -- I think you might be overdoing that a little bit. I think that the typical investor today, Ali, learns so much from going through the 2000 and 2003 period. Frankly, they are more sophisticated and they are wiser with regard to risk/reward than what they had been. So most of our clients -- we've got 6 million clients, most of them don't have really, really large concentrated positions in one stock.

So the ones that own individual stocks I think for the most part do their home work and try to have diversity along the respective guidelines as far as different exposure to different segments, different regions ever the globe. The other group is involved with more long-term investor strategies. And for those we're talking about the ETFs and diversified portfolio allocations.

VELSHI: The problem is the line. How do I know where I am? How do I tell whether I am somebody who should be buying stocks and doing my research, buying individual stocks, not buying too much of any one name but keeping myself well diversified or if I'm somebody who really needs the advice?

MOGLIA: Well you know people who need advice can get advice to buy an individual stock. I think to understand whether or not you're comfortable with a particular stock, you need to have -- you need to be able to explain in a couple of sentences why you think it makes sense to be able to own that stock and you've got to be able to understand why you want it for the future as opposed to why you bought it yesterday, number one.

Number two, unless you understand that specific approach to an individual stock, you should be thinking more in terms of a mutual fund or an index, et cetera. The index or the ETFs is a less expensive way to be able to play that and over time you actually get better market performance versus the average mutual fund.


ROMANS: Joe has been talking about ETFs for several years now. He thinks they're a good opportunity for small investors who don't want to eat up a lot of money in the fees like the big guys afford.

VELSHI: Or eat up your time trying to understand companies because there are people who do that for a living. And when these markets jump around like they have been doing, it's kind of tempting to do what everybody says you shouldn't do and start messing around in the wrong way with your retirement investments or your 401(k) s.

ROMANS: But certified financial planner Doug Flynn thinks this might actually be a good time to tweak your allocations based on your age and how much risk you can stumble.

VELSHI: Doug is with Flynn Zito Capital Management here in New York, Doug good to see you. Thanks for being with us.


VELSHI: Interesting world in which what Joe Moglia, who runs a big trading operation, says you should do and what you say you should do. It's mostly the same thing. You have to invest in a way that you can manage, whether it is because of your risk or because of your time that you can spend understanding it.

FLYNN: That is exactly right. What you need to do is have a portfolio that you can live with for the long term. And these types of gyrations in the market are good times to test whether or not the allocation you have is still good for you.

ROMANS: I think a great point, too, is if you're freaking out about what your allocation is and you haven't been doing your job, which is to have an allocation so if something like this has you are comfortable with where you are and you can reassess things, right? If I suddenly have been really aggressive and now I'm feeling very conservative, I should have thought about that.

FLYNN: Yes. And in the last couple of years with the market doing very well, it's easy to allow your portfolio to get more and more in stocks as it's grown. The bonds have grown slower and stocks faster in the last four or five years. All of a sudden there's a downturn and you might not realize even though you're aggressive you have might be more aggressive than you wanted to be. It's time for gut check to say this may not be the allocation that I had and maybe I should make some adjustments. VELSHI: There are two kinds of people in the world, those who are under 45 and those over 45. For purposes of you out there, if you're under 45, if you are over 45 just sit tight we are going to get to you in a minute. If you are fewer than 45 you can be as Christine said conservative, moderately aggressive or moderately conservative. Let's talk about this. Going from moderately conservative to moderately aggressive, what should your portfolio roughly look like?

FLYNN: Well, that's the first thing is to make sure that you understand just what your risk tolerance is. You can do that online with online tools to identify.

VELSHI: In many different places. Many different Websites have that.

FLYNN: Once you identify it, what you want to do is that obviously a moderately conservative investor is going to have less in stocks than someone who is more aggressive. When you're under 45 that typically means you've got roughly 20 years to save for retirement, especially in the area of your 401(k) where you're every week off your paycheck adding money in and buying through the ups and downs. You can be a little more aggressive generally. Just because you should be more aggressive because you're younger doesn't mean you have the stomach for aggressive investing. So we kind of break it out, even though you're young, to still different types of risk levels. The idea is to have something in the market. You want to have as much as you can --

VELSHI: So even if you're conservative, you're saying more than half of your investments should be in stocks.

FLYNN: Yes, because if you think about being, let's say, 40 years old, people think when they hit retirement, that's it, it's over. Really, it's just the first day of the rest of your life. So if you live 20, 30 years into retirement when you're 40 you might have 50 years of investing in front of you. Over those kinds of time frames you should have as much in stocks as you can or stock mutual funds or ETFs.

ROMANS: If you're under 45, you have all this time. If you're over 45, you're closer to retirement; you have to start kind of dialing it back a little bit.

FLYNN: Exactly. That's one of the model time frames to take a look and say, OK, I'm now within 20 years of retirement.

ROMANS: So when I do those calculators, I say I want to retire at 55 and this percent and it always goes big red lines, does not compute. It doesn't work until I'm 82.

VELSHI: Doesn't matter what it tells you, just start doing it. It might not seem great. But if you are over 45, it's more important that you pay attention to this. What are you telling people if they're going moderately conservative to moderately aggressive?

FLYNN: Usually just one step back. Your age -- in your example if you're going to retire at 55, you're only ten years away. You need to dial it back and get more conservative. It doesn't mean get out of the market because you have a long time. But it's one step closer. Too many times people take a look at their portfolio and try to get in when it's high and out when it's low when really this is about setting up a portfolio you can live with long term. Ideally you're going to get a little more conservative slowly as time goes on and as you age. That's the lesson here.

VELSHI: There are so many tools out there to be able to do these computations online, as you said, or someone can go to a place like TD Ameritrade or come to someone like you. What do you do? Do you do those computations?

FLYNN: Absolutely. One of the first things you do is assess risk, what's the risk tolerance of someone and then you talk about time frames for their goals. With all the stuff going on in the markets there's always stuff going on in the markets. If you think long term it's hard to do that because money is a very emotional subject and people tend to react emotionally. This helps you stay more objective. If you can do it yourself, fantastic. That's what advisers do, help you stay with the long term picture.

ROMANS: I would not consider you as a conservative person in any manner, so you wouldn't be conservative with your manner.

VELSHI: As you guys talk about, it's a gut check thing. Do you like mini golf or do you like roller coasters? You might think that you want to be retired at 55 with $5 million in the bank but what do you feel comfortable with? I'm definitely much more realistic.

ROMANS: Now I would like $5 million dollars in bank when I retire at 55. None of the calculators that can get me there. I want someone to invent the calculator that is going to get me in a 55 retirement with $5 million.

FLYNN: It's the stock market.

VELSHI: And the input?

Doug's one point we should talk about this a lot more, because you can't get out of the market entirely.

FLYNN: That's a natural reaction to want to consider doing that. When you ever peel back the subprime and you look at the fundamentals of the economy, whether you go back 20 years ago the stock market crash or ten years ago with long term capital management or two years ago with hurricane Katrina, you look forward and the market keeps doing what it does over time. So these things are natural assuming it doesn't turn into something truly disastrous. When you look at that, you say my goals are 20, 30 years out. I'm not worried about tomorrow. That's what you need to pay attention to.

ROMANS: Doug Flynn, thank you so much. It is always so great when you stop by.

All right. Coming up on YOUR MONEY, how you could lose your home insurance if you're in a high risk weather zone.

And what a sore scandal like the Michael Vick dog fighting case could cost the NFL and other professional sports.



VELSHI: Heavy rains this week caused devastating flooding in the Midwest and a major hurricane hit the coast of Mexico, displacing thousands of people.

ROMANS: You can't prevent a natural disaster but you can reduce the risk of the serious financial hardships they can cause to your most precious assets, your family and your home. Greg Hunter reports.


GREG HUNTER, CNN CORRESPONDENT (voice over): Earthquakes in Hawaii and Peru. Parts of Ohio underwater. Tornadoes ripping through the Midwest. A category 5 hurricane slams into Mexico. All have one thing in common. People needed to evacuate and shut down their homes fast.

GLEN DERENE, SR. EDITOR, "POPULAR MECHANICS:" Storms are more unpredictable and can be stronger. And since you never know exactly what's coming to you, you just have to be prepared.

HUNTER: "Popular Mechanics" Glen Derene shows us how to protect your property.

DERENE: I think we are going to start with one of the most dangerous; a gas leak could be explosive.

HUNTER: Knowing where and how to shut your gas off is key. But practicing shutting your gas line off is not advised because it can throw off your meter.

DERENE: It's a quarter turn valve. It's not like a water valve; you don't need to keep twisting. One pull down and you're done.

HUNTER: Gas is first, what's next?

DERENE: Power.

HUNTER: In an evacuation Derene suggests shutting off breakers one by one so as not to damage appliances. But if you need to do it in a hurry --

DERENE: If there's standing water in the basement when you come back you want to make sure there's no live power.

HUNTER: Last thing to shot down your water.

DERENE: You want to make sure that your own water supply doesn't flood your house. There's also external contamination in the main water outside if you have city water. It could come in and contaminate your house.

HUNTER: After you shut down your house you need to grab your ready bag. What's in it should be water, nature bars or energy bars, your drugs, your first aid kit, obvious reasons. Documents, cash, a phone card. They always work. Land lines most always work. Cell phones don't always work. A flashlight, one of my favorite things is l.e.d. flashlights, the batteries last a long time. A little more expensive but the batteries last a long time. A blanket or sleeping bag, it just rolls right up, it's two or three ounces. Last but not least, one of these crank radios. Not only does it get noaa and have an alarm, it can also charge your cell phone. For a complete list of what you need in your ready bag or your trunk logon to

Greg Hunter, CNN, New York.


ROMANS: See, I used to have a bag full of stuff like that and I've taken everything out of it. I used the water.

VELSHI: After Katrina we heard about this and we get careless. I'd have to dig around to find where mine is. But Greg's right. Have that stuff. What great examples of what you can do. If your home, however, is damaged by Mother Nature, most people count on insurance as a security blanket to get back on your feet and that's sometimes as far as people go with that discussion. But more and more insurance is becoming difficult to get especially in regions with high risk for extreme weather. Fred Krimgold is the director of the Disaster Risk Reduction Program at Virginia Tech. Welcome to the program.


ROMANS: We've been seeing it in Ohio, all this flooding. We're seeing more flooding in Texas and the like. Is it more difficult to cover yourself right now for some of those disasters?

KRIMGOLD: Well, yes, it is. There are parts of the country where it is difficult to find insurance coverage, particularly those areas that have been -- had devastating experience of natural disasters, particularly hurricane. And this is in some ways a necessary development, because insurance is a business, not a charity. And risks must be taken into account.

VELSHI: Well, Fred, there's kind of two problems here. One is that a lot of insurers are not insuring people in those high risk areas. The other one is that a lot of people who can get insurance or should get things like flood insurance simply don't. Maybe they don't know that they should or they just choose not to.

KRIMGOLD: Well, flood insurance is often required as a condition of a mortgage. And the availability of flood insurance is very valuable for the homeowner. This is a market in which you might have what would be considered otherwise an uninsurable risk. But because of the federal program, insurance is available as long as you conform with the standards of the program.

ROMANS: But, Fred, you can kind of see how somebody would look at somebody rebuilding for the fourth time maybe on the Alabama coast or someplace in Florida and say, come on, four times, or three times building over and over again. I mean, isn't kind of Mother Nature sending a signal and maybe insurance is just prolonging the inevitable?

KRIMGOLD: Well, that's definitely right. And in fact, what's most important is that premium pricing should be a means of communicating risk in advance of rebuilding or building in the first place. The idea of risk-based premiums is fundamental to communicating to the investor, the homeowner that they are taking on a cost of expected exposure and potential damage.

VELSHI: And, Fred, the advice I guess for people is know what risk you might have and do something about it, either move, get insurance or do something else about it.

Fred, good to talk to you. Thank you for being with us.

KRIMGOLD: Thank you very much.

VELSHI: Fred Krimgold is the director of Disaster Reduction at Virginia Tech.

ROMANS: OK, up next on YOUR MONEY, do sports scandals impact the way you spend your cash on the game?


ROMANS: This Michael Vick story, it's still moving. It's all over the place.

VELSHI: It is and it's going to continue because the Atlanta Falcons' star quarterback is expected in court on Monday to plead guilty to some charges related to these allegations of dog fighting. It's not the first dark cloud over the NFL this year.

ROMANS: No, it's not. Several NFL players have been in legal trouble in recent months. We're talking about shootings, weapons possessions, thanks, guys, drunk driving. At what point do you as a fan stop spending money in the stadium and in the stores on your favorite sports teams.

VELSHI: My feeling is nobody seems to stop spending money on their favorite teams despite these things. But I'm no expert on this, Adam Schein is, he is the host of "The Afternoon Blitz" on Sirius NFL Radio.

Adam what has never put a dent in sports spending except strikes?

ADAM SCHEIN, HOST "THE AFTERNOON BLITZ:" You take a look at the Michael Vick situation. The national football league is too big. You take a look at it, competitive balance in the National Football League. Every team believes that you could go to the super bowl and win it in 2007. And the NFL has set attendance records for four consecutive years, 18 million people watch NFL games live in person in 2006. So you take a look at Michael Vick and what's going on and it's heinous and disgusting and deplorable. The NFL is too big. Fans are too into it. They have too many marketable stars. And the Atlanta Falcons, I mean Arthur Blank does so many good things in the community, in Atlanta. Sure, this is going to affect the Atlanta Falcons on the field. I think they're going to be one of the worst teams in the NFL. But the Atlanta Falcons and the NFL still are going to move forward.

ROMANS: Arthur Blank is the Falcons owner; we should tell people who don't know about sports like me. But somebody like me, I might take my whole family to a game.

VELSHI: This was my good wholesome anchor talking about how much it will -- do you know how much it costs to take your family to a professional sports game?

ROMANS: Are you exalting bad behavior of really rich people if you go or are it isolated cases?

SCHEIN: I think it's an isolated case. You take a look at the National Football League, first you have to give Roger Goodell, the new commissioner of the National Football League all the credit in the world.

ROMANS: You think he's doing a good job?

SCHEIN: Phenomenal job, phenomenal job. He's proactive; he is ahead of the curve. You take a look at Goodell -- I love Paul Tagliabue (ph), the former commissioner of the NFL but Goodell is ahead of the curve in terms of setting up a code of conduct policy. He is proactive. You don't need to be found guilty in a court of law to violate the code of conduct policy. I think the NFL has too many good people like Reggie Bush, who appears on my show "The Afternoon Blitz," Sirius FM Radio, weekdays 3 to7.

Do I know what I'm doing or what? Here's the point. There are so many good people in the NFL who do a lot of great things in the community. They rallied around the city of New Orleans after hurricane Katrina. I mean, the NFL is going to get through this. And I think you credit Roger Goodell for his leadership because he's cracking down on the few bad apples in the NFL.

VELSHI: We're going to continue to follow this story. One last favor, look over there in camera 3 and tell the folks YOUR MONEY coming right back after this break.

SCHEIN: YOUR MONEY is coming right back after this break.



ROMANS: They are doing another lead story this week, lead recall story, some 66,000 products, another 250,000 of a different product. One of our producers brought in one of the toys. She was helping with the piece and found the toy in our toy box. This is the recalled toys. The paint on the handle has lead in it. What I found interesting is this was sold more than five years ago, just being recalled now, which really leads to some questions I think about, whoa, what's out there and how can it be out in the market so long?

VELSHI: Jennifer has been covering this story. It's sort of endless and just keeps going on.

JENNIFER WESTHOVEN, CNN CORRESPONDENT: Just Christine now saying another lead story, another recall. And it seems like every week that we're on the week we have another one of these recalls coming out. Parents are scrambling around, checking their kids' toy chests. This week a recall of 250,000 Sponge Bob Square pants address books and journals made in China with too much toxic lead. Elmo and Doris, so many popular characters. No injuries reported at this time, but if any kids put a toy in their mouth as that toy you're looking at looked tempting for a toddler, lead can cause serious health problems, and also brain damage.

ROMANS: It can lower I.Q. That is really what I think is frustrating, when something has been in the toy box for five years and now your kid is in first grade, what good does it do to recall it if it's already out there.

VELSHI: There's a big frustration about this. Wal-Mart has sort of said they're asking all their suppliers now to resubmit the evidence that these things have been tested before the holiday season.

ROMANS: The Consumer Product Safety Commission told me this week that there have been I think 84 or 86 million toys recalled this year but there were actually more toys recalled last year. It's on our radar because of the pet food scandal, the fish, the toothpaste, and the toys. There were actually more recalls last year.

WESTHOVEN: You can imagine if parents start flipping over a toy looking for that sticker made in China and putting it down, that would be terrible for Wal-Mart's business. They had to do something fast.

ROMANS: I wonder if Americans are going to pull back on spending for Christmas. I have mixed feelings about it. Video games?

VELSHI: Let's keep in mind, that wouldn't be the only reason to pull back on your spending at Christmas. The other big story that's on our radar --

ROMANS: I wonder if they can combine like the pullback in the market and this.

VELSHI: This mortgage situation, there's another element to this whole mortgage situation you've been following.

WESTHOVEN: I'm talking about kicking while they're down. How awful that you lose your home, can't afford your mortgage. That's a terrible enough situation. And then in your mailbox, a bill for tens of thousands of dollars from the IRS. This is happening around the country. It's called a little tax trap where the IRS can actually tax you on any of the debt that got erased. It can be huge. ROMANS: They treat it like income.

WESTHOVEN: Exactly right. For all these people who are facing, they are right on the brink of financial ruin. This can get a lot worse. The only way to get out of it is prove bankruptcy or insolvency.

VELSHI: Something has got to be done about that. I hope somebody at the IRS says this just doesn't make sense; you can't kick people when they're down. We talked earlier to Mark Zandi about somehow helping people out losing their homes.

A little bit of good news, though.

WESTHOVEN: We'll go through a lighter story or heavier.

ROMANS: It is not that light.

VELSHI: Heavier as it were.

WESTHOVEN: A big milestone for the Big Mac, the famous burger is turning 40 years old. Now, do you remember that jingle? All beef patty, special sauce, lettuce, cheese, pickles on a sesame bun.

WHITFIELD: There you go that song from 1975 that helped popularize it. What I think is funny about this is that the guy who invented this, he was a McDonald's owner outside of Pittsburgh, took him two years to convince the squares over at McDonald's Headquarters to let him try it out. He couldn't put it on the menu.

VELSHI: They told him you can't use anything --

ROMANS: He invented it with everything that was already in the store.

VELSHI: Notice by the way what you didn't hear in the jingle for all those years was the 540 calories and 29 grams of fat.

WESTHOVEN: Are you ready? Apparently if you take all those grams of fat times 150 million sold that is enough fat to weigh down 40 fully loaded 737s, what we eat here in the United States. Quite an image.

VELSHI: All I'm thinking about is Big Macs. I've never turned one down in my life. People used to say, they're gross.

ROMANS: Couldn't be that gross. Sold every 15 seconds somebody is eating one.

VELSHI: Exactly.

ROMANS: All right. Jennifer Westhoven, thank you, Jennifer.

VELSHI: All right. Coming up next, what if you could make your life after work all about chocolate?

ROMANS: Big Macs and chocolate!

VELSHI: It doesn't get better than this. Stay with us. (COMMERCIAL BREAK)

ROMANS: The movie character Forrest Gump once said, life is like a box of chocolates. You never know what you're going to get.

VELSHI: Good movie. Can you imagine if life were really like a box of chocolates? In other words, you're done working and then decide to retire into a world of chocolate.


VELSHI (voice over): Chocolate, nectar of the gods to some but to Robert Steinberg, it's more about the science than the taste.

ROBERT STEINBERG, CO-FOUNDER, SCHARFFEN BERGER: This is a Nba (ph). And this is what we make chocolate from.

VELSHI: Steinberg is co-founder of a gourmet chocolate company in Berkeley, California. Yet he's not always been a Willie Wonka wannabe.

STEINBERG: My career, my profession was as a family doctor, a Md.

VELSHI: But in 1990, caring for others became too much when Steinberg was diagnosed with leukemia. He had to give up medicine and focus on himself.

STEINBERG: I decided to basically allow myself to be open to do whatever I wanted to do. Although I had had a strong interest in food, I wasn't particularly interested in chocolate. It was really when I started reading about it in a technical book that I became fascinated by it.

VELSHI: Steinberg along with John Scharffen Berger, a friend and former patient decided to take this fascination and turn it into a business.

STEINBERG: Scharffen Chocolate is a company that was founded in 1996 to fill what we thought was a void in chocolate in the United States, which was chocolate that really reflected the flavor of the Caco (ph) beans.

VELSHI: And they found an audience for it selling to government food stores and their own retail outlets. The growth in business led to being acquired by Hershey in 2005 and the ultimate irony, Steinberg isn't what you would call a chocoholic.

STEINBERG: If you put a piece of pickle herring in front of me and a piece of chocolate I'd probably choose the pickled herring.


VELSHI: All right. Some things aren't obvious. You put a piece of chocolate and pickled herring and he chooses the pickled herring. Some things are obvious in life like the 40th anniversary of the Big Mac. I know because you and I have been eating together for years, that you would love Big Macs. ROMANS: I don't love Big Mac. I'm a quarter pounder girl.

VELSHI: Really.


VELSHI: What is the problem with the Big Macs?

ROMANS: Too much stuff in there to get between me and the meat.

VELSHI: But you understand that it is the 40th anniversary of the Big Mac?

ROMANS: I do understand.

VELSHI: You know what, that means that I am going to get your Big Mac. That is yours, you just hold that. I am not turning back the Big Mac, so in honor of the anniversary of the Big Mac.

It was purchased by our producer here.


VELSHI: So, happy anniversary to the Big Mac. Sorry I will make it up to you with some other food that you like.

ROMANS: Caviar would be fine.

VELSHI: That is it. Thanks for joining us for this edition of YOUR MONEY. My mouth is watering. You can catch Christine later today at 6:00 pm Easter on "Lou Dobbs This Week."

ROMANS: And you can see Ali every weekday morning on "American Morning." We will see you back here next week, Saturday at 1:00, Sunday at 3:00 see you then.