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YOUR MONEY

Interview with Treasury Secretary Timothy Geithner; The Political Fallout of AIG's Bonus Loophole; How to Start Building a Secure Financial Future

Aired March 22, 2009 - 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: Hello and welcome to YOUR MONEY. I'm Christine Romans.

ALI VELSHI, CNN HOST: I'm Ali Velshi. Coming up this hour, the business news you need to know to protect your financial security.

First, he has got one of the toughest jobs around and he is under fire. I'm talking about treasury secretary Timothy Geithner. I sat down with him for an exclusive interview, and I talked to him about his role in the AIG bonus controversy and how he plans to get our economy back to track.

ROMANS: You don't want to miss that. It's a very good interview.

Also ahead, how to start building a secure, financial future right now. Personal finance expert Jean Chatzky is here and she's got steps that you can take to achieve financial stability especially if you're living paycheck to paycheck. You want to move that scale, she is going to tell you how to do it.

VELSHI: She's written a great book and she has done a lot of research on it. So that is really interesting.

Taking the blame. The nation is outraged over lawmakers' loopholes that allow bonus payments of $165 million to be paid out to executives of insurance giant AIG. We'll check into the political fallout of that.

ROMANS: This story just does not go away. This is a story everyone is talking about this week is the AIG bonus loophole. How did this happen? There was this back and forth trying to figure out how these bonuses were paid up.

Let's look at these bonuses. Who got the bonuses? $165 million. Look at the number of people who got all of this money, $6.4 million bonus went to somebody. Look at these folks who got $4 million bonuses. Look at the number of people who got $2 million dollar bonuses and 73 people became millionaires working for the division of AIG that brought down the entire company.

VELSHI: I think that's a really key point. This isn't just people at AIG. This is the AIG Financial Products division which was right in the center of it. AIG was an otherwise healthy company until this division messed everything up. ROMANS: Big, big stable insurance company with basically hedge fund sitting on top that took the whole thing down and it was those people in this hedge fund that were essentially given these retention bonuses. You see them there.

VELSHI: That's the bonus to prevent you from leaving the company.

ROMANS: This is the ugly way that the compensation works on Wall Street but then it collides with the ugly way that Washington works Ali, doesn't it?

VELSHI: This was a real mess. Listen to AIG's CEO. This AIG's new CEO. He's been on the job since September. The bad stuff didn't happen on his watch and he is stuck defending this bonus situation. He was before Congress this week.

(BEGIN VIDEO CLIP)

EDWARD LIDDY, CHAIRMAN & CEO, AIG: This morning I asked the employees of AIG Financial Products to step up and do the right thing. Specifically, I've asked those who received retention payments in excess of $100,000 or more to return at least half of those payments.

(END VIDEO CLIP)

ROMANS: They might have not to return them or if they do it might be something they'll be taxed on because the House is really pushing through a bill quickly to tax those bonuses. The irony here is Congress in the first place allowed a loophole to go through that allowed the AIG bonuses to be paid and Congress on the back end is trying to amend -- basically use the tax code to get that money back.

VELSHI: Very interesting changes that they're proposing to the tax code, by the way. Highly specific, it speaks to any company that has taken more than $5 billion in TARP money. TARP is the bailout. Remember that's the $7 million bailout and employees there made more than $250,000 they would then face a 90 percent bonus, a 90 percent tax on the bonus.

ROMANS: People are talking about whether it's even legal. They're talking about what the consequences could be. You could have people working in the human resources department of saying Merrill Lynch who is doing a really great job trying to help people keep their jobs and find new jobs and then suddenly find themselves having to be taxed on a bonus that has nothing to do with the problems in the economy.

And another thing they think is important to point out here, there's been a lot of anger, populist anger this week and a lot of the way Wall Street works is that one-third of your compensation is your salary. Two-thirds is a bonus. So what Congress is trying to do now in the back end to tax the bonuses could affect a lot more people than Scoff laws who got us into this trouble.

VELSHI: I've always said that maybe they should change the bonus. You did a fantastic job and you get your share. I sat down with the treasury secretary, Tim Geithner just this week to talk to him about this and other things about how he plans to get this economy back on track. Now, unfortunately, he was, you know he was brought into the whole discussion of the bonuses because Senator Chris Dodd said to him that there was a change to the stimulus that allowed these bonuses to be paid and that somebody at Treasury was actually influential in making that change.

ROMANS: Because of all that, you've got folks, some folks who are saying maybe they don't have confidence in Timothy Geithner and his Treasury Department if in fact the Treasury Department is helping Congress, where is the balance of power there?

VELSHI: Right.

ROMANS: Some people have called for his resignation and he responded to that to Ali.

(BEGIN VIDEO CLIP)

VELSHI (voice over): What about the calls for you to resign?

TIMOTHY GEITHNER, TREASURY SECRETARY: I, again, this just comes with the job. If this was not challenging, it wouldn't be consequential, I feel there's deep sense of responsibility and obligation and really opportunity to work with the president and this Congress to try to make this economy stronger, to make sure the financial system never goes through this again. People will disagree with some of the choices we make, but we have to act. We have no choice, but to move.

(END VIDEO CLIP)

ROMANS: We have a lot more of that interview throughout the hour and there are some fascinating things that he said about what the Treasury and the Fed and your government are trying to do to help the economy. In fact, this $165 million in bonus controversy overshadowed some the much bigger numbers that we were talking about.

VELSHI: Huge. First of all, it overshadows the bigger number of AIG which has already received $170 billion, going to receive another $30 billion and maybe even more some say, but even that pales in comparison to more than $1 trillion that was injected into the economy this week to try and make lending a little easier or a little cheaper for you.

ROMANS: Ka-ching. The Fed's latest move, buying back Treasury securities, mortgage-backed securities and agency debt and what happened immediately, immediately by this flood of liquidity into the system essentially, mortgage rates fell.

VELSHI: Within a couple of hours. The average mortgage rate was above 5 percent. Let me just tell you what this means. The Treasury went out bought back debt and bought back bonds which means it gave people more money and gave these investors who held the bonds money to spend and invest. Agency debt is Fannie Mae, Freddie Mac and things like that and mortgage-backed securities and same thing, $750 billion.

So it gave Freddie and Fannie more money to buy mortgages from your bank. The bank becomes more able to lend you money. So the goals were to lower mortgage rates and lower treasury rates which we saw. We don't want to call it increased inflation, but get the economy to grow a little bit more.

ROMANS: To reflate the economy. And the potential risks, what else can the Fed do? They've been talking about this for months, frankly. There could be the long-term inflation consequences and people are saying look, the Fed is just printing money and we're going to have inflation down the line, but the bottom line here is in the very, very near-term, this is their attempt in the near-term to goose the economy right here.

VELSHI: I just talked to somebody here who said they locked into a 4.5 percent 30-year fixed mortgage and that is the effect of these changes from the Treasury.

ROMANS: Of all of the news this week, I will say that is the one piece of news that more people responded to me about that it would affect them immediately. The AIG story, people wanted to scream about it, but I'm telling you, the thing that affects their money is what the Fed did this week.

VELSHI: But the AIG story and bonuses still are getting people -- they're getting people angry. Massive bailouts followed by massive bonuses. I asked the treasury secretary, Timothy Geithner exactly what he knew about the AIG bonus loopholes in my exclusive interview with him.

(COMMERCIAL BREAK)

ROMANS: This is a very special edition of YOUR MONEY road to rescue. This week Ali Velshi sat down with the Treasury secretary, Timothy Geithner charged with crafting the administration's strategy Ali for getting us out of this mess and for addressing all kinds of bailouts, interventions and loans to the economy and turning things around?

VELSHI: Yes, he's got a big job and he's under a lot of pressure and the challenge is only mounting every day at Treasury. I had an exclusive look inside Timothy Geithner's world.

(BEGIN VIDEOTAPE)

VELSHI (voice over): Forty seven-year-old Timothy Geithner looks younger than his years, but the stress is starting to show. He says his eyebrows are turning grey.

GEITHNER: We have a very ambitious agenda that we're trying to do in weeks and months what most governments do in years and that's because we're completely committed to doing what it takes.

VELSHI: On the job for less than two months nothing is going as expected. The one-time president of the New York Federal Reserve Bank is beating back charges that he's gone soft on his old Wall Street pals, turning a blind eye as culprits of the financial collapse continue to profit.

GEITHNER: I think the American people are just enormously frustrated and angry that they find themselves in this position, we are very focused on making sure that the assistance we are providing doesn't do unduly benefit the executives that helped get in us in this mess.

VELSHI: How do we deal with what seems to be tone deafness on this side of Wall Street. How can these announcements come out? How are people so divorced from the reality of how angry Americans are about this?

GEITHNER: It is enormously damaging to every thing we are trying to do. All it does is feeding this great loss of confidence and the quality of judgments about the individuals presiding over these financial institutions and, you know, they're going to have to demonstrate a greater sense of responsibility going forward if they're going to earn back the confidence of the American people. You're right. It's very damaging and I completely share the basic frustration across America about what's gotten us to this place.

VELSHI: The president just said that he wants you to use either legal means or leverage, because if so many cases these companies are still getting more money from the government.

GEITHNER: We're very focused on making sure that the assistance we're providing doesn't unduly benefit the executives that helped get us in this mess.

VELSHI: These days when Geithner is not on offense.

GEITHNER: It's time now for us to move together and to act the reforms.

VELSHI: He's playing defense.

GEITHNER: I was not secretary of the treasury until about six weeks ago.

VELSHI: Constantly pitching his plan, selling it to business leaders here in the U.S. to world leaders last week in London and twisting arms on Capitol Hill.

GEITHNER: The most prudent thing to do in this case is to move aggressively. If you wait and risk doing too little then the recession will be deeper and longer and we'll face higher deficits in the future and the economy is going to be much weaker in the future and I think again most people across the political spectrum agree on that.

VELSHI: Geithner is working 15-hour days, dawn to dusk. His wife and two teenagers staying back in New York. That's where he was born, but Tim Geithner grew up all over, India, China, Thailand and Japan.

GEITHNER: My father was a Navy pilot, spent his life working on development issues. My mother is a teacher, piano teacher. Because of them and their work I grew up outside of the United States, and I learned early on as a kid, really, the enormously important role that America played in the world and decided very early on watching America through the eyes of the world that I wanted to work for my country.

VELSHI: Right now Tim Geithner's country is mad.

GEITHNER: The answer is brutal and indiscriminate in the pain they caused and they have this basic tragic unfairness that people were careful and responsible in their personal and professional judgments are being damaged by the actions of those who are less careful and less prudent.

VELSHI: Geithner is saddled with a big job and not enough staff. Several key positions remain empty at Treasury including his deputy. That's slowing him down as he races to clean up the toxic assets infecting the nation's top banks.

GEITHNER: We've already started to make sure that the banks have access to some kind of capital they need to provide lending in a recession and you'll see us move very quickly in the next few weeks to lay out a plan to help deal with these real estate-related assets that are at the core of the financial system.

VELSHI: How much money do you think that's going to take? The number 2 trillion is kind of out there.

GEITHNER: I wouldn't look at those numbers. Again, the important thing is that Congress has given us a substantial amount of resources and we're going direct that where it's going to be most effective in getting credit flowing again and you're going to see us again continue to move very, very quickly.

This government has done more in weeks than you've seen most governments do in months and years and that's because of the depth and the severity of the problems we inherited because again our judgment is the quicker we move and the more aggressive we are, the quicker we are going to bring the recovery back on track.

(END VIDEOTAPE)

VELSHI: Now, the president when appointing Timothy Geithner said he was uniquely qualified for the job, but then a couple days ago the president said that no Treasury secretary since Alexander Hamilton has had more to do early in his tenure as Timothy Geithner has.

So this is somebody who is under pressure and now the questions are coming up as to whether he is, in fact the right man for the job whether the events of the last few weeks have damaged his ability to get it done.

ROMANS: Frankly, every minute that is spent deflecting the outrage after the AIG bonus thing is a minute that is wasted on beefing up the Treasury and getting it staffed all of the way and on figuring out how to get the toxic asset plan.

VELSHI: They have got a lot of work to do there.

ROMANS: Peter Morici is here, Morici is here he is with the University of Maryland School of Business and also Hillary Rosen is a CNN contributor and Democrat Analyst and they both join thus afternoon to try to make sense of the job that he is doing and the job that he still has to do and how this administration is handling it.

Peter, let me start with you. You say that Timothy Geithner should be embarrassed. He should be embarrassed by all of this that's happened with AIG. You make a specific point that the administration was successful -- the previous administration was able to negotiate with bailout recipients for pay restrictions and the like and why couldn't they do it here?

PROF. PETER MORICI, UNIV. OF MARYLAND OF BUSINESS: Well essentially, the Bush administration required General Motors and Chrysler to renegotiate labor contracts with his workers as a condition for bailouts. When we first got involved with AIG, that might not have been possible and there were three subsequent bailouts and we've had weekly recounts in the Wall Street Journal about bonuses and bonus problems and so forth on Wall Street, Geithner, Bernanke and before him Paulson should have been aware that this was going to be a problem at AIG and they weren't.

They should be embarrassed that they didn't ask. But more fundamentally Geithner needs to get to work on some of the basic problems, for example yesterdays move by the Feb will be truncated in its impacted long-term by the reluctance of the regional banks to use the capital they are being given to make loans to smaller banks and that's really a problem.

The New York City banks are reluctant to reopen the securitization market. He should be jawboning them on that. He should be jawboning them on pay. There are specific things he can do rather quickly that aren't getting done.

VELSHI: Hillary, what do you think?

HILARY ROSEN, CNN CONTRIBUTOR: First, I need to clear up the nonsense that somehow the Bush administration was tough on pay. Yeah, they were tough on pay for $15 an hour workers. When it came to Wall Street you know they gave away all this money without condition.

So -- but, Secretary Geithner is in a really tough position now and I think he's doing a good job. This is his catch-22. He's trying to tell banks we have leverage because you want more money and we have an investment in you already and so what we want to tell you now going forward how to operate and he has the outrage of the American people and the direction of President Obama to make sure that he imposes very strict restrictions on the people involved there.

His recipients, all of these banks and they're meeting with every single day are basically saying now to the Federal government get out of my life. I want to repay you all this money. I don't want the money because I don't want to deal with these restrictions. Our executives want their bonuses and we want to keep operating as a private sector ...

VELSHI: Which is fine with me. Someone who is taking government money and they're paying them.

ROSEN: Well, that ends up being what's happening. Unfortunately, the victims there might be the individual consumers who are looking at increased credit card fees and significant debt loads that they can't handle because the banks are now anything to abandon the consumer market because they're going have to take these losses somewhere. So there really is a tough road. It's very glib to say that Tim Geithner isn't doing what he should be doing. He's doing exactly what he should be doing in a very tough environment.

ROMANS: Let me ask both of you quickly in the time that is remaining. Peter, do you agree, can I get the two of you to agree at least that there are a lot of very big issues here and the AIG bonus thing caught everyone by surprise by the outrage that really, really reverberated across the country and maybe took the eye off the message at least for this week, Peter?

MORICI: It certainly didn't help the administration to keep us focused on the problems that are at hand, but I would point out that what was going on at AIG is emblematic of the broader problem. Ali, you might not care what private banks pay and I wouldn't if it wasn't for the fact that we are guaranteeing their deposits. If they get involved in bonus schemes that encourage their executives to make reckless bets and then the FDIC has to come in and bail out those banks it becomes our business and that's part of what's been happening.

The administration needs to sit down with the banks and discuss with them how they can structure compensation going forward and how they can reopen the securitization market. I haven't been seeing those things happen in a substantive way. I wouldn't care whether we had a Republican, a Democrat or a British labor party government right now. That's not happening.

ROSEN: I think they are happening. In fact, you know Peter points a very important amount of leverage that we do have that those banks want the FDIC consumer credit guarantees and they'll work very hard to maintain it. I think right now going forward, though, we'll just continue to see this dance until there is an assurance that the credit markets are going to open up some and they're going have to live with some restrictions going forward.

ROMANS: All right. Hilary Rosen, CNN contributor and Democratic analyst and also Peter Morici from the University Of Maryland School Of Business, thank you both of you, really appreciate it. Have a great weekend.

VELSHI: The AIG controversy you have to believe that someone is going to feel the political fallout big time. Is it the president? Is it a member of Congress? Is it the CEO?

(COMMERCIAL BREAK) ROMANS: As officials from Washington to Wall Street scramble to place the blame for the AIG controversy over bonuses, President Obama said look no further.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: I know Washington is all in a 'tizzy and everybody is pointing fingers at each other and saying it's their fault, the Democrats fault, the Republicans fault, listen, I'll take responsibility. I'm the president.

(END VIDEO CLIP)

VELSHI: Well, how much damage will this backlash about AIG do to the Obama administration's agenda for economic recovery? Diane Swonk is the chief economist with Mesirow Financial and a good friend of ours; she is back with us today. Diane good to see you. What do you think? Is this a tea pot or does this really actually threaten to derail some of the things that this administration is trying to do?

DIANE SWONK, CHIEF ECONOMIST, MESIROW FINANCIAL: Oh, I think it does threaten to derail some of the things that the administration is trying to do. The problem is we're losing sight of the forest through the trees. You know AIG, some of the stuff is noise. It is outrageous. We all know it's morally outrageous. Ed Liddy, I know him, he's working for nothing as CEO of AIG. He didn't ask for that job. I'm not sure you could pay anyone to do that job right now.

It really is a horrible position. He tried to make a benefit cost analysis that they paid the contracts because it was going to cost more to litigate and cost taxpayers more to litigate. So, at the end of the day you know, yes, it's outrageous. All I can say is I made a list of things I'm thankful for in the recession. On the top of the list was I'm thankful I never got a multibillion bonus.

VELSHI: Or that you're part of the administration trying to have to deal with this sort of thing.

SWONK: And I don't work for a bank anymore.

VELSHI: Right. What is it, what do you think as an economist, that this administration can do to get the attention away from this and on to what they have to deal with? There are some major problems. Tim Geithner is still trying to get this banking plan out that we're all waiting for.

ROMANS: I'm dying to hear the details of this and we keep hearing that there is going to be a toxic assets plan. Wait another week, a couple of weeks. I fear that every minute spent handling this AIG backlash is a minute taken away from really making sure we've got this right.

SWONK: You're absolutely right. It's even more than that. The clock is ticking on the recession. We're still falling. We haven't hit bottom yet and so every time we fall further without more intervention or more substantive policy changes, we're going have more problems down the road. So I do think this is unfortunate because it really has side tracked. Somebody didn't think about the messaging on this and that's unfortunate.

That said, at the end of day, all of this was done in the height of the crisis and frankly, if it hadn't have been done you look at where the real payments are for AIG, Ben Bernanke, he hung up the phone on AIG, he was so angry but he still was forced to deal with it because it would have taken down the European Bank if they didn't.

VELSHI: Larry Sumners said the same thing.

SWONK: Larry is really a good messenger for the administration. I think Tim is not as good a messenger. He's a technical guy, he is the kind of behind the scenes kind of guy. We need to get Larry and Christina Romer who are much better messengers out in front of the administration on the economic message because I think they'll help clear up some of the damage that's been done because we really cannot wait on these issues any further.

ROMANS: And that is what I wanted to ask you about, because Ali in his interview with the Treasury secretary, the Treasury secretary touched on something that a lot of economists have been telling me and that is we cannot be wringing our hands as bad as it is over $165 million. We have got to think of this like a flood is coming and we have to use every single sandbag.

We are going lose them, some are going to break and we're not going to need them all and get every sandbag out of there and get ready and that is what is happening in the economy. We have to throw more at it then we think we are even going to need because the history lessons show if you don't do enough and you do it too late you have a lot of pain for a long time.

SWONK: Well, that's exactly what Ben Bernanke really underscored. Here is a guy the foremost expert on the great depression and he said when they grilled him in Congress and said you know hey, wasn't fiscal stimulus bad during the great depression. He said no, actually it wasn't big enough to deal with the depth of the problem. You have to fire all your guns to make sure you avoid a depression. It's a depressing environment, but it is not a depression yet.

VELSHI: Diane, good to talk to you, thank you so much for giving us on the wisdom. Diane Swonk is the chief economist at Mesirow Financial.

And you know to the administrations credit, I think Tim Geithner understands, the Treasury secretary understands that they do have to be on point with their messaging and that I think was part of the effort. He talked to Charlie Rose and he came out here, so I think they're trying to get better that.

ROMANS: Diane makes a great point too that there are economics and there are politics and those two things are very different and when you combine them together it can be very ugly and uncomfortable, we just hope that we can get a good mix and get through all of this.

OK, from the big business blame game to the economic engine of small business. How do become a successful entrepreneur right now.

(COMMERCIAL BREAK)

ROMANS: All right. According to the Small Business Administration, small businesses employ about half of all private sector workers in our country.

VELSHI: Yes, small companies really are essential to our economy. The Obama administration has announced it's giving $730 million in direct spending for small businesses this week and that's money that was approved as part of the stimulus package.

ROMANS: We wanted to see how small businesses are doing today and we found one entrepreneur who is growing her company. I'm not kidding; she is growing it right now in this horrific economy with the help of a resource you can use for your own small business.

(BEGIN VIDEOTAPE)

ROMANS (voice over): Yes, it's a recession.

ISELA HERNANDEZ, OWNER: This is 100 percent stone.

ROMANS: No, that doesn't stop Isela Hernandez from growing her small business.

HERNANDEZ: I think it's the timing is there. Mexican food is really popular. There isn't a product like this out there in the market, and I really felt like if not now when?

ROMANS: Hernandez started her business about two years ago, lending her Mexican heritage with an entrepreneurial spirit. Her niche bringing authentic, moderately-priced Mexican cook wear products in the U.S. market. Her line quickly caught the eye of a top gourmet food store chain.

MICHELLE ALEMAN, DIRECT MANAGER: I thought they were really interesting and definitely very special. We have products that were in the style of a lot of Mexican products, but they were made in China and not really a true Mexican product.

ROMANS: So how did Hernandez, who had never run a business before, do it? She used her own business savvy, picked up during years as a department store buyer, but also got help from a free counseling service for small businesses called Score.

HOWARD GELTZER, COUNSELOR, SCORE: She came to Score because score is a resource. It's an opportunity for someone to get some advice free, to grow a business or to start a business, and Isela had an idea, and I thought the idea had a marvelous premise.

ROMANS: Score is a program of the Small Business Administration seasoned business people like Howard Geltzer volunteers their time and their experience to advise new entrepreneurs. Hernandez says it's a big help for small business owners who don't have the resources of a large company. HERNANDEZ: We might have, you know, sales people, a P.R. person, a P.R. team, assistants, and product coordinators to make a marketing plan happen. In this case, you really have to rely on yourself. You can go to S.c.o.r.e. and talk to professionals there who can advise you on the best way of moving forward with your plans.

ROMANS: Geltzer helped Hernandez on a public relations strategy including developing an eye catching Web site and that help pays off as Hernandez builds her company.

HERNANDEZ: The economy you are right is not that great, but I think if you're an entrepreneur with a good idea, customers react to that regardless of the environment.

(END VIDEOTAPE)

ROMANS: It's -- it was a really great kind of like good news in this whole thing. She's, like, you know what? I want to take my -- I want to grow this company. I want to grow this business and I'm going to do it and I think it's just a really great tale for people who have lost their job or have been thinking of leaving their job.

VELSHI: Businesses start up with in these economies, and by the way consumption we were over consumers and that's going to change, but we do remain consumers. People do buy things.

ROMANS: That's right.

VELSHI: Richard Sloan joins us now; he's the founder of Start-up Nation. It's a community to help entrepreneurs start their own businesses. Richard good to see you again. It's been a long time.

RICHARD SLOAN, FOUNDER, START UP NATION: Great to see you Ali.

ROMANS: Just because it's a recession doesn't mean you should be too afraid to go out there and start your own business or maybe you're forced to go out there and start your own business.

SLOAN: You know, in fact I think there are great arguments that can be made that needs are more extreme. There is more urgency among the consumers out there so there are actually special opportunities that exist in a market like this.

ROMANS: Richard, do the president's plan, the administration's plan to try to better fund small business loans and all of these different things that they're doing also try to eliminate some capital gains on investments into small business? A lot of different plans, is that going to help?

SLOAN: Well, I think it is going to help. You have to be able to rely and lean on that banker in order to fund many of the activities of your business, but the vast majority of companies that start up right now are micro businesses and individuals often home based and they won't be looking for a bank loan they'll be bootstrapping.

VELSHI: Richard, one of the things we talked about is particularly for people looking for jobs and the effect of social media and social networking. We talked about face book and last week we were talking about how Christine and I are both on Twitter now. You actually think these are --

SLOAN: Of course.

VELSHI: These are things that people should do for their small businesses to grow their businesses.

SLOAN: Yes, absolutely. We always advocate at start-up nation that you create a Web site for your business, but it's not just enough to have just one oar in the water these days when you have face book and Twitter and so many other social sites out there. You can actually create a broad presence and kind of divert traffic into your site.

VELSHI: You have a few tips, Richard. It's your passion. Take stock, taking stock of your skills and commit to your concept. Test drive your concept, but you know what I like? Google like mad. Your fourth point. What do you mean by that? There's free research out there.

SLOAN: Well, look, you've got to have the passion and that's going to be all about playing to your passion and you have to take stock of what your real resources are. You have to make sure you have a tight concept and you want to test drive it with other people, but Google like mad means you have information available to you today to be strategic, to be smart, to make great decisions in strategies based on all that data that's available to you by being a good googler. Pull in that information, use it, incorporate it into your strategy and you'll have much better chances for success.

ROMANS: All right. Richard Sloan, co-founder of Start-up Nation. We should tweet all five of these.

SLOAN: Tweet away.

ROMANS: Social networks so all of these millions and millions of fans.

VELSHI: Do you know how to follow me on Twitter?

ROMANS: I think I am.

VELSHI: I'm Ali Velshi. What are you?

ROMANS: I'm Ali Velshi.

VELSHI: Don't you have a Twitter name?

ROMANS: It is Christine Romans.

VELSHI: OK. That makes sense.

ROMANS: Jean Chatzky is here and she says there are steps you can take to have a secure, financial future even while living paycheck to paycheck. (COMMERCIAL BREAK)

ROMANS: There's never been a better time than today, right now, to become financially stable. Our next guest says if you're living paycheck to paycheck there are steps you can take right away to get on the path to a secure financial future. We should all be thinking about the next move to make. This is the time. Jean Chatzky is author of the new book "The Difference, How Anyone Can Prosper in even the Toughest Times." Welcome to the program.

JEAN CHATZKY, AUTHOR, "THE DIFFERENCE:" Thank you.

ROMANS: What is the difference?

CHATZKY: The difference is a prescription for getting from a place where you're struggling financially to a place where you feel secure and are able to sleep at night. It's a series of steps that involve things beyond money.

ROMANS: Beyond money. Let's talk about where you are on this list because you've partnered with Merrill Lynch and Harrison Act to Poll a bunch of folks about how they feel and where they are in the U.S. population. Wealthy people, that's about 3 percent.

CHATZKY: That is right.

ROMANS: Financially comfortable, 27 percent. Paycheck to paycheck, wow! This is more than half of you out there, 54 percent. Further in debt. Who are these people?

CHATZKY: The wealthy people are optimistic, they're resilient. They have about $2 million in investable assets, not including their house and they save and invest habitually. The financially comfortable do most of those things. They tend to be a little bit on the younger side and they have investable assets of about a quarter to a half a million.

People who are paycheck to paycheck, that is descriptive in and of itself. They know who they are. Any little financial glitch could throw them over the precipice. They don't sleep at night because of their financial problems and people who are going further and further into debt are just digging themselves into a deeper hole.

ROMANS: We want to be moving up that ladder.

CHATZKY: We do and the good thing is it's possible. When we look at the people who are at the top two tiers, who are in that top 30 percent either financially comfortable or wealthy 90 percent were not there ten years ago. They weren't born with the money, they did this themselves.

ROMANS: I think that is what is really important; you weren't born with the money. It wasn't about where you were born or who you were born to, but the fact that you can take steps to get yourself along the path. CHATZKY: That's right. You have to choose that you are going to make the difference in your own life and now more than ever before, I think that's what people have to say to themselves. I am going to control my own life. I am going to control my own financial destiny and the nice thing about the attributes and the difference is there are a lot of exercises that you can actually do to just boost the amount of all of these things that you have.

ROMANS: Let's talk about those attributes because there are some things that you might not normally think of optimism, gratitude. How can gratitude and optimism make me move up that ladder and be financially comfortable or wealthy?

CHATZKY: Let's do them separately because they're definitely separate attributes. When you talk about optimism people who are more optimistic and I'm not saying by any means that you want to be a sap because that doesn't work either. People who are about 8 out of 10 on the optimism scale, they get the interviews when they get the interviews, they get the jobs and when they get the jobs they get higher starting salaries and then they get promoted and having that income helps them become wealthier along the way.

Gratitude is the antidote to materialism. When you are grateful, you are thankful for what it is you have in your life which makes you not inclined to go out and spend money you really don't have on all that stuff.

ROMANS: Also on the list you have resilience, connectiveness and passion intuition and then there's habitual saving and investment in stocks. You have eight things on here and only two of them have to do with money.

CHATZKY: Only two. It's incredible, but they are, of course, the two most important things to do with money and I think particularly right now you really need to be doing both. People who are wealthy or comfortable when they rank the attributes that helped them get there; saving is at the top of the list. They have the money to spend. They have the money to spend probably like crazy and yet they have never done that.

They have always prioritized saving and again it makes them feel better because although we know from research, we've seen brain scans, MRIs of people in the process of spending money and we know it's really fun. It lights your brain up like a Christmas tree. Saving money doesn't do that, but once you have the money saved and then you feel really, really good about it.

ROMANS: Jean Chatzky thank you so much. The book is called "The Difference." Fascinating read, thank you.

All right. Need quick cash to get you through the day, find out where you can get your hands on cash right now with a catch.

(COMMERCIAL BREAK)

ROMANS: So you know the Easter bunny might be coming to a town near you very soon but you know I am told the Easter basket might be a little lighter this year.

VELSHI: The National Retail Federation predicts that consumers will spend an average of $116 on Easter candy, gifts, food and decorations.

ROMANS: That's down apparently.

VELSHI: How do you come up with $116?

ROMANS: I have never spent $116 on Easter unless you count a big party I was throwing with two big Easter hams or something. You count the food maybe.

VELSHI: It seems like a lot. I do tend to sometimes think these estimates from the National Retail Federation, we've always had these estimates and then we have the reality afterwards and they don't typically seem to be in line.

ROMANS: Maybe we are not very festive.

Maybe the rest of America is spending a lot of money.

VELSHI: Maybe they are. You know what it can help the economy. I really like peeps. You have to buy them. Do they keep?

ROMANS: I don't know if they keep, but maybe I'll buy $116 worth of peeps this year and keep them in the office for the rest of the year and we'll do our part for the economy.

VELSHI: We can peep while we tweet.

ROMANS: Ooh! That sounds like trouble. Like it would be trouble.

VELSHI: Everyone wants to get their hands on some extra money but some folks really need it right away. There's one interesting solution that you might not have thought of.

ROMANS: That is right CNN's Stephanie Elam headed to one place and it's not a bank where you can get cash on the spot.

(BEGIN VIDEOTAPE)

STEPHANIE ELAM, CNN BUSINESS NEWS CORRESPONDENT (voice over): This is how it looks in the movies.

UNIDENTIFIED MALE: I need money.

UNIDENTIFIED MALE: I want to pawn something.

ELAM: But this is reality.

UNIDENTIFIED FEMALE: I'm pawning this DVD player.

UNIDENTIFIED MALE: I just came by to see if I could borrow a couple of dollars.

ELAM: A couple of dollars to get through the day. A common story driving people into pawn shops for quick cash.

BLAINE MESSIGNER, PRESIDENT, N.Y. PAWNBROKERS: In the last four to five months we've given out about 20 percent more money as compared to last year.

ELAM: Pawnbroker Blaine Messigner says in these tough economic times, business here is golden.

MESSIGNER: It doesn't matter whether you're in bankruptcy, whether you lost your house, whether you owe a lot of money into credit cards. If you have an item and you want to pawn it, take it to a pawnshop and get a small loan.

ELAM: If I'm coming in right now and I say I want to pawn my stereo and drop it off here, get to this line and out of the store, how long does it take to get my cash?

MESSIGNER: About ten minutes. Biggest misconception of pawning is that people come into a pawnshop and they lose their merchandise. That's not pawning. Pawning is technical collateral for a loan. That is the legal term for it. People come into the pawnshop. They want their merchandise back.

ELAM: Goods are held for up to five months, sometimes longer, as long as the customer continues to pay 4 percent interest on the amount borrowed.

MESSIGNER: It's a storage house. This is where we keep people's merchandise.

ELAM: You had to break through the wall to make more space? If the customers don't pay back the loan and reclaim their items, then they go up for sale. But according to Messigner, pawn brokers prefer to do business like a bank they don't want to own the home or in this case the fur coat.

MESSIGNER: We're not in the business of selling people's merchandise. We're in the business of banking and collecting interest on items.

ELAM: While it may sound like a quick way to get cash in hand, make sure the pawnshop you use is legit.

UNIDENTIFIED FEMALE: You want to make sure the pawn shop is a BTB accredited business. If not that, check out they at least have a good record with the Better Business Bureau.

ELAM: While it may not be like the movies, there is one golden rule.

MESSIGNER: She asked me for a thousand, I don't give her a thousand.

ELAM: In pawning, every deal is negotiable.

Stephanie Elam, CNN, New York. (END VIDEO CLIP)

ROMANS: All right, listen up, everyone. Eliot Spitzer is speaking out ...

VELSHI: Not commenting that much because you don't have a lot of experience at pawn shops?

ROMANS: I have no experience at pawn shops.

VELSHI: We'll make a field trip out of this.

ROMANS: We should. That's a good idea. How about the cuff links?

VELSHI: You can find some interesting stuff there. I didn't mean to interrupt you. I just guessed that you were not a pawnshop aficionado.

ROMANS: No, I'm not a pawnshop aficionado, but I think any way that you can get some money or you can find a way to make ends meet in this economy ...

VELSHI: I feel like you were on to another seamy story.

ROMANS: I was. You know the reason why I wasn't commenting on the pawnshop story was because I am actually -- we have this incredible exclusive interview, believe it or not, with Eliot Spitzer. Eliot Spitzer is speaking out, yes, that Eliot Spitzer.

(COMMERCIAL BREAK)

VELSHI: All right. We've been having this conversation about the AIG bonuses. Now Congress dealing with a bonus tax. A tax designed specifically for people who work for companies that got bailout money from the government and then got -- earn a lot of money.

ROMANS: It addresses the populist anger. It feels good for those people who want retribution. But is it really good in the end and what are the unintended consequences?

VELSHI: Let's find out. Jeannie Sahadi always one to bring us a level head about this, she is a senior writer at CNNMONEY.com and Paul LaMonica, editor at large at CNNMONEY.com. Who has also written about this this week? Paul lets start with you. What do you think? Bonus tax sounds great. Claw back all that money that we've given people. What's the problem with the concept?

PAUL LAMONICA, EDITOR AT LARGE, CNNMONEY.COM: I think part of the problem is this that just this focus on the bonuses. I can understand the anger, but don't let it overshadow the fact that AIG has received $170 billion, not million, billion in bailout funds and since September, the first bailout, we've had very little, if any progress, in getting AIG broken up, having some of its quote/unquote good assets sold to other insurers so that we can actually have the government pay back some of this loan. ROMANS: You know Jeannie I think it's so interesting that Congress in the first place sort of put in the loophole language that allowed the bonuses to go out, now Congress is coming on the back end -- how reasonable is all of this?

JEANNIE SAHADI, SENIOR WRITER, CNNMONEY.COM: I think the negative consequence for Congress and the Obama administration is people are going to be like, which is it? You did one thing and now you are doing something else. Are you going to punish everybody you don't like in this? People might acknowledge that some mistakes were made in how that legislation was put together in the first place. It will make private companies a little bit nervous about getting into these public/private ventures that Treasury secretary Timothy Geithner wants to encourage.

VELSHI: You bring up a very interesting point here. So the part of the dealing with the toxic assets situation that the Treasury is trying to work on will probably involve having private companies partner up with government to invest in some of these toxic assets. One thing that doesn't work is when people try to make investments and government keeps changing the rules. Paul, there's something sort of fundamentally wrong with legislating every little bit along the way as outrageous as these bonuses are to everybody.

LAMONICA: Exactly. That's a big reason why I think a lot of the banks that first got bailout money last fall, some of them are now eager to return the money as quickly as they can.

ROMANS: I want to bring in a voice we haven't heard for a while, Eliot Spitzer, who has been in political exile of course for the past year because of his own sex scandal.

VELSHI: Is he here?

ROMANS: No, but he is speaking to Kier (ph) of GPS, it is going to air later this week, it is an exclusive interview. He weighs in on AIG and just the shenanigans going on, the questions that he says still need to be raised specifically.

(BEGIN VIDEO CLIP)

ELIOT SPITZER, FORMER NY GOVERNOR: When AIG initially received $80 billion, a decision that was a consequence of a very brief meeting of the New York president, the New York Fed, the secretary of the Treasury, perhaps Chairman Bernanke and arguably some reports say the chairman of Goldman Sachs, $80 billion, virtually all of it flowed out to counter parties, $12.9 billion to Goldman Sachs.

Why did that happen? What questions were asked? Why did we need to pay 100 cents on the dollar on those transactions, if we had to pay anything? What would have happened to the financial system had it not been paid? These are the questions that should be pursued.

(END VIDEO CLIP)

ROMANS: He is basically saying there are a lot more questions and a lot more things to be pursued in all of this and he agrees that the visceral reaction of the $165 million bonus scandal. But the amount of tentacles to follow in this scandal just ...

VELSHI: I don't think anybody who thinks this is cool, this bonus. I think everybody is against it and everybody gets that this is really bad. But we have to figure out what we do about AIG and Citigroup and a lot of other companies out there that may still require a lot of our attention and a lot of taxpayer money.

ROMANS: Ironically they all share to that Wall Street who had investigated this, New York Attorney General, AIG was sidelined during this whole thing or at least quiet during this whole thing. He's got a lot of experience on this but his personal issues taking over it. A fantastic interview, you should watch all of it later today.

VELSHI: Thanks to Paul LaMonica and Jeanne Sahadi for joining us. Thanks to you for joining us. Make sure to check us out tonight at 8:00 p.m. for a CNN special "AIG Facts and Fury." That is 8:00 p.m. Eastern tonight right here on CNN.

ROMANS: Also, make sure you join us every week for YOUR MONEY. Saturday's at 1:00 p.m. Eastern and Sunday at 3:00. You can also logon 24/7 to CNNMONEY.com. Have a great weekend, everybody.

(COMMERCIAL BREAK)

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