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What Was Accomplished in Washington at the Hearing With BP?; Gulf Coast Residents Response to Hearings; Could There Be a Double Dip in Housing?

Aired June 20, 2010 - 15:00   ET


CHRISTINE ROMANS, CNN HOST: BP's leaders take a beating in Washington. We will go beyond the political posturing and figure out exactly what was accomplished.

Welcome to YOUR MONEY, I'm Christine Romans. Ali Velshi has been aboard the CNN Express, touring regions hit hard by what President Obama termed what the worst environmental disaster America has ever faced.

Ali, hard are folks in the Gulf responding to what they have been hearing out of Washington this week?

ALI VELSHI, CNN HOST: Christine, it is an interesting national story, but around here in the bayous of Louisiana where I am in Lafitte, Louisiana, frustration. They feel that there is a discourse and dialogue going on in Washington that is not related to the reality of what is happening right.

In fact, I was here in Lafitte on Tuesday night before the presidents oval office address and folks here were saying what they wanted to hear was about what was happening right now. What extra efforts were going on right now to save this oil from reaching the parts of the coast and the wetlands that haven't already been affected by it?

What is happening right now for the people who are out of work, this is a fishing community. People who can't fish are working in the oil industry but a lot of that has been shut down, they are not interested in the posturing and the partisanship that was heard in the testimony on Capitol Hill. There is a lot of frustration; they think everybody's attentions need to be turned to turning that spill off and cleaning up the Gulf and nothing else at the moment.

ROMANS: Let's bring in David Gergen our CNN political analyst and Gloria Borger, CNN senior political analyst as well. Let's talk about what was accomplished political posturing or problem solving or a blend of both. Gloria you start.

GLORIA BORGER, CNN SR. POLITICAL ANALYST: Well you know I think that the big thing that the president got this week which is controversial with some Republicans is the $20 billion escrow account.

I think this is something that people in the Gulf can probably look at and say OK there is going to be a commitment here, it is going to be independently administered and there is going to be money to make sure that we are made whole. That doesn't take care of the bureaucratic problems that Ali is talking about, about actually getting this cleanup done in the right way and that is something they are worried about rightly so.

ROMANS: David what about you? Do you think the president came out here looking like he was in charge and trying to solve this? Did Congress look like it was political theater? And Ali says that people in the Gulf are still frustrated to say we are in the middle of the problem right now all of the stuff in Washington is not helping us.

DAVID GERGEN, CNN SR. POLITICAL ANALYST: Well Christine, the president did have a solid step forward with the $20 billion fund that BP has put up. Gloria is right about that. But it remains rather abstract to people who live in the Gulf. I think he missed the boat with his speech. Because that was the moment I think it was his last best shot in convincing the country that he was providing effective decisive leadership.

That is not what a virtual speaks, there was a sense coming out of the speech that the government is still not on top of this, that we do not have the command structure in place to shut down the leak and to clean up the Gulf as Ali said. Until that happens, I think the president is going to continue to pay; his leadership is going to erode.

ROMANS: Let's take a look at what the people are saying about that. We have a CNN Research Poll that shows that today 53 percent think that Obama is tough enough to handle a crisis and 47 percent say he is not. Compare that with the beginning in 2009 you can see a big deteriation in the confidence Ali of the president being able to handle a problem.

And the thing that is troubling here is that this problem is a problem that is not going to end tomorrow or in August if they can actually seal that well or get that relief well drilled. This is something that could go on for a long time.

VELSHI: That is right. Let me give you a bit of the character of these communities along the Gulf whether they are fishing communities or oil communities or tourist communities. This is Louisiana, in Mississippi and in Alabama. It is a little bit different in Florida.

But essentially these are people who have dealt with the ebb and flows of the economy over a year. They have dealt with Katrina; they dealt with damage by Katrina to oystering, to shrimping. They have dealt with the change in prices which we haven't really talked about as much on the show, but a fascinating story about shrimp for instance at low prices.

These are people whose grand fathers were fishermen or oil workers and whose children may be as well. They are OK with short-term changes, but they believe that this oil spill has affected them for so long to come that they need solutions. Now they no there is no more fishing this year, they know that. They wonder whether there will be fishing in five years, or ten years. They can make long term adjustments but what they need is they need local solutions to the problems they have gotten.

They feel that while this discussion is taking a national tone to it and an important one about the future of alternative energy versus drilling in deep waters and things like that. The reality is they need decisions about whether there is going to be a barrier island put up here or whether there is going to be sand bars or there are going to be other things.

That is what they feel is being missed in this discussion. Local effective decision making is taking second place to large policy discussions happening in Washington or a blame game which may be necessary to have but doesn't affect their daily life right now.

ROMANS: You know, Gloria, it is interesting because when you talk about six month to evaluate what the rigs for deep-water drilling and the like, people in the region are saying, we don't have time for bureaucracy.

BORGER: Right and that is the whole, it raises the whole issue of what you trust your government to do. Our poll shows that more people trust the government to manage this cleanup and BP of course because they hate BP right now. But they are not sure that the bureaucracy can move as quickly as they need it to move.

You hear the governor's right Ali, every governor from every Gulf state is complaining in one way or the other that the government is not on top of it, and that is why Barack Obama doesn't look good. Because even he can't make it work. He wants it to work, but it is kind of out-of-control.

GERGEN: Let me come back to this Christine, this moratorium. Because I do think that has become urgent as well as the clean up. That is the moratorium of using the rigs that are out there in the Gulf. The president has left this to the commission. He has excellent people, Senator Bell and he has a good group. This commission we are into the third month now since the spill.

The commission is going to hold their first meeting next week and they don't yet have an executive director to run this. And there are a lot of disagreements about where they are going. We don't have -- the government has not pushed these oil companies to come up with emergency plans that are not these crazy plans about walruses and they have to have real plans and real action.

VELSHI: Quickly.

GERGEN: And the people of the gulf are waiting and jobs are being lost. He needs to put an urgency into this whether this commission is the right vehicle or not he has got to find some way to get the rigs that are out there back into action. Make sure they are safe and get them back into action.

ROMANS: All right a lot of work to do and we will be talking about it for months to come. I'm sure Gloria Borger and David Gergen, Ali Velshi on the road in the Gulf. Thanks guys. Political opportunitism or poor timing, the president being criticized of both of those things for linking the oil disaster to energy reform. Who is right and who is wrong? We'll talk to two people who respectfully disagree on this.



BARACK OBAMA, PRESIDENT OF THE UNITED STATES: The tragedy unfolding on our coast is the most painful and powerful reminder yet that the time to embrace a clean energy future is now. Now is the moment for this generation to embark on a national mission to unleash America's innovation and seize control of our own destiny.


VELSHI: All right. The president's chief of staff, Rom Emanuel, once said never let a crisis go to waste. And it seems the president isn't, he is making a strong push for energy reform in his first address to the nation from the oval office that happened this week. But was his timing off? His detractors say yes, his supporters say no, now is exactly the time to effect change.

ROMANS: Stephen Moore is an editorial writer for the "Wall Street Journal" and Howard Gould is an eco-entrepreneur and these two just love to disagree on all things energy. So let's disagree together gentlemen. Howard, should this oil disaster be linked to the push for clean energy reform? Is the president right to try to make this link?

HOWARD GOULD, ECO-ENTREPRENEUR: He absolutely is correct on this. I mean, what better opportunity right now to show people that the dangers of what is going on from a fossil fuel perspective and the fact also to show people that the oil companies are not being forthright with the answers and pushing for the truth of what the dangers of this industry really is. I think he is right in pushing this forward right now.

ROMANS: I want to show you a poll here from June 16th. People were asked from the CNN Research Poll, are you confident that the government can reduce U.S. need for oil, 36 percent said yes, 63 percent said no.

VELSHI: Well, yes, here is the thing, why would we think the government can reduce our need for fuel? Let's take a look at fuel efficiency standards in cars; it takes the government 25 years to change these things. You know what really helped fuel efficiency? When gas got to $4 a gallon.

Stephen I have got to ask you, if 9/11 was a time to fix up the way we dealt with terrorism, and other things like this become our opportunity to fix the way we do things, why wouldn't this be the best opportunity? We consume 20 percent of the world's oil and we produce 2 percent of it. Why isn't this a good time to say let's change our energy needs and our uses? STEPHEN MOORE, EDITORIAL WRITER, "WALL STREET JOURNAL:" I think there was a kind of backlash quite frankly this week against the president kind of using the oil crisis and the spill crisis in the Persian Gulf -- I mean in the Gulf to capitalize on his agenda for cap and trade and more energy subsidies and so on.

When I talked to some Democrats on Capital Hill this week, they said actually this was a setback for those issues. We can have an argument about whether we should do this now, but I think a lot of American's say let's get going with the cleanup, and lets make sure this is done professionally.

ROMANS: He makes a good point about we should be focusing on the cleanup and the disaster right now. But you think we could be doing all of these things.

GOULD: The people that are talking about climate change legislation are not the people that are going to be down there doing this clean up. The fact is by taking that attitude it is just kicking it down the road. And saying let's not focus on the economy because we need to do the clean up. We have big government and a lot of smart people out there that could be focused on these issues right now. This isn't detracting from the clean up by talking about moving towards a cleaner economy.

ROMANS: Is this the turning point for clean energy is the bottom line here? Both of you, let me ask you first Stephen, is this some sort of a turning point or is this going to be a turning point squandered? We were talking about how looking back to Exxon-Valdez and people said we were going to rethink our reliance on oil and the environment. I'm sure if you looked at how much we consume it is up substantially since Exxon-Valdez.

MOORE: Look, I am a skeptic as you know, Christine. Because I think if you look at the last wonder fuel that we were going to rely on to reduce our oil dependents, it was going to be ethanol. Remember that?

GOULD: That was George Bush that pushed that.

MOORE: But it also true that a lot of people just saw that as a way of reducing our dependence. And remember, Jimmy Carter invested billions of dollars on solar and wind power and that was also turned out to be a big boondoggle.

What I would favor is, if solar and wind can be competitive with fossil fuels, I'm all in favor of it. If nuclear can be competitive, I'm in favor of that. What I'm against is just shoveling tax dollars into these technologies. We own the get 1-2 percent of our electricity from solar and wind power after billions of dollars of investing in it.

GOULD: You are completely missing the boat on this whole thing; the fact is that - from a subsidy stand point, $312 billion are used for oil subsidies right now. These are the same companies that are getting the highest profits in the world. Doesn't that strike you as a little bit odd?

MOORE: Where do you get $300 billion? That is ...

GOULD: No, no, $312 billion was reported by Bloomberg two days ago for 2008 numbers.

MOORE: You might want to check that.

GOULD: Sorry?

MOORE: The oil industry pays more taxes than any other industry.

GOULD: And it is the highest subsidies out there. And the fact that these companies are making the most profits, you don't think that you could make a competitive argument?

ROMANS: I promised everybody that there would be a respectful disagreement and we all delivered thank you so much. Howard Gould, Stephen Moore, we will continue this discussion at another time because it is certainly not going to go away. And what beautiful bells.

VELSHI: The discussion seems to continue all the time. We just turned the volume up and let everybody listen to these two guys because they are fantastic. And yes there are beautiful bells here in Lafitte, Louisiana Christine.

ROMANS: All right. New signs that the housing market could be threatened once again. What that means for your biggest investment? That is next.


ROMANS: Well Ali a drum beat of pessimistic housing news this week and concerns that there could be a double dip in housing. The good news there is a 4.8, 3 percent mortgage rate for a 30 year fixed rate mortgage. But if you are in a position to buy there is good news but there are threats out there with the recovery that we saw earlier this year in housing Ali, unemployment the biggest thing there.

You have high vacancy rates and you have record foreclosures still. Even if you think that you are at the worst of the foreclosures that still means you have an awful lot to go through before you can start moving up again. And a lot of people are saying that the juice from that is over, but we knew that, right?

We knew that that was going to run out. The builder's confidence index this week was pretty pessimistic. It showed a reading of 17. What does that mean? For people like us who follow these reports all the time, you have to be at 50 for a positive outlook. Think of that. So the people who are involved in this are still really concerned about where housing is going to go, Ali.

VELSHI: Yes. Let's say you look at the world and you say, if there are these extra houses out there and foreclosures and vacancy rates, maybe there shouldn't be a single house in America being built. I get that for now the builders shouldn't have a good outlook and when you weigh the good against the bad, those low interest rates, those 4.8 percent interest rates have a lot of weight compared to the other factors. These are historically low rates.

That said, I think when you look at housing you look at your housing situation. There are parts of the country where housing prices are increasing or stabilizing. And there still where foreclosures are forcing the house prices down, so when you look at it nationally you may see a decline over the course of next year, but we could hear this from somebody a lot smarter than me.

ROMANS: And that is Robert Shiller. He is the Yale University professor of Economics, and co-author of "Animal Spirit." He is a real well-known housing expert and he has been with us all along as we have been watching what has been going on in the housing market.

Robert, I think Ali and I agree here. Jobs are really the key to all of this aren't they? If you have so many people out of work, you are not in the position to either a pay your mortgage or b, go out and buy a new home or move across the country for a promotion. I mean jobs are really critical, am I right?

ROBERT SHILLER, CO-AUTHOR, "ANIMAL SPIRITS:" We have been forecasting home prices for close to 20 years now. You are absolutely right. We found that cities that have a slow job growth it does hurt their home price. It is one of other factors though.

ROMANS: Like what? What other factors are you watching here? And are you concerned about another leg down for housing or is this to be expected once the home buyer tax credit is over in the spring and awakening in housing, maybe now we rest and see what happens.

SHILLER: I think a lot of people think that the question is whether we are off to the races again this year or will it be next year? My company Macro Markets has done a survey of professional forecasters and we found in last months survey that even professional forecasts are predicting home prices will start in 2011 will go up 2 or 3 percent a year. I don't know about that. Some of the forecasters are with me that there is another scenario that is worrisome.

ROMANS: What is that scenario?

SHILLER: I would say that would be the Japanese scenario. The Japanese economy in the 1980s had a boom in the stock market and housing market. Amazing boom, and when that burst, home prices in Japan fell from 1991 until 2006 every single year they went down for 15 years of decline.

ROMANS: Ouch. So the best case scenario I guess or the contentious scenario that you are outlining is 2-3 percent housing price gains starting maybe sometime next year, but the worst-case scenario is really ugly?

SHILLER: You know that home prices are not upward as we have become accustomed to think. Now, think about the oil spill. We just saw, that is -- you know that kind of event may change our psychology and lead us to a period of protracted stagnation. It reminds me of the 1926 hurricane in Florida. Remember this? The Florida land bubble in the 1920s.

ROMANS: I was just a baby in the '20s; I can't quite remember that one.

SHILLER: Well, remember this. It was amazing. Everyone in the whole country was talking about Florida and how the prices were going through the roof. And they had this terrible hurricane in '26, it ended the bubble, it burst and prices fell and guess when they started going up again in Florida? In the 1970s, it was a half century later before they had another boom.

ROMANS: All right Robert Shiller.

We like you to be honest. That is why we have you on. OK, Robert Shiller, thank you so much Robert. And Ali, you know something interesting about where you are right now, there are some folks will actually be suspending foreclosures for people who live in 25 miles of the coast. In case you are in trouble right now, they don't want to loose your house on top of all this.

VELSHI: Right. That might help the folks around here where I am. Listen, the other thing that I have been doing while I was out here; I went out and saw some things that I had not seen throughout this entire coverage of the spill to be seen. And it is fighting oil with fire.

I went out to look at how the massive fires in the Gulf are keeping the oil from reaching the shore. I have some fantastic pictures for you that will give you some sense. Here is one of them, but I have more when I come back.


ROMANS: Ali has spent the week on the Gulf coast on the CNN Express talking to people directly affected by the oil spill disaster.

VELSHI: Yes, Christine I'm hearing a lot of frustration from folks who say not enough is being done to actually plug the leak and protect their areas. Now I wanted to show you something that is being done that has actually seem to be working pretty well. It is called controlled burning. It prevents those big clumps of oil that are floating in the water surrounding the spill area from washing onto shore.

I went out with the Coast Guard to see how the fires actually work at burning away the oil.


VELSHI (voice over): What we are going to be witnessing is a controlled burn. We know they have been able to burn some of the oil off a bit earlier today. We'll evaluate what the situation is when we get there. UNIDENTIFIED MALE: This is actually oil that you are seeing on the surface of the water. Our fishing vessels come along and we collect it. When we get the appropriate amount in the boom we bring an ignition boat over and we will ignite it.

VELSHI: That is what you want to see.

UNIDENTIFIED MALE: It is. We call those our mega burns or our very successful burn.

VELSHI: If you look up to there, it is like a weather system being created there. And if you see the bottom of that burn, the smoke is white. That is the steam.

UNIDENTIFIED MALE: That is the steam from the adjacent water, yes.

VELSHI: You will see as we come up, there are shrimpers on either side of that fire. That is where the boom is connected.

UNIDENTIFIED MALE: We have them pulling a u-configuration. They gather that oil into the boom and they keep working real slow.

VELSHI: They coral the oil basically that is then set on fire.

UNIDENTIFIED MALE: 2,000 to 5,000 barrels an hour with this kind of burn.

VELSHI: So even thought this is crude oil it has been degraded a little bit from a mixture of water, you can't sort of just throw a match on it and hope that it is going to ignite.

So what happens is they put one of these in with it, this is two half gallon jugs of diesel and then at the bottom here you see a flare, they light the flare, the flare then melts the plastic around the diesel, ignites the diesel and hopefully the diesel will burn long enough in that oil that it ignites the oil.

We are right in the middle of where this oil is. Just a few miles as way. Right in the distance, maybe it is ten miles away. You can see the source of the spill. And right here -- fish. You can see them swimming around the water is fairly clean here. This is an area that there has been burning going on.

In a good day they can burn 30,000 to 40,000 barrels of oil in these controlled fires. Not the sun is getting ready to set here; any fire that is already burning can remain burning overnight. They don't set into ones. But they will be back in the morning to start burning more of this oil; they will keep on doing it until there is no more oil left to burn.


ROMANS: Ali, amazing pictures. Tell me about the environmental impact of all of that smoke. I guess what you are weighing here is the environmental impact of burning it on the ocean or leaving it there to come on shore.

VELSHI: Or get to shore, yes and get those pelicans and the other sea animals. There are a couple of issues. If you live it in the water and you put the dispersant in, it gets the sea animals, and if you burn it, then it gets into the atmosphere and that of course contributes to carbon dioxide emission.

The whole thing is very, very complicated. They have made the determination that it would be easier to burn this in its situation in the middle of the ocean than to let it get on shore. What a world that we are in that that is the better of two evils. Because when you are out there, as I said, you saw that cloud going up.

It really looked like a weather system, the sky was clear around that, but in that spot that we were at it was like the darkest of storms. Quite remarkable, Christine, I have seen fires and I've seen oil, I have never seen them together that way. It was really quite spectacular.

ROMANS: And so amazing. So after you are going out there and seeing all those amazing images of burning the oil way out there off shore, on shore you got a chance to speak with a group of people in Lafitte, Louisiana after the president's address to the nation this week. So you got their point of view on this too.

VELSHI: Yes, and I thought it was so fascinating what I heard from the folks around here. It really localized the story for me. Because so many of us consumed this story on a national level so I'm actually back in Lafitte where I spoke to those people earlier this week. Most of the folks in this town are in the fishing business or in the oil business. That is where you go if you can't make the same amount of money fishing.

So many of their families have been in these industries for generations, they are worried about losing not just their income but also their way of life. They are frustrated about the Obama administration and about BP and how everybody is handling the spill.

But listen to them in their own words.


VELSHI (voice over): I was talking to them about how they feel about whether the president has this under control or if BP does. This gentlemen over there, you are a prime example; you don't think anybody out body outside of this place has a good thing ...

UNIDENTIFIED MALE: You can't let the fox watch the hen house. You know, hey, BP is watching the hen house. You can't do that. You got to bring people in that know. Hey, the mayor knows. Our mayor can't go to Florida and fix their problem. But you need to let the mayor in Lafitte fix his problems just like the guy in Florida fix their problems.

VELSHI: What is your sense of what you heard? UNIDENTIFIED MALE: I didn't like what the president said about stopping our drilling. We have a lot of family, I'm a fisherman. My son went into the oil business because the prices of shrimp were so bad and we were worried about stopping drilling.

VELSHI: Ma'am, you are not from here, a lot of people in this room are from here. You are not from here; you are a stranger because you have been here only 40 years?


VELSHI: And you are worried now about what your future holds?

UNIDENTIFIED FEMALE: Yes, I'm married to a fisherman and I worked on the back of the boat for 30 years. I'm sure there will be no fishing for us. It is full of oil out there.

VELSHI: You were telling me you are very worried about what this region is going to go through. Nobody in the room thinks it is going to recover in less than ten years?

UNIDENTIFIED FEMALE: That is right. And with the oil industries I have sons working for everything they do is with the oil industries. I have fishermen, in the family, and I don't know what my grandchildren and great grandchildren are going to be doing in the future if we don't stop the oil from coming in here.

VELSHI: All right other ideas?

UNIDENTIFIED MALE: There are women here because the guys are working trying to clean the oil right now. We need to get it stopped and cleaned up and we can get out there and tell us if we are going to work again in 5 years, 10 years, or whatever.

VELSHI: What happens if they say it will be ten years?

UNIDENTIFIED MALE: Well, I'm 47 years old, who is going to hire me. Yesterday was the first day I ever took a physical to get a job. The first time in my life since 1981 when I graduated from high school. I always fed my family every year since then. Now everybody in here is the same thing.


ROMANS: All right Ali, let's go directly to the source and get some answers to find out exactly what is being done to help people like this who are in danger of loosing their livelihood for ever. You will get those questions and answers directly next.


ROMANS: So the catastrophic oil spill in the Gulf really just wreaking havoc on the regions economy particularly Ali, small businesses.

VELSHI: Yes, so might get the impression from hearing everything that is going on that nothing is going on to help small businesses. There is help. There are claim centers, BP has set them up.

There is also help available from the Small Business Administration. The SBA has dispatched more than a hundred representatives to the region to access the needs of small business owners and they are offering low-interest disaster loans to those affected. I'm here with Ben; he is a public information officer with the SBA. Tell me how many offices do you got down here?

BEN RAJU, PUBLIC INFORMATION OFFICER, SBA: The SBA has set up 28 offices throughout the Gulf region to assist small businesses. The SBA is offering low-interest disaster loans for those impacted in Louisiana, Alabama, Mississippi as well as Florida, through out the Gulf region we have about 28 centers set up and to date we have distributed over $4 million in loans.

VELSHI: Who is getting these loans?

RAJU: These loans are available to businesses that are impacted by the disaster. This includes our shrimpers, our fisherman, our oyster men, this also includes businesses that are dependant on these industries as well, like our ship yards, our boat docks, field companies, individuals that are dependent or businesses that are dependent on these are able to come to one of the centers call our 1- 800 number which is 1-800-659-2955 and get assistance and find out what is available to them.

VELSHI: All right.

ROMANS: I wanted to show you I have a list here for you guys of what kinds of small businesses are eligible here. Think about it, it is not just the people who are bringing the fish out of the ocean, right? There are also the people who processing and selling shrimp and shipping it. The people who are supplying the gear and the fuel for the boats.

The people who are involved in recreational fishing, I mean there are lots of different ways that you can come under this. My question for you Ben is a low-interest disaster loan in some cases many of these people, we just heard Ali talking to them. They don't need a loan, they need the business back.

What is the loan expected to do? Is it going to help them weather this or is it supposed to be something to help them, tie them over or fix it?

RAJU: This -- we know that individuals that are being impacted, businesses that are being impacted by this disaster will be filing a claim with BP. We are encouraging them to do so. However, in the meantime, SBA is here to help bridge that gap between the time that the settlement is done, and the immediate needs of those businesses.

As well as the Small Business Administration in these centers we also have small business development centers, counselors that are available to assist these businesses in determining what type of financial needs they may have as well as offer counseling, prepare business plans for them, and maybe redirect their business plans. Because there are a lot of things going on right now. And some business owners may need some advice and some counseling on where to structure their business or where to direct or redirect their business and counselors are available in every one of those centers to assist business owners that are impacted by this disaster as well.

VELSHI: Hey, Ben, is this process relatively streamlined? Because one of the things we have been hearing from the people around here, as much as there are claim centers and all sorts of places people can go these communities as you know, these are people who work a certain way. It is not a highly complicated paperwork driven kind of way. Is it relatively easy to go to the SBA and say this is the business I do here is my paperwork can we work out a loan?

RAJU: Ali, the SBA process is very streamlined. We have trained individuals in place to assist business owners and complete their documents. Have them work with the business owners as well as if there is a need to recreate documents or if there is a need to assistance needed to fill out these documents. SBA is there and our small business partners are there as well. We have resources available to assist these businesses because that is where the assistance needs to be.

VELSHI: All right. Ben, thank you for being out here and doing the work that you are doing. Because we know the people here, as you have seen it, you have been here since the beginning of the oil spill, they are struggling. Thank you for the SBA being out here and trying to help.

Christine, good point that you make. While it is useful that people can get some emergency money, ultimately there will be more than just the money that was lost this year. It is the business that will be lost for years to come and that is definitely something that continues to worry the folks in the bayou here in Louisiana and I know the same conversation I'm having with people in Mississippi and in Alabama and even all the way into Florida.

ROMANS: Even as the wholesalers try to find new way to supply their fish. And then they might have to sign contract for one year, two years, as things get cleaned up in the Gulf. And now you've broken some of the agreements that you have spent 20 or 30 years building.

VELSHI: That is right.

ROMANS: Of course none of this would be a question if it weren't for BP and the drilling that it was doing in the Gulf. BP is under attack in this country. Find out where in the world they are saying, hey wait a minute, back off.


ROMANS: BP CEO, Tony Hayward, Ali was not the only one getting slammed by Congress this week. BP America president Lamar McKai, he took some harsh criticism during his Congressional testimony.

(BEGIN VIDEO CLIP) REP. CLIFF STEARNS, (R) FLORIDA: It is really outrageous that you sit here and tell us that you are going to punt to the unified command when we had 11 people killed, we have had a huge environmental damage and you are still sitting here as a CEO of BP. Frankly I would call for your resignation. I'm calling for it today, I'm not asking you to apologize, I'm asking you to resign.

REP. JOSEPH CAO, (R) LOUISIANA: Mr. Sterns asked Mr. McKai to resign. Well in the Asian culture we do things differently. During the Samari days we give you a knife and ask you to commit harry kerry.


ROMANS: Well, Ali, I don't know how that solves a Gulf oil leak, but here is another twist on this. BP, a British company, so many pensions of regular folks there tied to this company. There is also this concern that there is a British backlash to the BP backlash in the U.S. as well. There is some people who look at the comments like that over seas and say, OK now you have gone too far, you have just gone to far.

VELSHI: Here is a couple of ways I look at this. Number one, how much of this is really BP's fault? BP has got a spotty safety record. They had the Texas City explosion, the refinery in which people were killed and they had a leak on the north slope of Atlanta. But BP does have a spotty history. Now, how much of his was the oil industry? One thing we heard in hearings this week was that the major oil companies all had exactly the same back up plan in case something like this happened.

It was all useless to the extent that it even had provisions for saving walruses which I think haven't been in the Gulf of Mexico for about 3.5 million years or something like that.

And the then Christine how much of it is the regulation that the government is supposed to provide through the Minerals Management Service which is part of the Department of Interior which apparently was in bed with the oil industry anyway. So I think if we want to solve the problem as opposed to if you want to make headlines for being really mad and you want to blame BP, there's certainly some validity to that.

I think we really have to look at there are different parties. There's the regulators, there's the oil industry, and then there's specifically BP. We need to know who is responsible for exactly what. I kind of think sometimes these Congressional hearings operate at this level over here and go over most people's heads, and it's a lot of political point making and I'm not sure it was very satisfying. To me this week's hearings were like the meals that I normally eat for lunch, empty calories.

ROMANS: I also think there's a lot of hearing, there are hours and hours of hearing and there are a lot of people who are trying to make sure that their constituents can see them being tough in that hearing.


ROMANS: Also you mentioned several things in play or not in play over the past few years; one thing we did not mention was congressional oversight. Congress passing the laws, by the way, that set the limits on liabilities for these companies. People running for Congress and expecting very big packages of campaign donations from the oil industry. So Congress is not -- is not -- Congress has oil on its hands, too. I will say that and that is not a controversial statement.

VELSHI: You and I have had this discussion a few times, so do all of us.

ROMANS: Yes, oh, yes.

VELSHI: We always have to remember, we do buy the stuff. They're not making something that none of us buy. We buy every last drop of oil that is drilled from the Gulf of Mexico or on land in the United States, plus about five times as much that we bring in from everywhere else.

ROMANS: All right. Let's switch gears here and talk about the stimulus. Whatever happened to the stimulus? Remember. The White House says get ready for recovery summer, Ali. But will it prevent another recession?

VELSHI: Recovery summer. But first in this week's "Turnaround" Allan Chernoff takes us to a men's grooming salon in Washington, D.C. Where breaking through stereotypes wasn't the only obstacle.


ALLAN CHERNOFF, CNN SENIOR CORRESPONDENT (voice over): Spa, rolling stone, manicures. This isn't your grandmother's beauty salon. Michael Gilman cofounded the Grooming Lounge in 2002. Designed specifically for men who want the pampering without a lot of fuss.

NICK PARRY, CUSTOMER: As a man walk nothing a women's salon is sort of intimidating. Being surrounded by women who are getting perms and things like that when a guy just wants a basic haircut.

CHERNOFF: Haircuts aren't the only specialty of the Grooming Lounge staff.

MICHAEL GILMAN, COOPER:-FOUNDER, GROOMING LOUNGE: The unibrow is huge. Do a lot of waxing where we say you're supposed to have two eyebrows, if you have one, you should do some division.

UNIDENTIFIED MALE: The hot lather shave is fantastic especially at the end of a hot day.

GILMAN: Who wouldn't want to sit back and have a beer and have someone take care of their feet while they watch their favorite sport or a news show? We just have to get them over the hurdle of saying oh, that's not the type of thing I do.

UNIDENTIFIED MALE: Pedicures, those are also fantastic, too.

UNIDENTIFIED FEMALE: Thank you very much.

CHERNOFF: But leading converts took time.

GILMAN: We were like dealing beauty products out of the back seat of our car. You know, for some reason it felt like you were doing something illegal. You know, throwing out moisturizers and hair trimmers from car trunks.

CHERNOFF: At one point the Grooming Lounge used to have three locations, two in the Washington, D.C. area and one in Atlanta. But the Atlanta store was hit hard by the recession, closing after only a year in business.

GILMAN: We just kind of made the decision one day that said, you know what, it's been great, we've really tried everything, but let's get back to our core business. And some of the things that we know are going to drive our business forward in the next five to ten years.

CHERNOFF: The company grew 12 percent. Enough to begin inking distribution deals throughout the country. Grooming a business for years of success.

UNIDENTIFIED MALE: OK. Thank you very much.

CHERNOFF: Allan Chernoff, CNN, New York.



ROMANS: All right, Ali, cranes, construction, jobs! The White House says this summer you can expect to see the highest levels yet of projects tied to the Recovery Act of 2009. That's the stimulus. But does the spending actually aid recovery?

Well, no. That's what a recent survey of economists who claim the stimulus package did not help. But the White House is calling this recovery summer and says these projects are big and we're on track for -- we're on track for 3.5 million jobs they say it's going to save or create, Ali.

VELSHI: Yes, I guess one has to think about this. The way the government calculates is that there are "x" number of jobs created directly by stimulus and then the demand created by the people who make money out of those jobs creates further jobs. Theoretically, once a whole bunch of people are making money, they then create a cycle of prosperity that then creates jobs.

So in the end, the one job created by stimulus is only temporary, for as long as that job is. But does it create wealth? Does it allow people to save a little money, to invest money, to give some money to invest for later down the road? So I think it's probably splitting hairs for economists to say, no, this doesn't create long-term prosperity. But how much long-term prosperity does it create? That is probably more art than science.

ROMANS: I think you're right. I also think that this whole question of is it or not working is irrelevant at this point. There are construction sites that are humming this summer. The White House is going to be going around and touring those construction sites. For those people they are working.

Here's the issue with the White House starting to call this recovery summer, they are starting to call it that just as more and more people are saying what's going on here? We're worried about slipping back and even the president a week ago, Ali, issued this stern letter to congressional leaders saying we are at risk of slipping backwards if we don't keep up all of the spending. Keep up those extenders for jobs, for jobless benefits and the like, if we don't keep up the money flowing.

So on the one hand they're trying to call it recovery summer on the other hand the president's also saying we've got to keep at it.

VELSHI: It's going to be tough. One thing I've learned while I've been down in the Gulf of Mexico for the last week is Washington's got to be careful of not sounding out of touch with the reality that people live on the ground, whether here in the Gulf or anywhere in America when it comes to the economic recovery.

ROMANS: I would say the recovery summer is what we all want for the Gulf coast and for the country as a whole and for the labor market. It's a nice -- it's a nice idea and it would be certainly nice if it pans out. But we're all pretty skeptical these days, aren't we Ali?


ROMANS: All right. That wraps it up for this show. You can join our running conversation on facebook and twitter at Alivelshi and at Christineromans.

VELSHI: Make sure you join us every week for YOUR MONEY, Saturdays at 1:00 p.m. Eastern and Sundays at 3:00. Logon to -- you can do this 24/7, logon to Have yourselves a great weekend. Christine.

ROMANS: Safe travels, Ali.