spillway. gabrielle giffords is back in florida to watch the nasa launch. her husband, mark kelly, is commanderring the mission. i'll be back. meanwhile, "your money" starts now. -- captions by vitac -- www.vitac.com if you are serious to deal with the long term debts in this country, then it is time to talk about tax increases and spending cuts. i'm ali velshi. welcome to "your money." the debt field has been the latest pawn in how to lower our deficits. obama has said not raising the debt ceiling would be catastrophic. however, a number of republicans are not blinking. will cain is a cnn contribute tore. will, i was in washington when speaker of the house made it clear he wants to make ceiling cuts relative to any debt

problems. >> these should be actual cuts. real reforms to these programs, not broad deficit or deficit targets that punt the questions to the future. and with the exception of tax hikes which, in my opinion, will destroy america's jobs, everything is on the table. >> what serious conversation about debt reduction begins by absolutely taking the possibility or discussion of tax hikes off the table? >> not very many serious discussions. i remember when i was little, my dad took me to a car dealership, ali, and he said, this is how you buy a car. i remember they wrote numbers on a piece of paper and passed them across the table. my dad's number, i'm sure, was absurdly low. that's the only explanation i can give with boehner, is saying a very low bid to hike tup

later. that's why i look to guys like tom coburn who is a party of six. you can't question his opposition, he's conservative, but he understands reality. >> i hope you're right, and that's what some people around me at that speech were saying. jean with cnn money. jean, if we want to keep the level of debt at the number it's at right now, not reducing, just to keep it growing from spending cuts, we would have to cut our spending by 35%. that's about $1.2 trillion, or basically our government's entire budgets for discretionary spending, including defense. now, to achieve the same goal of keeping our debt where it is just through tax increases, so forget about spending cuts, the government would need to take in 50% more in tax revenue. bottom line, it seems to me we would have to do both. as i explained earlier it's simply not feasible to attack our debt without spending cuts and increasing revenue, although

you will continue to hear some conservatives say this is a spending problem, not a revenue problem. i know this, you know this. when is washington going to start reflecting this? >> well, i think under a couple scenarios. one, if we have a bond market crisis, which is not necessarily likely, but that would definitely inspire people to get busy negotiating and compromising. the other might be if americans stand up and say, you know what, i don't want a third of the federal budget cut. i want to have some of the federal budget cut, but i also am willing to pay a little bit more in taxes. there was members of the conference board. they basically said, look, neither party has the muscle or the public trust to push through a one-sided solution. they don't have the votes for it. so bipartisan solutions are mandatory. it's not an option. compromise shouldn't be seen as giving up, you know, or conceding too much. >> it seems like it does feel like that these days.

let's bring rowland in. rowland, treasury secretary tim geithner says august is when we run out and default on american debts. i think come august 1st, we'll all be wondering what's going to happen, but it is this climate of fear. is it possible for them to reach a compromise by threatening the world is going to come to an end? don't democrats have some bigger role to play here by saying, i get it, we'll cut for tax issues. >> there are people sitting at home now. they have been extending paying their light bill until the phone company or the light company sends them a notice saying, at 5:00 p.m. on friday, your lights are going to get real. we operate with fear.

we wait until the last minute. we're very good at that. we're not very good at planning and going on the offensive. when you listen to speaker boehner, he throws out trillions in cuts, but he won't specify. i think it is dangerous to say trillions in cuts when you also say, frankly, we're not going to have tax increases. now, understand this. you have republicans who will even suggest that if you get rid of oil subsidies that's somehow a tax increase. so they tack anything on as a tax increase. democrats don't want to be honest about this area as well. the american people have got to stop sitting here. rail companies were saying it. rowland is right on one point, specifically. winston churchill once said, you can count on the american people

doing the right thing once they've exhausted every other option. we need these emergency situations to do the right thing. so yeah, i don't think this is being overplayed. i would say if we do not raise the debt and we force short-term cuts, then you get ready for depression. our economy is that fragile. the debt we've accumulated is that great. the fact is we know. the people you talk to understand that we're going to have toll. >> i toss up boehner's poker hand earlier and what he might be trying to do. whenever you give washington an extra dollar, they need to see that extra dollar of tax increases will go to reducing the benefit. we have no history that's happening. >> the other issue is when you hear republicans say tax cuts are going to somehow spur the

economy. it's going to cause people at the top income levels to begin to actually hire, and that's also not true. >> is that true? >> will tax cuts help the economy? >> yes. >> i think democrats and republicans both have a point. republicans say if you raise taxes too much, you can hurt economic growth. democrats think if you cut too much spending, it can hurt economic growth. both right because we don't know, in fact, if that's what it will be used for. both parties have to work with that, because if we come up to a by hart san slukz. and what exactly are you prepared to cut? i think this is a much better conversation to have on specifics than in theory. it's a basic concept, your tax dollars are simply not, so i'm

going to show you where exactly your money goes, up next. host: could switching to geico really save you

15% or more on car insurance? host: does the buck stop here? sfx: buck's blustery exhale.

host: could switching to geico 15% or more on car insurance? host: does it take two to tango? ♪ male announcer: be kind to your eyes with transitions lenses. transitions adapt to changing light so you see a whole day comfortably and conveniently while protecting your eyes from the sun. ask your eyecare professional which transitions lenses are right for you. female announcer: through the transitions healthy sight for life fund, we support the education efforts of prevent blindness america. learn about protecting your vision at preventblindness.org.

we spend a lot of time on this program talking about the deficit. you might be wondering why it is actually so important. stripping away politics for a second, without serious measures to cut the united states debt, your world could be very different in just a few years. here's why. by 2020, if nothing were to change, spending on social security, medicare, medicaid and the interest on our debt is on track to use up 89 cents of every dollar that the government collects in federal tax revenue. that means only 11 cents of every dollar will be left behind to fund everything else that the

government does. gee, if we're on a path that is simply unsustainable, how quickly do we need to make changes? how urgent is it that we actually tackle this? and before you answer, i'll tell you the reason i'm tackling this is i'll tell you this is a republican scare tactic. that debt is the biggest economic problem we face. >> it's a mass scare tactic. a lot of non-partisan deficit experts say this is a problem. they want to start sooner rather than later, not because we can't make it to 2020 without making any changes. we probably can but we don't know what the consequences will be. we want to make changes sooner than later because it will be less drastic. we want to give people the time to prepare, and we want to reduce the bond markets. >> the risk that eventually everyone who invests in u.s. treasury bonds will say, i'm not sure the u.s. can pay those bonds so i want more interest

rather than taking the risk of investing in the united states. >> and they can't swear that will happen in the bond markets, but a lot of people think we're increasing the risk the longer we take to get our bond sheet in order. >> and nobody thought letting lehman brothers fail would send the world markets and economy into a tailspin. these risks are true. jean just laid out the map. is the public -- are we ever going to react to that potential disaster before it occurs? you said a while ago that will said we don't do this until the time comes, but this is very serious. >> let's look at what's happened over the last three years. when you saw individuals, people watching this show right now, make some of the most ridiculous economic decisions, and that is trying to own a home and a second home, trying to have jet skis and boats, vacations, huge credit card debt, they saw individually how their lives

clashed economically. so you can take that same scenario and apply to the federal government. right now the money that's coming out of your home and you're spending 80% on housing or you're spending 70% and the other money on, say, food and gas, you look up and say, wait a minute, i only have 2 or 3% left to spend for my child's education. how do i apply did to my life? it's the same example. and now we see how folks have changed their lifestyle as a result. >> so we're all agreed here this is serious. will, you and i also agree that simply taxing the rich is not going to solve our problems. >> no. >> there are a lot of rich who need to be taxed more, but name me the politician who is going to tell the majority of americans the truth, that in order to deal with this issue,

things need to be cut but it is also a revenue problem. there is an amount to sustain the government that we already have. >> this is where i hold paul ryan in high esteem. nobody, republican or democrat, wants their medicare touched. paul ryan said, guess what, it has to be touched. we can't manage the budget by just taxing the rich. middle class, you have to pay, too. if you want to keep the government the way it's running now with these high entitlements. you have to -- we can't afford any of these, even for the

middle class. >> but that's rare. >> between the two of you i got two names out of 535 elected officials. >> that's my point, ali. you don't have enough people because also, this political system would be the safe districts or penny. i nominate the three of you to sit down and solve this country's problems. we'll get some straight answers. always a pleasure to have you on and helping our viewers understand this a little bit better. here's something you can understand. oil companies making billions in profits, so why do they get tax breaks? and if we take them away, will that actually lower the price you pay for a gallon of gas? i'm going to check that out, next. >> - up to 60% off. i am familiar. your name? > naomi pryce. >> what other "negotiating" skills do you have? > i'm a fifth-degree black belt. >> as am i.

> i'm fluent in 37 languages. >> (indistinct clicking) > and i'm a master of disguise >> as am i. > as am i. >> as am i. > as am i. >> well played naomi pryce. you think i have allergies? you're sneezing. i'm allergic to you. doubtful, you love me. hey, you can't take allegra with fruit juice. what? yeah, it's on the label. really? here, there's nothing about juice on the zyrtec® label. what? labels are meant to be read. i'd be lost without you. i knew you weren't allergic to me. [ sneezes ] you know, you can't take allegra with orange juice. both: really? fyi. [ male announcer ] get zyrtec®'s proven allergy relief and love the air®. [ heather ] businesses need a reliable financial partner. one who can stay in sync with their moves. my job at ge capital is to get bobcat all the financial and business support they need. we provide financing for every bobcat dealer in north america. together, we've rolled out over 100,000 machines

to small businesses all over the country so they too can grow. ♪ ge capital. we're there for bobcat every step of the way. ♪

personal pricing now on brakes. tell us what you want to pay. we do our best to make that work. deal! my money. my choice. my meineke. welcome back to "your money." christine romans joins me now, and lee gallagher.

let's talk about gas prices, like everybody isn't already. when gas prices go up, people are quick to point out the profits of the oil industry. they're big. take a look at this. this is just for the first three months of this year. exxonmobil nearly $11 million. bp, $7 billion. shell, chevron, about 6 billion apiece. adds up to big dollars in just three months. ceos from the five major oil companies were grilled by senate democrats on whether their company should be getting billions of dollars a year in tax breaks and subsidies when they're looking at profits like this. testimony was sketchy. they said the tax changes under exploration are descriminatroy.

>> you'd have an easier time explaining a unicorn just flew into this hearing room. >> slamming big oil have become a big thing on the hill. where do gas companies get off doing that? >> we saw this in 2008, there was a cry again to tax the oil companies, raise the taxes, tax their bonuses, things like that. the interesting thing to remember or take note of is that oil company profit margins are actually much, much lower than those of financial services, t pharmaceutical companies. not that this company needs tax breaks. i would argue no corporate america needs any bigger tax break than they get. what we're seeing here is theatre, and this is topic duh

jou. i would think that in tough times we get angry about profits. is it a little unamerican to suddenly decide profits are what make you evil? >> absolutely. we want companies to be profitable. i've said this on the show many, many times. we don't want unprofitable companies. but the problem with these hearings is the target is the same target as those spammers who send e-mails saying if you don't buy gas, it's going to affect opinions. i think it's hard for them to argue they need the tax credits and tax breaks, they could do a better job understanding for people to. >> what part of this is legitimate? >> the funny thing for me is

there is a headline of gas prices. what is wrong about tax bricks and the like. some will say that a manufacturing tax break isn't really fair if it's an oil driller. and some people will is a that loyal try to view that owl on the of our running out, we have big deficits and everybody looking for that. >> let's talk about something else that matters to people a lot: your home prices. they continue to fall, down 30% since their peak, by the way, in 1986. the price of a median single family home, just shy of 166 that are's honda. you got mortgage rates at low

prices with low mortgages not suzie be. mortgages are up. alfred, is this another sign that owning a home may not be part of the american dream? >> i think temporarily, and very temporarily. the truth is a lot of people -- this is a symptom of a much bigger problem. people are struggling to regain income, people are struggling to regain jobs. they're very tentative to take on something as big as owning a home. i think this is a snapshot of time. everything that goes up must come down. >> let's assume that bit time you apply for a mortgage, you have some sense you might get one. a quarter of a million americans applying for a mortgage are getting rejected. >> they're going in the wrong direction. foreclosures are up, prices are still falling. this is not the way this was

supposed to happen. we were supposed to be out of the woods for now on. inventory is going down, but foreclosures are bad because they drag down all prices and the more prices that go down, people get more underwater because their homes aren't worth much anymore. >> this is good. if you do have credit and you've got enough money for a down payment and you're planning to live in a house, this is the deal of a century. >> the real deals, though, are not being had by regular people, they're being had by very sophisticated investors. so as people come in with money, they don't care about lower interest rates, they don't care about being denied by the bank, because they have the money. so when i see those started making money on a depressed asset, i think. fortune had a cover story on it

recently to say the housing unit is coming back. i'll tell you why i'm interested. being in a good school distri district -- we'll check it out next. [ female announcer ] experience dual-action power,

with listerine® whitening plus restoring rinse. it's the only listerine® that gets teeth two shades whiter and makes tooth enamel two times stronger. get dual-action listerine® whitening rinse. building whiter, stronger teeth.

your advertising mail campaign is paying off! business is good! it must be if you're doing all that overnight shipping. that must cost a fortune. it sure does. well, if it doesn't have to get there overnight, you can save a lot with priority mail flat rate envelopes. one flat rate to any state, just $4.95. that's cool and all... but it ain't my money. i seriously do not care... so, you don't care what anyone says, you want to save this company money! that's exactly what i was saying. hmmm... priority mail flat rate envelopes, just $4.95 only from the postal service. a simpler way to ship. luck? i don't trade on luck. i trade on fundamentals. analysis. information. i trade on tradearchitect. this is web-based trading, re-visualized. streaming, real-time quotes. earnings analysis. probability analysis. that's what opportunity looks like.

it's all visual. intuitive. and its available free, wherever the web is. this is how trade strategies are built. tradearchitect. only from td ameritrade. welcome to better. try new tradearchitect and trade commission free for 60 days. welcome back to "your money" our guests still with us. some parents will go through extreme measures to make sure their child receives a quality education, even to the ex tentd of lying about where they live to get into a better school district. this is not altogether uncommon. we've seen it in ohio. this week we saw it in connecticut, but it's a nationwide problem and it begs the question, should the quality of your education be determined by your zip code? what we saw in connecticut is a woman who has been charged with larceny for stealing the value of an education because she got her kid into a school in a district that was better than her own. alfred.

what does it come to that we're stealing other people's zip codes to get our kids into better schools. >> the bigger problem is that public education is financed locally. so yers, if i live and i'm paying -- i live in a community where i'm paying five figures in taxes each year to fund the public school system and someone not paying taxes is getting into that school system, yes, i might feel like i'm getting stolen from. the larger issue is because of the way we finance public education, you are going to get a better education depending on what zip code you're in. >> i moved to a town just like you did that has a quality public school, and i pay the taxes that reflect that. but when you call this district office, it says, press 1 for hours, press 2 to talk to the principal, press 3 for the anonymous residency hotline. you can turn people in, i'm not kidding. i asked other parents and this

is normal. they're trying to root out -- some schools hire public investigators to check out people's address. >> are we so connected to our employment issues, to our except activei -- competitive issues? every parent would like their kid to get a better education, and shouldn't we be able to do that? >> sure, parents have their children's best interests at heart, but you have to set the boundary somehow, otherwise some schools would be packed and others wouldn't have anyone in them. our schools need fixing, more funding and better teachers. until that's solved, we're going to see more of this. >> people who are advocates of vouchers like to hold this up as an example of why you should be able to take your money -- >> so the voucher people who support tort reform and more money for public schools, and

the -- when we see a couple high-profile situations, there are probably. so we really need to look at the infrastructure of how we do public education. >> no simple answer. >> nothing about education is simple. here's another one. students across the country are gearing up for summer break, and some people are asking, should they be? it was meant for a time when kids had to help out on the family farm, which they don't have to do anymore, so should that time be used to improve math, science and reading scores? we're in school 180 days a year, but the company at the top of the list, finland, they go to school less. is that a solution? >> i'm a believer in summer jobs

to teach kids responsibility and there's a case to be made for that. on the other hand, there is the spring slide or summer slide. kids forget that. and that's especially pronounced in lower economic situations, so you're looking at a divided system here. is it easy to get -- >> i figured you were doing it. >> some have to figure out child care changes and things like that. we talked about zip codes and how you get a different education where you live. are we necessarily going to spend more money and fill their brains? >> even with the summer job situation, a lot of low-income kids can't get summer jobs, and what you have is a lot of kids, middle income and low income, who are spending idle time -- in some cases they can be

productive, but a lot of times they can't, then they come back and suffer. the long-range impl indication. here's something children didn't learn in cool. now we can find it in a skrab bell, the word added is slang. a good business decision or a warning sign of the apocalypse. christine? >> yes, it is a good business move and a sign of the apocalypse. >> alfred? >> as a scrab brble buff and scrabble fanatic, it really does help you improve your vocabul y vocabulary. >> they could just make a slang version of -- just one slang.

i think it's a travesty. i'm old school and i don't ha have -- i haven't even heard that until today. >> that saying is not a real, new word. >> a new word that says. >> good. >> thanks to all of you. it's always a pleasure to have. you would probably be demanding criminal charges. that's exactly what goldman sachs did to its clients without standing trial.

if you've been waiting to see a criminal conviction in the wake of the financial crisis, this was a good week for you. roger rotman, the hedge fund tightman who was accused of insideer trading was found guilty yesterday of insurance securities fraud. some of his information was obtained from a goldman sachs board member who dealt with

another headache dealing with an ongoing investigation. he built a case against goldman sachs long before anyone in congress started sniffing around. he says it's got enough evidence to move forward with criminal charges against goldman sachs. our own eliot spitzer says in your latest article that based on that, he would be dropping subpoenas by the truckloads, but the justice department still seems reluctant to move forward. assuming the viewers today have not read the article, lay out your case in short form. >> the report is a 650-page document, and to put that in as short a hand as i can possibly make it, what they're saying is that late in 2006, goldman sachs realized they were sitting on a time bomb of toxic mortgage assets, that they conspired to unload those assets on their clients and bet against them at the same time. later on, the report also sort of lays out that in the process of investigating this issue, the

senate questioned gold man. they also had -- tlebl that someone lied about these activities. megan is a part of this. megan, did he lay out a convincing case? >> i think it's tough. these cases are incredibly difficult to win. they secure a lot of convictions in spite of all the subpoenas he laid down. what he did was he got settlements from firms, and in some cases it wasn't really clear that the firms had done anything wrong. the problem is a firm that's dependent on capital for its life blood, once you drop a subpoena, they kind of have to settle a deal even if they didn't do anything. >> goldman has done that elsewhere, they've come up with a settlement. matt, you've been on this case. some might think you have an issue with goldman, but you think they've done something wrong. >> absolutely. i don't see how anyone can read

this report and not see that goldman sought to sell assets on unsuspecting clients. one of these came after they sold a $100,000 deal on a place called timberwolf and they're celebrating afterwards and one guy said, we found a white elephant, a unicorn and a flying pig at the same time. in other words, we found an ultimate sucker. it afs ait was all on report. >> it might have been their pension furnds or their city that invested in them and lost money, additionally, the other side of one of these deals was always an institutionalized investor. why wouldn't those institutional investors have done the necessary homework to understand that goldman was selling them junk? >> well, i think that the fair argument is these investments are incredibly complicated and it's very hard to know what happened, but the fact is we generally assume an investor

like a pension fund or a hedge fund has the intelligence, the know-how and the motivation to figure out what's going on the other side, so we don't necessarily offer the same amount of protection we offer ordinary investors. >> it seems like they don't. >> if i could just jump in there, ali, there is a legal standard that requires an investment bank like goldman sachs to disclose elements of the deal. for instance, if they had a $200 short position -- >> let's spell that out. you're saying they had a legal obligation to tell somebody they sold an investment to that they had a $2 million debt against that investment. >> goldman actually, in that deal, even said affirmatively that their interests were aligned with the client because they had a $6 million stake in that same deal. but they didn't disclose they had a $2 million debt against the deal. >> inherently, someone who is selling you an asset is going to short that asset, right?

they're not owning it anymore, and you presume there's a reason for that. >> i'm not sure that makes sense for an investment firm, though. >> what we have to do is disclose. it's perfectly legal for a car dealership to sell me a car i'm not going to like. it's not legal for them to sell me a car they didn't represent it as. he argues he's actually gone through these documents and said a lot of these things were disclosed, that, in fact, goldman laid out in very lengthy detail all the ways in which this could go wrong. i vaenhaven't read the disclosu documents personally but there's at least two dueling competing documents in this story. >> i definitely know that some of the clients goldman was talking to were completely blindsided by the fact that, for instance, they were buying

assets out of goldman's own book when they were told that goldman didn didn't. >> i think he wants to see something from goldman arrested or charged with something. clearly, whether you think perhaps they were not dealing in the best interests of some of their clients. >> i think they probably aren't, just like most vendors don't always look to their own interest before the interest of their own clients. here's the thing. i think there is sort of a real desire to have a sense of closure on this, a desire to trap down a villain, figure out who did this to us, and i think that really outweighs the power of stupidity. stupidity and poor design. >> how are you not ashamed of

these companies that rip off ordinary people? >> a hedge fund is not ordinary people. >> but morgan stanley then took in turn a billion dollar tax ripoff from the taxpayer. therefore, they ripped us off. >> they do deals with big banks. there are questions how we should do those bailouts, but it's not goldman sachs' responsibility to make sure that morgan stanley makes money. >> i don't know how that makes sense in any planet in any universe. that is just insane. >> last word to you, megan. >> well, you know, i think it's very morally satisfying to try and track down people who did things to us, but i think in the end, justice wants to make a case that goldman didn't just do something we didn't like, they want to make a case that goldman actually did something illegal at the time they did it. that's a lot harder standard to meet. in the aftermath of these

crises, what you get is a lot of cases brought that fail. eliot spitzer didn't make his cases, a lot of giuliani's cases fell apart, even the enron stuff has been falling apart. so it's a lot more difficult to track down chronic wrong-doers. >> we reached out to them and they gave us the following statement. >> with respect to senator levin's remarks, the testimony we gave is truthful and accurate and this is confirmed by the subcommittee's own report. the report references any employees who they were short. our short positions were largely offset by our long positions and our financial results clearly demonstrate this point. i will explain to our viewers that the long position means you're buying something with the understanding and hope that it

will increase in value, but when you're short on something, you are betting that it is going to lose value, and that's what this hinges on. matt is a contributing editor with rolling stone. ly article is worth a read because it stirs the pot a little bit. any one of you can invest in the next hot start-up company before it goes public. i'm going to show you how when we come back. check it out. huh? mr. clean magic eraser with the grease-fighting power of dawn. he helps remove three times more greasy kitchen mess per swipe. if i had hands, i'd throw in the towel. yeah, things aren't what they used to be. mr. clean magic eraser kitchen scrubber... with listerine® whitening plus restoring rinse.

it's the only listerine® that gets teeth two shades whiter and makes tooth enamel two times stronger. get dual-action listerine® whitening rinse. building whiter, stronger teeth. i know what works differently than many other allergy medications. omnaris. omnaris, to the nose! did you know nasal symptoms like congestion can be caused by allergic inflammation? omnaris relieves your symptoms by fighting inflammation. side effects may include headache, nosebleed, and sore throat. i tossed t allergy symptoms out of my party. [ man ] omnaris. ask your doctor. battling nasal allergy symptoms? omnaris combats the cause. get omnaris for only $11 at omnaris.com.

a lot of the news we get, we cover on "money" at cnn comes from money.com. cnn money revamped the website. i want to show you some of the new features so you can enjoy the stories on your own. the new page, this is what the home page looks like. it will always have a big story up here and the latest stories, you can get quotes on the site. it will also tell you what the most popular stories are along the side here. a lot of great advantages. for those of you who use tablets or like the way they work, there's a tab on the side of the page and you click it an you get a tablet view of these stories.

if you use an ipad or one of those devices, you can use the tablet view as well. if you have been trolling this site like i have, and i enjoy doing it, you might have come across this story earlier this week, groupons do or die moment. it's talking about the startup, groupon, the daily coupon website. it's expanding, changing its business model. it's been called the fatest growing startup in history, expecting sales to top $3 billion this year, not bad for a company that is two years old. investors have made millions on startups like groupon. there are ways to get in on the action as well. the question is should you, and if you should, how do you do it? i want to have that discussion with matt mccall, the president of penn financial group. matt, you get the vibe about these new companies, newly public companies and ipos. how does the average person get involved in this and should they? >> first of all, should they is a real big question. you take a lot of risk. a lot of these companies aren't publicly-traded. it's very difficult, first of

all, to get shares to invest in these companies. second of all, not a lot of information out there about these companies before they go public. and even more importantly, a lot of times you can actually get into this company, but your money is tied up for years. you can't sell it tomorrow. >> you look at a company like facebook or groupon. if there's an ipo, an initial public offering, usually the people who get those first shares are investment houses and their good clients. generally a guy like me is not going to get stock on the first day unless i buy it on the open market. is that wise? >> no, that's not wise. what happens is typically they price an ipo at a certain price, let's say $10 per share. that stock may open that first day of trading at $20 a share. you're paying twice as much as a person who bought it the day before. >> which is a private sale. >> investment banks can get in. what you want to do is wait a few weeks and watch the action. zip card just went public the last couple weeks. stock came up high 20s, fell to the low 20s.

a lot of investors called me that day that wanted to buy at the high rate. >> even though it fell, if you were one of the pre investors, the smart money that you and i can't be, you probably made money on that. >> still up money right now. a lot of people that get in pre-ipo can't sell for the first six months or so. they are kind of locked up. there's a lot of risk that goes along with that. >> one example is a company like google where that would have made sense to buy the first day. how do you know? when do you know when it's time to get into a new company. all this nonsense about the first few days or weeks or months is absolutely true, what if i think groupon is a great company or facebook is a great company when it goes public one day. when should i invest? >> what i do, zipcar is a great example. you take it and compare it to similar companies. see how its valued. let's take hertz. hertz is trying to become the next zipcar. you say, well, zipcar is losing 95 cents a share in the first quarter. is now the time to jump in? probably not.

look for a price, $18 or $19 a share and be patient. let it come to you. >> that's a good point. be patient. let the stock price come to you. is there a way to invest in startups using either an exchange-traded fund or a mutual fund. somebody else does the hard work for you. >> what there is, power share's private equity exchange. what that does, invest in a basket of private equity companies. what they do, they own a lot of companies that are private and will likely take them private. they own other companies that are privately traded. it's one way or the investor to get in there. this is up 23% and pays a 4.6% dividend on top of it. >> if you're dieing to invest in a company before it's a public company, that's your way to do it. >> that's your only way for the average investor. unless you're sitting on hundreds of millions of dollars, then you can call your broker.

>> matt mccall, great to have you on. thank you. protecting consumers in the wake of the financial progress. why congress needs to stop meddling and let the agency designed to protect you do their job.

your finances can't manage themselves. but that doesn't mean they won't try. bring all your finances together with the help of the one person who can. a certified financial planner professional. cfp. let's make a plan. while i took refuge from the pollen that made me sneeze. but with 24-hour zyrtec®, i get prescription strength relief from my worst allergy symptoms. so lily and i are back on the road again. with zyrtec® i can love the air®.

time now for the xyz of it. next week on this show we'll talk with harvard professor elizabeth warren. the timing couldn't be better. the consumer financial protection bureau was her idea. she may well end up running it. the agency hasn't even opened its doors and already under attack. 44 republican senators are vowing to block confirmation of any nominee to head the bureau unless major changes are made to curb its authority. i want to make sure you heard me right.

44 republican senators want to curve the first and only consumer protection financial bureau. they want to replace the director with a whole board and subject funding to appropriations, meaning good-bye independent agency. i'm not saying the bureau is perfect as it's written. this smacks of an obvious effort to gut an agency that frankly was watered down to begin with. my question to you 44 republican senators, who exactly are you trying to protect? what is it about protecting consumers that rubs you the wrong way? can't have it both ways. you either want more protections from predator financial actors or you don't. whose side are you on? you point out the consumer protection financial bureau will directly affect every american by limiting what financial products they can buy. yeah, that's exactly the point. banning the kind of loans that led to the financial crisis is a win for both consumers and the banks because borrowers will know what they're getting into and banks won't be able to take on the kind of risks that almost dr d