More headaches for Toyota and its customers. The National Highway Traffic Safety Administration is reviewing complaints of steering problems in late model Toyota Corollas.
According to Reuters:
The regulators also said they are reviewing dozens of complaints about potential
steering problems in newer Toyota Corollas...
...NHTSA is reviewing dozens of complaints alleging steering problems in 2009 and 2010 Corollas. Motorists have complained of veering.
The agency said it is discussing the matter with Toyota to see if a formal investigation is warranted, a standard thing to do when reviewing complaints.
Coming as this does after Toyota's recalls of millions of vehicles to repair an unintentional acceleration problem and hundreds of thousands of its "halo" car, the Prius, to fix braking irregularities you want to ask, but are almost afraid to, what else can go wrong for Toyota?
State Farm actually told NHTSA about the unexplained acceleration problem in 2007, more than a year before the agency took action, as far as anyone can tell.
An excerpt:
The warnings, from a firm that maintains a vast store of crash data based on its customer base of more than 40 million, followed a stream of consumer complaints about the alleged defect. Regulators received the warnings more than a year before they pressed the automaker to issue recalls affecting millions of cars and trucks.
Japan's Kyodo News service adds this to the developing story of problems with the brakes on some models of the 2010 Toyota Prius:
Toyota Motor Corp. is set to file recalls over brake problems with its latest Prius hybrid in both the United States and Japan, in a move that will affect more than 270,000 vehicles, sources familiar with the matter said Monday.
The Japanese automaker plans to report the recall to the Land, Infrastructure, Transport and Tourism Ministry as early as Tuesday and promptly file similar proceedings in the United States, the sources said.
Earlier, The New York Times reported that it's been told by "a person briefed on the decision" that Toyota this week will "recall at least 311,000 of its 2010 Prius hybrid models after receiving a flurry of complaints about the vehicle's brakes."
Some drivers have reported that on bumpy surfaces the brakes can feel as if they aren't working. The company says new software should fix the problem.
Toyota has already had to recall more than 7 million other cars in the U.S., Europe and China over a sticky accelerator and floor mats that can get caught in the gas pedal. Those problems and criticism of Toyota's response to them have sullied the stellar reputation for quality long enjoyed by one of Japan's corporate icons.
John Thain, the controversial former head of Merrill Lynch who helped make that company's acquisition by Bank of America happen but was forced out soon afterwards, has been named chief executive of CIT.
Thain became a symbol of Wall Street's excesses because of his demand, later dropped, for a $10 million bonus in 2008 during a time when Merrill was imploding. Then there was his rushing through of about $4 billion in bonuses to Merrill executives before the completion Bank of America's completion of the Merrill acquisition at a time when Merrill was booking huge losses.
And as if that weren't enough, Thain really stepped into it with the $1.2 million refurbishing of his offices, including a $35,000 commode, a fancy word for a toilet. Thain later apologized for what he called a lapse in judgment.
Even so, Thain has long been viewed as one of the sharpest minds on Wall Street, which helps explain why CIT has turned to him with a compensation package valued at $6 million -- $500,000 in cash and $5.5 million in stock.
CIT, a lender to small and medium sized business, has been operating under bankruptcy court protection.
Every year my former colleagues at USA TODAY use technology to try to figure out which was the most popular Super Bowl ad.
Using handheld meters, adult volunteers register their reactions as each ad is broadcast. This year's top-rated spot: The "Betty White" ad from Snickers.
Over at FoxNews.com, there's an unscientific survey and it's producing a much different result. The "winner" there: Focus on the Family's "Tim Tebow" ad, which sparked some controversy because it's an "advocacy" ad (in this case, a subtle "pro-life" message).
The Tebow ad scored quite low in USA TODAY's rankings.
Of course, online surveys can be skewed by concerted efforts to affect the results (as appears to be happening right now to a question we asked earlier today). Which is why we always try to remember, when we ask such questions, to remind Two-Way readers that they aren't "scientific" surveys. Instead, they're conversation starters.
Update at 11:20 a.m. ET: "Gabe" at Videogum says the best ad on TV yesterday didn't air on CBS during the Super Bowl. Rather, he likes this Subaru spot that was on during Animal Planet's Puppy Bowl VI. Being a dog person, I have to say I also like it a lot too:
Goldman Sachs, the powerhouse Wall Street investment banking giant, has awarded Lloyd Blankfein, its CEO, a 2009 non-cash bonus of $9 million, according to a company filing with the SEC. Other top Goldman officials also received similar non-cash amounts.
The 2009 award was substantially more than Blankfein received in 2008, which was zero. But it was a lot less than the $67 million in bonus he was paid in 2007.
Earlier, I reported that Jamie Dimon, CEO of JP Morgan Chase, was awarded a non-cash bonus of about $17 million.
The size of Blankfein's bonus was being closely watched on Wall Street and beyond.
That his multi-million dollar bonus is in the single digits is meant to be a strong message to President Barack Obama and Congress, and Americans as a whole, that Blankfein and his team are acutely aware of the anger over Wall Street pay and hope to tamp it down.
Leaders of Wall Street's bonus army. Jamie Dimon of JP Morgan Chase, left, and Lloyd Blankfein, of Goldman Sachs, at the White House in March 2009. (Ron Edmonds / AP Photo)
By Frank James
Jamie Dimon, CEO of JP Morgan Chase, is one of the biggest of the big dogs on Wall Street.
So a lot of people were waiting to see what his "number" would be, his 2009 bonus. The wait is over; he will get a bonus valued at around $17 million according to a company filing with the SEC. But instead of it being in cash, it will be in stock and options.
The non-cash approach is all the rage on Wall Street for the topmost executives at the big firms, as companies try to show that they got the message that Washington policymakers and voters are outraged by Wall Street compensation that in past years past resembled Powerball prizes.
Especially galling has been companies paying bonuses after they and their industry were bailed out by billions of dollars from taxpayers.
By getting stock, Wall Street's top bankers are trying to demonstrate that they have a stake in their companies not taking foolish, short-term risks since that could negatively impact the value of their stock bonuses.
According to the SEC filing, Dimon would receive 195,704 units in restricted stock and 563,562 stock options.
Businesses trimmed 20,000 jobs from their payrolls, but the nation's unemployment rate edged down to 9.7% in January from 10% the month before, the Bureau of Labor Statistics just reported.
We'll add more details from the report shortly.
And we'll watch to see how the financial markets react later in New York. Globally, markets have been in a tizzy over doubts about the "recovery" and worries over some nations' debts.
Update at 10:20 a.m. ET: And our friends at Planet Money have now explained why one number -- the jobless rate -- can seem to point in a different direction than the other.
The BLS gets the number of jobs by surveying employers, asking them how many people they have on payroll, while the actual unemployment numbers come from the household survey, which asks people whether they have jobs and are looking.
Update at 9:40 a.m. ET. White House economic adviser Christina Romer just released a statement that says, in part:
While unemployment remains a severe problem, today's employment report contains encouraging signs of gradual labor market healing. The unemployment rate fell three-tenths of a percentage point and employment rose in a number of industries, though overall employment fell slightly.
Update at 9:25 a.m. ET: The question always comes up: How could BLS say the jobless rate declined if businesses also cut the number of jobs on their payrolls?
One reason is that those numbers are based on different surveys -- one of people, which generates the unemployment rate, and one of businesses, which generates the "payroll employment" figure. Two different sets of data. Two different looks at the issue.
Meanwhile, the Associated Press notes that:
The department also revised its past employment estimates to show that job losses from the Great Recession have been much worse than previously stated. The economy has shed 8.4 million jobs since the downturn began in December 2007, up from a previous figure of 7.2 million.
That's the most jobs lost in any recession, as a percent of total employment, since World War II.
Update at 9:15 a.m. ET.At the BLS website, you can break apart the data in many different ways and generate all sorts of charts. Here's a look at the nation's jobless rate since the start of 2007 (the recession officially began in December of that year):
How the jobless rate has changed the past three years. (BLS.gov/data/)
Update at 8:57 a.m. ET. The Associated Press notes that the jobless rate dipped "because a survey of households found the number of employed Americans rose by 541,000, the Labor Department said."
Update at 8:45 a.m. ET. As often happens with economic data, there's good news and there's bad news in a single report. BLS says:
-- Bad news. "The number of long-term unemployed (those jobless for 27 weeks and over) continued to trend up in January, reaching 6.3 million. Since the start of the recession in December 2007, the number of long-term unemployed has risen by 5.0 million."
-- Good news. "The number of persons who worked part time for economic reasons (sometimes referred to as involuntary part-time workers) fell from 9.2 to 8.3 million in January."
-- Bad news. "About 2.5 million persons were marginally attached to the labor force in January, an increase of 409,000 from a year earlier. ... Among the marginally attached, there were 1.1 million discouraged workers in January, up from 734,000 a year earlier."
-- Bad news. About 600,000 more jobs were cut from payrolls last year than previously thought.
-- Good news. In the one month last year when employment went up (November), BLS now estimates there were 64,000 jobs added to payrolls, vs. its earlier estimate of a 4,000-jobs gain.
A bow and an apology. Toyoda at today's news conference. (Itsuo Inouye/AP)
By Mark Memmott
Toyota Motor Corp. President Akio Toyoda is this morning taking questions about the accelerator and brake problems in some of his company's vehicles -- problems that have done significant damage to Japanese car maker's reputation and market value.
As the Associated Press writes:
Toyota said this week it is considering a recall in the U.S. and Japan for its Prius gas-electric hybrid, which has been plagued with braking problems. Nearly 200 complaints have been reported in the U.S. and Japan over such problems. Toyota said on Thursday it was a problem with the antilock brake system.
The problems with the Prius, Toyota's flagship model, follow a global recall announced Jan. 21 for 4.5 million vehicles with gas pedal problems that stick and can cause sudden acceleration.
Now, the Los Angeles Times reports, "Toyota Motor Corp.'s investigation into brake problems with its Prius hybrid (has) bled over to the Prius' upscale cousin, the Lexus HS 250h hybrid. ... The mechanical parts that make up the brake system in the Lexus model are identical to those in Toyota's 2010 Prius, but the two gas-electric hybrid cars use different software systems to control the way the brakes are used, said Brian Lyons, a Toyota spokesman. Still, he said, the Lexus is now part of Toyota's investigation."
Toyoda, 53, is the grandson of the company's founder.
We'll report on what he has to say as soon as possible, so hit your "refresh" button to see our latest additions.
On Morning Edition, NPR's Chris Arnold reported about the high costs some Toyota dealers in the U.S. are confronting because of the company's troubles.
Update at 8 a.m. ET. The news conference just ended, according to The Wall Street Journal's Dispatch blog, which writes that:
It's over! They (Toyoda and company quality officer Shinichi Sasaki) bowed, as is common practice, but certainly not a bow of contrition. They practically ran out of the room to avoid being mobbed by Japanese reporters.
Update at 7:45 a.m. ET.The Wall Street Journal's Dispatch blog says the news conference is coming to a close. It reports that Shinichi Sasaki, Toyota's quality officer, said of the vehicles' troubles that "we have not tried to conceal the problem. We have been fully transparent in terms of what we have learned. There is no time lag in what we have learned and reported and disclosed."
Update at 7:29 a.m. ET. The AP reports that:
Toyoda said the automaker was still deciding what to do to fix braking problems with the popular Prius gas-electric hybrid.
Update at 7:20 a.m. ET. Japan's Kyodo News service has this summary:
Toyota Motor Corp. President Akio Toyoda apologized Friday for causing concern over recent massive global recalls of the automaker's top-selling models.
Update at 7:17 a.m. ET.The Wall Street Journal's Dispatch blog reports that Toyoda just said the company's "attitude is to fully cooperate" with U.S. authorities.
Update at 7:10 a.m. ET. The Associated Press reports that:
Toyota chief apologizes for safety woes, sets up committee to raise quality control.
"A wooden-looking Akio Toyoda is reading from a script and apologizing. ... The first bow by Mr. Toyoda was a perfunctory one by Japanese standards. ... While he has apologized for 'causing an inconvenience' to customers, there has been no deep, long bow that is standard in these type of press conferences."
They're "outrageous," and he knows the American public is upset.
But Obama administration "pay czar" Kenneth Feinberg says the $100 million worth of bonuses that insurance giant AIG plans to pay employees are legal.
As Feinberg told All Things Considered co-host Robert Siegel this afternoon, the contracts with those employees were signed well before AIG had to be bailed out with billions of taxpayers dollars.
"I'm not pleased, I'm frustrated and angered by it," Feinberg said:
Much more from Robert's conversation with Feinberg will be on today's edition of ATC. Click here to find an NPR station near you that broadcasts the show. And check here later for the broadcast version of their discussion.
Feinberg's official title is "Special Master for Executive Compensation."
Kenneth D. Lewis, former Bank of America chief executive, was sued Thursday in a civil lawsuit for fraud by New York Attorney General Andrew Cuomo who charged that bank officials knowingly kept shareholders in the dark about huge losses at Merrill Lynch in order to smooth the way for the bank's 2008 acquisition of the large stock broker.
Kenneth D. Lewis. (AP Photos / Bebeto Matthews)
Besides Lewis, former B of A chief financial officer, Joseph Price, was also sued by Cuomo and Neil Barofsky, the special inspector general of the Troubled Asset Relief Program or TARP.
From the press release announcing the lawsuit:
According to the lawsuit, Bank of America's management intentionally failed to disclose massive losses at Merrill so that shareholders would vote to approve the merger. Once the deal was approved, Bank of America's management manipulated the federal government into saving the deal with billions in taxpayer funds by falsely claiming that they would back out of the deal without bailout funds.
"This merger is a classic example of how the actions of our nation's largest financial institutions led to the near-collapse of our financial system," said Attorney General Cuomo. "Bank of America, through its top management, engaged in a concerted effort to deceive shareholders and American taxpayers at large. This was an arrogant scheme hatched by the bank's top executives who believed they could play by their own set of rules. In the end, they committed an enormous fraud and American taxpayers ended up paying billions for Bank of America's misdeeds."
B of A issued this statement in response to Cuomo:
We find it regrettable and are disappointed that the NYAG has chosen to file these charges, which we believe are totally without merit. The evidence demonstrates that Bank of America and its executives, including Ken Lewis and Joe Price, at all times acted in good faith and consistent with their legal and fiduciary obligations. In fact, the SEC had access to the same evidence as the NYAG and concluded that there was no basis to enter either a charge of fraud or to charge individuals. The company and these executives will vigorously defend ourselves.
It's conceivable that Lewis, Price and B of A could be helped by the terms of the bank's settlement with the Securities and Exchange Commission and North Carolina's attorney general.
"Retailers are reporting modest gains for January as shoppers, uninspired by limited racks of holiday clearance, spent cautiously after a holiday buying spree in December," the Associated Press writes.
It adds, though, that "fourth-quarter profit profits look brighter as Macy's and Bon-Ton Stores are raising their outlooks because they didn't have to discount heavily and saw sales improve."
January sales at top U.S. retail chains moved into positive territory from last year's decline as many avoided drastic clearance sales and shoppers redeemed holiday gift cards.
But problems continue to accumulate for the Japanese automaker.
The latest: It acknowledged today that some of its recent Prius models have a brake design problem that, as the Associated Press puts it, can make it feel like the brakes aren't working when the vehicle is on a bumpy or slippery surface.
Toyota's manager in charge of quality, Hiroyuki Yokoyama, said the company had identified the problem and corrected the glitch for Priuses sold since late January. He said the company was still considering what actions to take for cars already on the road and had not ruled out a recall.
This news comes on top of the worldwide recall of several million Toyota vehicles because of sticky accelerators that could cause them to surge.
Update at 9:32 a.m. ET. The Associated Press just moved this "alert":
Transportation Department opens investigation into brake problems in 2010 Toyota Prius.
Here's a quick (unscientific) question:
(We'll keep the question open until noon ET on Friday.)
The Washington Post reports today that: "Federal regulators uncovered stark evidence that some Toyota cars accelerated unexpectedly more than two years ago. But neither the government's safety agency nor the automaker apparently recognized at the time how broad the dangers would turn out to be."
Even after trimming its bonus plan by $20 million, "the American International Group ... will distribute about $100 million on Wednesday, according to people with knowledge of the negotiations." (New York Times)
AIG is the insurance giant that got way too deep into high-risk investments and needed a huge bailout from American taxpayers in 2008 to avoid a collapse that might have brought the financial system down with it.
Toyota did not agree to recall millions of its vehicles that have potentially dangerous accelerators until after his department had extensive discussions with the automaker, Transportation Secretary Ray LaHood tells NPR.
"We persuaded them that it was in their best interests, but more importantly in the interests of the driving public ... to find a fix for these vehicles," LaHood said on Talk of the Nation a short time ago. This clip starts with host Neal Conan:
"If it had not been for the work of (the National Highway Traffic Safety Administration) pushing Toyota to make the recall, traveling to Japan, meeting with the top officials of Toyota in Japan and telling them that their folks in the United States seem to be a little safety deaf when it came to us talking to them, I don't know if the recall would be taking place," LaHood told AP.
After LaHood spoke with the wire service, Toyota issued this statement:
"Nothing is more important to us than the safety and reliability of the vehicles our customers drive. Secretary LaHood said to us that the soonest possible action would be in the best interests of our customers, and we took his advice very seriously and instituted a recall. We are very grateful for his advice and we feel that we have been given a chance to regain our customers' trust."
CBS has sold all it Super Bowl TV ad spots, charging $2.5 million to $2.8 million a pop for a 30-second spot, according to the network. That amount was somewhat less than NBC was able to charge last year.
CBS has sold all available spots for this Sundays Super Bowl broadcast, the network said Monday (Feb. 1). In most years broadcasters have some spots available until game day. While CBS reported price for a thirty-second ad spot, between $2.5 million to $2.8 million, is less than NBC's high of $3 million during 2009, demand has been stronger than expected. What is more remarkable is that CBS was able to command such strong pricing given that it first pitched the Super Bowl to advertisers in the midst of the worst recession in recent memory and during one of the most drawn out and embattled upfronts in some years.
Among CBS advertisers are a host of car companies including: Audi, Honda, Hyundai, Chrysler's Dodge and Cars.com. Coca-Cola Co. and Dr Pepper represent the soft drink category with Pepsi opting to shift out of the Super Bowl and spend big on a social media-driven cause marketing effort. Pepsi will however advertise its Doritos brand. Regular Walt Disney Pictures will also be promoting its latest movie efforts. General Motors and Fedex opted to sit out the big game this year.
If there is any silver lining for ExxonMobil which on Monday reported its fifth straight quarter of lower profits, it's that it slips further out of the cross hairs of lawmakers who only two years ago accused the company of profiteering off Americans and repeatedly threatened it with windfall profit taxes.
ExxonMobil's 2009 fourth-quarter profit fell 23 percent from the comparable year-earlier period. (David McNew / Getty Images)
On Monday, the energy giant reported that its 2009 fourth quarter net income was $6.05 billion, or 23 percent lower than the comparable 2008 quarter net profit of $7.82 billion.
Meanwhile, its 2009 earnings were $19.4 billion, its lowest annual profit in seven years. That was less than half of the $44.1 billion it reported for the 2008.
Fortune 500 chief executives are about as good as Washington politicians when it comes to spin. This is how Exxonmobil's chairman Rex W. Tillerson, spun his company's poorer showing:
"Despite continuing difficult global economic conditions, ExxonMobil delivered strong
business results and built on our long-term focus. Our full year 2009 earnings excluding
special items were $19,420 million despite significantly lower commodity prices and
weak product margins.
Our financial strength provided us with the foundation to continue investing in new
energy supplies to help meet global energy demand and to fuel economic growth. Capital
and exploration spending was $27.1 billion in 2009, another record year, and in line with
our longer term plan.
Wall Street types evidently liked what they heard from Tillerson and other company officials. And they liked even more that ExxonMobil's earnings came in higher than expected, which sent the company's share price up 2.81 percent as of 1:47 pm ET.
Saying it has "developed and rigorously tested a solution," Toyota just released some details on how it plans to fix sticky gas pedals on 4.2 million cars and trucks it has recalled.
According to Toyota: "Parts to reinforce the pedals are already being shipped for use by dealers, and dealer training is under way. Many Toyota dealers will work extended hours to complete the recall campaign as quickly and conveniently as possible, some even staying open 24 hours a day."
Toyota also released this video statement from Jim Lentz, president and chief operating officer of Toyota Motor Sales USA, who begins by telling customers, "I want to sincerely apologize to Toyota owners":
The vehicles involved include:
-- Certain 2009-2010 RAV4
-- Certain 2009-2010 Corolla
-- 2009-2010 Matrix
-- 2005-2010 Avalon
-- Certain 2007-2010 Camry
-- Certain 2010 Highlander
-- 2007-2010 Tundra
-- 2008-2010 Sequoia
Update at 3:15 p.m. ET.All Things Considered co-host Melissa Block spoke with Lentz this afternoon. What should a driver do if a gas pedal gets stuck? Said Lentz -- Put both feet on the break, press hard, shift the transmission into neutral, and pull off the road:
Much more from Melissa's conversation with Lentz will be on today's edition of ATC. Click here to find an NPR station near you that broadcasts the show. Later, the interview, as aired, will be posted here.
Update at 8:30 a.m. ET. Earlier on Morning Edition, NPR's Brian Naylor talked with host Renee Montagne about the news. As he says, Congress is starting to ask questions -- including, where was the National Highway Traffic Safety Administration as the problem grew?
Update at 8:15 a.m. ET. Here's another report from NPR's Frank Langfitt, about the solution Toyota has devised. And, as Frank says, Toyota argues it has not dragged its feet in offering a fix:
Update at 7:05 a.m. ET. NPR's Frank Langfitt called the newsroom a few minutes ago with this report:
As Frank says, the small part that is going to be sent to dealers is designed to eliminate friction that has been causing the sticking problem. With more than 2 million vehicles affected just in the U.S., though, "it's going to take time" to get them all fixed, Frank notes. One dealer he interviewed estimated that each of her franchises could "do about 100 cars a day."
A Ford Motor joint venture company in China has halted production of some commercial vehicles in China. Ford is worried about the gas pedals. They're made by the same company that built potentially problematic gas pedals for Toyota, which suspended sales of 8 of its models in the United States to investigate the design. Now Toyota is widening the safety net to Europe. Toyota isn't suspending production there; it's being handled as a recall.
The pedals are built by CTS Corporation, based in Elkhart, Indiana. CTS says it has "no knowledge of any accidents or injuries that have resulted from this rare potential condition". CTS says the gas pedals were "manufactured to Toyota's design specifications." In other words, CTS is saying - it ain't us. As for the Ford accelerator pedals, the joint venture partner company, Jiangling Motors, says it is reviewing them but hasn't heard of any problems.
As the Detroit Free Press says, the news marks "a stunning improvement over its historic, $14.7-billion loss in 2008, especially for a year that saw industry sales drop to their lowest level since 1982."
Today's strong financial results are more good news for a company that has been riding high since sweeping the "Car of the Year" and "Truck of the Year" awards at the North American International Auto Show in Detroit earlier this month.
Fourth-quarter earnings were $868 million, or 25 cents a share, compared with a year-earlier net loss of $5.98 billion, or $2.51, Ford said today. Excluding one-time costs, profit was 43 cents a share, beating analysts' estimates, and the shares rose in early New York trading.
How did Ford do it? Time writes that the company "benefited from cost-cutting, a $696 million profit in its credit arm and popular cars and trucks like the Ford Fusion midsize sedan and Ford Escape small sport utility vehicle."
The morning-after headlines and analyses of Toyota's decision to stop selling and producing eight vehicles are brutal.
On CBS-TV's The Early Show, Edmonds.com analyst Jessica Caldwell said Toyota is likely to "take a pounding" for a while as consumers re-think whether to buy its products:
In The Detroit News, safety advocate Sean Kane says "this is a desperate act by a company trying to get ahead of a problem that's already spun out of control." He's president of the advocacy group Safety Research & Strategies.
The Wall Street Journal's Heard on the Street column warns that "for a brand that prides itself on quality, this could be a crippling blow."
For its part, Toyota says that "helping ensure the safety of our customers and restoring confidence in Toyota are very important to our company."
The problem that has plagued Toyota involves accelerators that sometimes get stuck.
It's looking to be a busy day, so let's get right to it.
As you've probably heard (several times) by now, President Barack Obama this evening delivers his first State of the Union address. He's scheduled to get started at 9 p.m. ET.
On Morning Edition, NPR's Scott Horsley reported that "you can expect to hear a lot about jobs. ... Obama is looking to reconnect with recession-weary voters after last week's special election in Massachusetts put much of his agenda in doubt":
The Los Angeles Times expands on that meme just a bit, saying that "with his State of the Union address tonight, President Obama aims to deliver a game-changing message, one capable of convincing Americans that his policies will create jobs, curb spending and restore prosperity."
The New York Times, meanwhile, adds that top administration aides say that in the address, the president will "accept responsibility, though not necessarily blame, for failing to deliver swiftly on some of the changes he promised a year ago. But he will not, aides said, accede to criticism that his priorities are out of step with the nation's."
We'll "live-blog" the State of the Union, starting in the early evening as more details start to emerge about what the president will say. There will be live coverage on NPR member stations and a special post-speech broadcast following
To find an NPR station hear you that broadcasts Morning Edition, click here.
One of the other major stories of the day will be coming from Apple, which early this afternoon (ET) is expected to unveil its much-anticipated tablet computer. Our friends at All Tech Considered plan to live-blog that news, so check with them as the day goes on.
NPR's Lynn Neary previewed the tablet news on Morning Edition. It might, she says, heat up an e-book war
Spyker agreed to pay $74 million in cash and $326 million in preferred shares in the company that would emerge from the deal, according to the Dutch company. The transaction, subject to Sweden agreeing to guarantee a 400 million-euro ($563 million) European Investment Bank loan for Saab, is expected to close in February.
The Associated Press says "money for a deal to buy Saab could come from Spyker's largest shareholder, Russia's Conversbank Financial Group, or other shareholders. It would also likely involve a large loan from the European Investment Bank, backed by the government of Sweden."
General Motors has scheduled an 11:30 a.m. news conference. The Detroit Free Press, the Associated Press and several other news outlets say the subject will be the naming of interim CEO Ed Whitacre as permanent CEO.
As the AP says:
Whitacre, 68, is a former CEO of telecommunications giant AT&T Inc. He has been serving as interim CEO since the board ousted former CEO Fritz Henderson on Dec. 1. GM had hired a firm to conduct a global search for a successor.
Update at 12:45 p.m. ET: It's official. GM has named Whitacre permanent CEO. We've also updated the headline on this post.
The Associated Press just moved an "alert" that says "Hershey won't make bid for Cadbury, paving way for Kraft's deal for the British candy maker."
That would seem to confirm a story in the Financial Times, which said that "Hershey has decided not to mount a bid for Cadbury, abandoning its hope of using the British confectioner as a path to global expansion and conceding that Kraft's recommended bid ... is too high for it to top."
Goldman Sachs Group Inc. says it earned $4.8 billion in the fourth quarter and $13.4 billion for all of 2009 "as the bank's trading business again outdistanced the rest of the financial industry," the Associated Press writes. "The company rewarded its employees with $16.2 billion in salaries and bonuses for 2009."
Bloomberg News adds that the earnings "beat analysts' estimates as the company slashed the percentage of revenue allocated to compensation. ... Last month Goldman Sachs said its top 30 executives, including (CEO Lloyd) Blankfein, Chief Financial Officer David Viniar and President Gary Cohn, wouldn't receive any cash bonuses for 2009. Instead, their bonuses will consist entirely of restricted stock that they can't sell for five years."
Goldman's press release about its earnings is posted here. It says that:
The firm's 35.8% ratio of compensation and benefits to net revenues was its lowest as a public company. While net revenues in 2009 were only 2% lower than the firm's net revenues in 2007, total compensation and benefits was 20% lower, representing a reduction of $4 billion.
Update at 11:10 a.m. ET. Bloomberg adds this perspective:
"The big story is the compensation," said Keith Davis, an analyst at Farr, Miller & Washington LLC in Washington, which manages about $650 million, including Goldman Sachs shares. "They got the message that politically they can't be paying out close to 50% of revenues anymore, at least for the time being."
Accenture's marketer's have moved on from Tiger to an elephant and other animals not caught up in sex scandal. ( / Accenture website)
By Frank James
Accenture has moved on from Tiger as in Woods to elephants as in pachyderms for its world-wide marketing campaign.
The Wall Street Journal reports that after dropping the adulterous golfing legend as its marketing face, the consulting company has decided to go with other animals instead.
We assume this is because Accenture has satisfied itself that animals won't ruin their pricey marketing campaign by getting involved in sex scandals although if I were them, I would avoid ever using bonobo apes in their posters.
A WSJ snippet:
Amid salacious headlines about the golf superstar's alleged extramarital affairs, the new campaign, based on an idea Accenture's ad agency already had on hand, was put on a fast track. It would replace images of Mr. Woods with a lineup of animals pictured in ways designed to jibe with Accenture's longstanding slogan: "High Performance. Delivered."
After nearly a month of focus-group testing and production work, Accenture is rolling out the new global marketing campaign this week. The creatures, which include an elephant, a chameleon and some frogs and fish, will star in a series of TV, print and online spots. They also will appear in airport ads in 28 countries.
We've rounded up the latest news about Tuesday's catastrophic earthquake in Haiti and the rush to get help to that impoverished nation in this post. Check back with us throughout the day for more news from Haiti.
Other stories making headlines this morning include:
-- The Washington Post -- Obama To Propose Sharp Hike In Taxes On Largest Financial Institutions: "President Obama plans Thursday to propose a sharp increase in the taxes paid by the nation's largest financial institutions designed to raise $90 billion over the next decade while constraining the industry's ability to take large risks and reap outsize rewards, a senior administration official said."
-- Morning Edition -- Many Chinese Don't Want Google To Leave:NPR's Louisa Lim reports that many Chinese are unhappy about Google's threat to pull out of China because of government censorship. They say that amounts to letting the government win:
-- Los Angeles Times -- Three Charged In Alleged Scheme To Smuggle Parts To Iran That Could Help Make Nukes: "Three men, including an Iranian-born chemical engineer living in Glendale, have been charged in a scheme to smuggle sophisticated industrial components into Iran that could be used in the development of a nuclear weapon, authorities said Wednesday." An indictment was filed in U.S. District Court in Los Angeles.
-- NPR News -- Singer Teddy Pendergrass Dies. As NPR's Paul Brown reports, Pendergrass, 59, died of colon cancer. He started as a drummer and rose to fame singing with Harold Melvin and the Blue Notes. Despite being paralyzed from the waist down in a 1982 car accident, he kept performing:
From a related story by the Philadelphia Daily News -- The "silky voiced soul singer" had hits such as Turn Off the Lights and If You Don't Know Me By Now that "set the mood for millions of fans."
Pendergrass, right, in 2000. (Suzanne Plunkett/AP)
Wall Street executives said Wednesday they underestimated the severity of the 2008 financial crisis and made poor decisions, while also defending their bonus and compensation practices to a skeptical commission investigating what caused the collapse.
Also at the first hearing of the Financial Crisis Inquiry Commission, Bloomberg reports:
Goldman Sachs Group Inc. Chief Executive Officer Lloyd Blankfein tesitified today that he was never asked to accept a discount on investment contracts his firm had with American International Group Inc.
AIG, as part of a bailout funded by U.S. taxpayers, paid out 100 cents on the dollar on such contracts with bank counterparties, including New York-based Goldman Sachs. The fact that the banks weren't required by regulators to accept less- than-full payment prompted some members of Congress to criticize AIG's rescue as a "backdoor bailout" of Wall Street firms.
-- The Associated Press: "By contrast, U.S. sales of cars and light trucks plunged 21% in 2009 to 10.4 million as a shaky economy kept buyers away from showrooms. It was the first time any country bought more cars than Americans."
We'll post the numbers as quickly as possible, so check back here when the time arrives.
To get us all ready, here's some of the morning's reporting about what to expect:
-- Reuters says it polled 84 economists yesterday and that the consensus was that the number of jobs on U.S. businesses' payrolls likely didn't change much last month.
That doesn't sound so great, but remember: A year ago businesses cut payrolls by more than 700,000 jobs in one month. Since then, the pace of job losses has slowed dramatically.
The jobless rate hit 10.2% in October, then dipped to 10% in November. We'll find out today where it stood in December. (BLS.gov)
For the largest auto makers, 2009 was their annus horribilis, their worst year in about three decades.
The Detroit Free Press had a handy graphic whose format I reproduce below.
CHRYSLER down 4%Lowest level since '62
GM down 6.1% Buick sales up 37.4%
NISSAN up 18.2% Frontier sales up 113.1%
HONDA up 24% Moves ahead of Chrysler
TOYOTA up 32% Corolla leads again
SUBARU up 33% Outback sales up 106%
While some of those percentage increases look rather effervescent, keep in mind the numbers for 2008 were fairly gloomy, dropping 18 percent from the prior year.
So 2009 looked good by comparison even though last year was still decidedly lousy. Sales for the entire industry were under 10 million vehicles.
Still, things are looking up. As NPR's Frank Langfitt said on All Things Considered Tuesday:
What we're seeing is more stability in the industry. Sales are slowly rebounding from these historic lows. Last year were among the worst sales in more than a quarter century. Of course, some companies are doing better than others. In Detroit, Ford has been the standout. The company didn't take a government bailout, didn't go bankrupt like GM and Chrysler. And in it's been gaining share of the market, kind of on the strength of some quality products, like the sedan, the Fusion, has been doing very well. So a lot of analysts see Ford turning the chaos of last year into an opportunity.
AT&T says it will no longer sponsor Tiger Woods, joining Accenture and Gillette in dropping support for the golfer after numerous allegations of infidelities. AT&T Inc.'s logo appeared on Woods' golf bag, and has been the title sponsor of a PGA event in July with Woods as the host.
"We are ending our sponsorship agreement with Tiger Woods and wish him well in the future," Michael Coe, a spokesman for AT&T, said in an e-mail today.
Anastasia Kelly, AIG's vice chair, is quitting because of the $500,000 pay cap. She talked with Rep. Dennsi Kucinich at a May 2009 hearing as then AIG CEO Edward Liddy watched. (Chip Somodevilla / Getty Images)
By Frank James
When it became clear that the Obama Administration meant business in terms of slapping pay caps on top execs at financial institutions whose very survival was due to massive taxpayer help, chief executives at financial institutions warned that they would have trouble either attracting or keeping their talent.
They weren't kidding in the case of Anastasia Kelly at AIG. The AIG vice chair has informed her employer that she's out of there because of the pay caps.
As NPR's Ted Robbins reported for the network's newscast:
Once the world's largest insurer, AIG has gotten $182 billion from the government to keep it afloat. Anastasia Kelly was AIG's vice-chair for a number of departments -- including legal, human resources, and corporate communications.
Her base pay was capped at $500,000-a-year by Kenneth Feinberg, the man President Obama appointed to monitor pay at companies which received taxpayer funds...
The company says she is leaving for what it calls "good reason", then states that reason as the pay cap. Kelly will get a reported $3.8-million severance package. AIG also announced a second, lower-ranking officer is leaving the company to pursue other opportunities.
While that may sound like bad news to taxpayers, here's something to consider. Earlier in the year Treasury and company officials had thought the company might need a $5.6 billion infusion.
But GMAC's financial needs turned out to be significantly less than previously thought because it didn't take the financial hit that had been expected as part of the GM bankruptcy.
In any event, before the latest infusion, GMAC had received $12.5 billion in taxpayer help.
Still, GMAC is reeling because of losses associated with mortgages held by its ResCap unit which was in the residential-mortgage business.
An NPR colleague pointed out the following chart to me from the BusinessInsider.com. It's called, somewhat hyperbolically, "The End of Newspapers."
As a former newspaper reporter, I resemble this chart, at least part of it. I was hired to my first newspaper job in 1981 at about the time the industry was enjoying a growth spurt, according to the chart.
I exited the industry earlier this year amid an ongoing nosedive in newspaper employment.
What's really fascinating about this chart is how much more quickly the fall of the newspaper industry was than its rise. It took the industry about 40 years from the late 1940s to the late 1980s to go from about 270,000 workers to peak slightly above 450,000. But it only took half the time to decline to the late 1940s level. Wow. That's a lot of "creative destruction" to use economist Joseph Schumpeter's famous term.
Those are the dire consequences being bandied about as News Corp. and Time Warner Cable stare each other down over fees. They're working toward a 12:01 a.m. ET, Friday, deadline. NPR's David Folkenflik says the markets that are affected include: Austin, Boston, Chicago, Dallas, Detroit, Los Angeles, New York City, Orlando and Tampa Bay.
There have been such showdowns before, but nothing on this scale. Some very large markets are going to be missing college bowl games on New Year's Day if this isn't resolved. Somebody has to blink eventually, but it is conceivable that the movement would only come after huge customer outcry over losing some of the most-watched channels on TWC systems.
Looking for a car? Don't mind that it's a brand that's going out of business?
Then maybe General Motors' "fire sale" on Pontiacs and Saturns is for you. As The Wall Street Journal reports (subscribers only), GM "is offering its dealers hefty incentives to move thousands of leftover vehicles from its discontinued Saturn and Pontiac brands." It's going to pay dealers $7,000 for each Saturn or Pontiac they buy.
You have to act fast, though. The offer ends Jan. 4.
And as Marketplace's Alisa Roth reports, if the dealers pass on all or much of those incentives buyers could get some eye-popping deals:
As we reported earlier, the latest news from Iran is all about renewed anger aimed at the government and the regime's brutal response.
And we also reported earlier about the rising number of questions about why a man who allegedly tried to blow up a plane as it approached Detroit was ever allowed to board the jet.
As for other stories making headines, they include:
-- BBC News -- "Bomb Attack On Processions In Pakistani City Of Karachi": "At least 15 people have been killed in a bomb attack on a religious procession in the southern Pakistani city of Karachi, officials say. Television footage showed a large plume of smoke over the site of the blast and ambulances rushing to the scene."
-- The New York Times -- "U.S. Wides Terror War To Yemen": "In the midst of two unfinished major wars, the United States has quietly opened a third, largely covert front against al-Qaida in Yemen."
-- Bloomberg News -- "Holiday Retail Sales Rose An Estimated 3.6%, SpendingPulse Says": "U.S. retail sales rose an estimated 3.6% this holiday season from a year earlier, helped by online shopping and purchases of electronics, data from MasterCard Advisors' SpendingPulse showed. ... The National Retail Federation has predicted a 1% decline in U.S. spending for the season. The International Council of Shopping Centers, another trade group, anticipates a 2% increase in sales at stores open at least a year."
-- Morning Edition -- After Nearly A Year, Obama's Agenda Is Still A "Work In Progress". NPR's Scott Horsley talked with guest host Linda Wertheimer about the President Barack Obama's first year in office:
-- The Indianapolis Star-- NFL's Colts Are No Longer Perfect; Once Again, No Team Will Be Undefeated.
Did Wall Street's investment banks knowingly sell to even sophisticated investors exotic debt products they knew could blow up but earn the creators of the so-called investments in profits laughing all the way to the bank?
That's the intriguing question being investigated by the Congress, Securities and Exchange Commission and the Financial Industry Regulatory Authority, a self-regulatory body funded and run by Wall Street, according to a New York Times piece.
An excerpt:
Pension funds and insurance companies lost billions of dollars on securities that they believed were solid investments, according to former Goldman employees with direct knowledge of the deals who asked not to be identified because they have confidentiality agreements with the firm.
Goldman was not the only firm that peddled these complex securities -- known as synthetic collateralized debt obligations, or C.D.O.'s -- and then made financial bets against them, called selling short in Wall Street parlance. Others that created similar securities and then bet they would fail, according to Wall Street traders, include Deutsche Bank and Morgan Stanley, as well as smaller firms like Tricadia Inc., an investment company whose parent firm was overseen by Lewis A. Sachs, who this year became a special counselor to Treasury Secretary Timothy F. Geithner.
The news this hour, as we've said, will be the Senate vote on legislation to overhaul the nation's health care system.
And there's also word this morning that nine-year-old Sean Goldman has been reunited with his American dad in Brazil. David Goldman's long legal battle to win back his son had made headlines across the world.
As for other stories making headlines, they include:
-- The Associated Press -- "Holiday Storm Descends On Plains, Midwest": "Holiday travelers battled slick, icy roads and scattered flight cancellations and delays on Wednesday as a major winter storm began to spread across much of the nation's midsection -- and the worst of the weather was still expected to come. The storm was likely to intensify by Thursday, bringing heavy snow, sleet and rain to a large swath of the Plains and the Midwest. A foot or two of snow was possible in some areas by Christmas Day."
-- The New York Times -- "Banks That Bundled Bad Debt Also Bet Against It And Won": "Authorities appear to be looking at whether securities laws or rules of fair dealing were violated by firms that created and sold these mortgage-linked debt instruments and then bet against the clients who purchased them, people briefed on the matter say."
-- Politico -- "McCain, GOP Secretly Courting Another Dem To Switch": "Republicans are stepping up their efforts to persuade more House Democrats to switch parties and are zeroing in on a second-term Pennsylvanian who acknowledged the efforts but said he has 'no plans' to do so. Democratic Rep. Chris Carney received a phone call Wednesday from Sen. John McCain, R-Ariz., asking him to consider becoming a Republican, a top GOP official told Politico." Earlier this week, Rep. Parker Griffith of Alabama changed parties, from Democratic to Republican.
-- Morning Edition -- "Locals Want More Say" On Rebuilding Of Afghanistan: NPR's Soraya Sarhaddi Nelson reports that many Afghans "complain that international development amounts to a hodgepodge of expensive and often shoddy projects in dangerous areas with little local say over how the money is spent." They want that to change.
Subway shop will rise with the Freedom Tower at Ground Zero in Lower Manhattan. (Mark Lennihan / AP Photo)
Subway, the fast-food sandwich company, has earned a reputation for savvy marketing. Now it's taking its publicity machine to a whole new level, literally.
It has transformed a shipping container into a Subway shop and has had it hoisted by crane onto the rising skeleton of the Freedom Tower being built in Manhattan at Ground Zero. As the building rises to it's full 105-floor height, so will the sandwich shop, eventually becoming perhaps the world's highest billboard.
Less than half of the $45 million in bonuses that executives at AIG Financial Products agreed to return by the end of this year have actually been paid back, The Washington Post reports.
According to the Post:
As the final days of 2009 tick away ... only about $19 million has been given back, according to a report by the special inspector general for the government's bailout program.
Some of the employees who had offered to return their bonuses have instead left the company, taking their cash with them.
As we've previously reported, there's been considerable outrage among the public and politicians over the large amounts of money that the ailing insurer has paid to some of its executives. After all, the federal government sank billions of dollars into AIG in 2008 "as the company teetered under the weight of its risky investment insurance business" and threatened to drag much of the rest of the financial industry down as well.
Reports that some Iranian soldiers have entered Iraq and taken over an oil well that lies in a disputed piece of territory have pushed oil prices up slightly today.
Saying that it couldn't nail down a deal to sell the Swedish car maker, General Motors announced this morning that it "will start an orderly wind-down of Saab operations."
GM had tried to sell Saab to Swedish car maker Koenigsegg Group, but that deal fell through. Talks with Denmark's Spyker Cars ultimately went nowhere.
According to the Detroit News, the shut down "affects about 3,400 employees globally and 1,100 dealers -- including about 218 in the United States."
GM bought half of Saab in 1990 and took full ownership in 2000. U.S. sales of Saab models tumbled 61% through this year's first 11 months, and the biggest U.S. automaker identified the brand as one of four -- along with Saturn, Pontiac and Hummer -- it would shed to streamline operations.
Saab, like other GM divisions, fell into financial turmoil earlier this year as a global slowdown in the auto industry aggravated its existing balance-sheet problems. The Swedish unit filed for protection from its creditors in February, exiting in the summer after reaching an agreement with creditors to write off about 75% of its debt.
In what will be interpreted by many as yet one more blow to broadcast television and another victory for the Internet, Pepsi said it won't advertise on the 2010 Super Bowl, ending a 23-year run on the biggest sporting event of the year.
The soft drink maker announced Thursday it will abandon the Super Bowl and focus on its online marketing efforts. For the 2009 Super Bowl, a 30-second spot on NBC went for $3 million on average.
Pepsi had been a major advertiser during the Super Bowl. According to TNS, the company spent $142.8 million on the 10 Super Bowl ads from 1999 to 2008, second only to Anheuser-Busch, which spent $216 million. The brewer of Bud Light confirmed Thursday it will have 5 minutes worth of advertising in the 2010 Super Bowl.
Pepsi recognizes Super Bowl ads can be effective for marketing, spokeswoman Nicole Bradley said, but the game doesn't work with the company's goals next year.
Pepsi's Super Bowl ads have provided some of the funnier commercials in past years. A sampler below:
There are some interesting details to be had in the numerous documents the National Transportation Safety Board released Wednesday from its investigation of the two pilots who flew past Minneapolis in October because they were distracted by their conversation and their personal laptops.
Here's one. According to one of the reports, Captain Timothy Brian Cheney told investigators that Northwest Airlines bankruptcy and its later acquisition by Delta Air Lines:
... Made a financial impact on his retirement, and had been a distraction that created a "bitter and angry" environment that he tried to leave out of the cockpit. He characterized pilot morale as average and that it was better now than it was three years earlier.
He obviously didn't do a good enough job of keeping the discontent out of the cockpit since according to what he told investigators he was complaining about how a scheduling system that was new to Northwest pilots like himself hadn't given him the results he had hoped for and would require him to make frequent commutes from his Seattle home to Minneapolis.
First, let me say that I find these "best places" to live, work, whatever lists next to useless. They're biggest utility is to the companies or towns ranked high which can use them in marketing.
Still, I almost always look at them. Go figure.
That said, An outfit called Glassdoor.com has compiled a "best places to work" list for 2010 (isn't it still 2009?) and Southwest Airlines comes in at the top of the 50 companies. Number 50 is Marriott.
None of the companies, from what I can tell, are non-profit. (Sorry NPR.) That rules out a lot of great organizations and institutions.
Here's one way in which the list is suspect. Whole Foods, the supermarket chain, went from number six last year to 48 this year. How could that happen? Whole Foods has been fairly stable despite the recession.
The answer, according to a Reuters story, may have something to do with its CEO.
From Reuters:
Whole Foods Market Inc fell to 48th from sixth place last year. While the company remained a good place to work, employees expressed distaste for Chief Executive John Mackey,
who in 2007 was found posting messages on a Yahoo! chat forum under an alias, criticizing Wild Oats Markets Inc, a rival that Whole Foods was seeking to acquire.
That's a very unsatisfying answer. It's hard to believe that Mackey's behavior would have that big an impact. Maybe the answer has more to do with the survey's methodology. For instance, Whole Foods is based on only 62 reviews. Southwest has 32 ratings, almost half. That's not good.
Here's a summary of the methodology:
The Top 50 were selected from more than 38,000 companies reviewed by the nearly 70,000 employees who completed a 20-question survey on Glassdoor.com in 2009. To be eligible for the list, a company must have had at least all of the following:
25 reviews from United States-based employees between January 1, 2009 and December 1, 2009,
"satisfied" ratings overall and across all categories, and
a CEO with at least a 50% approval rating.
The survey questions relate to employees' attitudes about Career Opportunities, Communication, Compensation & Benefits, Employee Morale, Recognition & Feedback, Senior Leadership, Work/Life Balance, and Fairness & Respect. After the overall ratings are calculated, a company may be excluded from the list if our review panel determines detrimental acts by management or other negative company events could ultimately damage employees' faith in the company's senior leadership and/or adversely affect its overall rating on Glassdoor.com.
Charging that the company "has illegally used its dominant market position for a decade to stifle competition and strengthen its monopoly," the Federal Trade Commission announced this morning that it is suing semiconductor chip giant Intel Corp.
The Wall Street Journal writes that "the administrative complaint charges that Intel used threats and rewards aimed at the world's largest computer manufacturers, including Dell Inc., Hewlett-Packard Co., and IBM Corp., to coerce them not to buy rival computer central-processing-unit chips."
Intel has faced similar charges for years and has denied any wrongdoing. The lawsuit comes after a recent $1.25 billion settlement with rival Advanced Micro Devices Inc. over similar claims.
The FTC says it is "seeking an order which includes provisions that would prevent Intel from using threats, bundled prices, or other offers to encourage exclusive deals, hamper competition, or unfairly manipulate the prices of its CPU or GPU chips. The FTC also may seek an order prohibiting Intel from unreasonably excluding or inhibiting the sale of competitive CPUs or GPUs, and prohibiting Intel from making or distributing products that impair the performance--or apparent performance--of non-Intel CPUs or GPUs."
In other legal news, Bloomberg reports that "Microsoft Corp. ended more than a decade of antitrust disputes with the European Union by giving consumers a choice among Web browsers. "
Boeing is scheduled to send its 787 Dreamliner into the sky over Puget Sound and Washington state today, and the test pilot who will be at the controls says he's confident the carbon-composite jet will perform as it should:
"We have a plastic airplane," Mike Carriker tells The Seattle Times. "It's the first time anybody in the industry has taken a large composite wing with a composite spar and gone whipping out. ... Obviously, we think we're OK, otherwise we wouldn't go fly."
Designed to be more fuel efficient than its predecessors, the Dreamliner "promises to excel at carrying 250 or so people very long distances," the Associated Press writes. Airlines have already ordered 804 of the jets.
The test flight is scheduled for 1 p.m. ET and is supposed to last four hours. Boeing hopes to deliver the first jet to Japan's All Nippon Airways late next year.
Update at 1:30 p.m. ET: The jet just took off.
Update at 2:30 p.m. ET. And here's video of the take off:
Wells Fargo is the latest financial giant to say it's repaying the bailout money it received from the federal government, a move the big banks are making in part to get out from under pay restrictions placed on them by the Obama Administration.
The company said it would repay the $25 billion it received from the Troubled Asset Relief Program completely, raising part of the sum by selling $10.4 billion in common shares.
With most of the other major financial institutions announcing that they were repaying the TARP money (Citigroup did so earlier Monday) every major bank that received TARP money is pretty much in the same position of having to repay the TARP funds in order to compete for talent that might go to other banks without the pay constraints institutions operating out of the TARP must heed.
An entrepreneurial college student created what he claims is a parody of the popular The North Face brand called The South Butt.
Now he's getting an extracurricular education in corporate hardball. The huge apparel maker whose identity the young man mocks has sued the 18-year old for what it claims is trademark infringement.
Jimmy Winkelmann, a University of Missouri at Columbia freshman, created his brand which clearly borrows heavily from the apparel giant as a send up of all the people who mindlessly wear North Face gear because everyone else they know wears it.
So South Butt has a logo that resembles North Face's, except flipped upside down. It sells tee shirts and a jacket. And it has twisted the North Face marketing slogan of "Never stop exploring" into "Never stop relaxing."
News came Friday afternoon that The North Face has decided to take us to court! Now, more than ever, we need your support as we prepare for the upcoming events. We're stocked up and ready for the Holiday rush that is about to take place because of this news -- please get your Christmas orders in ASAP !
President Barack Obama's latest meeting with some of the nation's leading Wall Street and banking executives -- folks he referred to on CBS-TV's 60 Minutes last night as "fat cats" -- has gotten underway at the White House.
Obama is due to make a statement about the session around 12:10 p.m. ET. We'll update this post with what he says. And the White House will stream the event here.
In the meantime, the Associated Press tops its latest story about the get-together with this:
President Barack Obama is asking bank executives to support his efforts to tighten the financial industry, while bankers are prepared to tell the president he should stop oversimplifying their concerns if he wants good-faith collaboration.
According to the White House, these are the financial executives at the meeting:
Oil giant Exxon Mobil just announced it is buying XTO Energy for $31 billion and will assume $10 billion of the Fort Worth-based company's debt.
As the Associated Press writes, "Exxon has moved quickly to pick up valuable natural gas fields and now it is snapping up XTO, which claims about 45 trillion cubic feet of natural gas."
Dow Jones Newswire reports that the deal will boost Exxon Mobil's "presence in the natural-gas industry at a time of low prices for the commodity." Also, the deal will "put to rest speculation about when Exxon, which hasn't had a major acquisition since the merger a decade ago with Mobil, would take advantage of lower commodity prices pressuring smaller and debt-loaded companies in the oil patch."
There's breaking news, as we just reported, about Citigroup announcing it will repay $20 billion in bailout money it got through the Troubled Asset Relief Program (TARP).
As for other stories making headlines, they include:
-- Morning Edition -- "Rich, Poor Nations Divided Over Reducing Emissions": From Copenhagen, NPR's Richard Harris talked with co-host Renee Montagne about the big differences that world leaders have over a climate deal as they begin the last few days of their summit:
Related story by The Guardian -- "Poor Nations Threaten Climate Deal Showdown At Copenhagen Summit": "A number of African countries indicated their leaders would refuse to take part in the final summit unless significant progress was made in the next three days. The showdown between rich and poor countries came as ministers began arriving in Copenhagen to take over negotiations. However, negotiators failed to reach agreement in key areas such as emission cuts, long-term finance and when poor countries should start to reduce emissions."
From a related story by The Associated Press -- Talks In "Disarray": "U.N. climate talks have been thrown into disarray as developing countries blocked negotiations, demanding that rich countries raise their pledges for reducing greenhouse gas emissions. Representatives from developing countries said they refused to participate in any working groups Monday at the 192-nation summit until the issue was resolved."
Related story on Morning Edition -- "Pentagon, CIA Eye New Threat: Climate Change": "For the first time, Pentagon planners in 2010 will include climate change among the security threats identified in the Quadrennial Defense Review, the Congress-mandated report that updates Pentagon priorities every four years."
-- The Associated Press -- "Abu Dhabi Bails Out Neighboring Dubai": "Dubai got a $10 billion lifeline from oil-rich Abu Dhabi on Monday, securing a last-minute cash infusion aimed at preventing a default that risked sparking broader fears about the city-state's shaky finances."
From a related story by the BBC -- Markets Cheer: "News of the payment boosted share markets in the United Arab Emirates. Dubai's main share index closed 10% higher, while Abu Dhabi's rose more than 7%. Bank stocks also took heart from the extra funding. Shares in HSBC, Standard Chartered, Banco Santander, Barclays and Lloyds all rose. Meanwhile, the value of both the euro and the pound improved. Both currencies have been unsettled in recent weeks by news of Dubai's debts."
From a related story by The Wall Street Journal -- Troubles Had Shaken Markets: "Dubai rocked world markets in late November when it requested a freeze on $26 billion of debt payments by Dubai World in order to restructure the conglomerate. Dubai World, which last week began talks with banks to restructure the debt, Monday said the new funds will provide 'a stable basis for the restructuring process which continues.' "
-- Times of London -- "Secret Document Exposes Iran's Nuclear Trigger": "Confidential intelligence documents obtained by The Times show that Iran is working on testing a key final component of a nuclear bomb. The notes, from Iran's most sensitive military nuclear project, describe a four-year plan to test a neutron initiator, the component of a nuclear bomb that triggers an explosion."
-- The Associated Press -- Lieberman Resists Medicare Buy-In Plan": "Senate Democrats who thought they had found a workable compromise on health care reform learned otherwise from independent Sen. Joe Lieberman over the weekend. The Connecticut senator, whose vote is critical to the bill's prospects, threatened Sunday to join Republicans in opposing health care legislation if it permits uninsured individuals as young to 55 to purchase Medicare coverage."
Related story at CBSNews.com -- "Senators Rockefeller, Nelson And Lieberman Debate Current Bill."
-- Morning Edition -- Along With Broken Nose, Berlusconi Faces More Political Woes": NPR's Sylvia Poggioli reports from Rome about the corruption trials, nasty divorce and court evidence linking him to the Mafia that is surrounding Italian Prime Miniter Silvia Berlusconi:
-- ESPN.com -- "Saints And Colts Can't Let Up Now": "The Indianapolis Colts and the New Orleans Saints wouldn't stick it to us, would they? They wouldn't go full fetal position because it's the safe, sensible, PBS-fundraising-dull way of treating the final three games of their seasons, right? They wouldn't dare commit the mortal sin of sports and mess with a streak -- and not just any streak, but a 13-0 streak (times two) -- because that's what the coach-by-the-numbers NFL handbook says, would they?"
Banking giant Citigroup just announced it has struck a deal with regulators to repay $20 billion in bailout money it got through the Troubled Asset Relief Program (TARP).
The bank said it will "issue $17 billion of common stock and $3.5 billion of 'tangible equity units' " to seal the deal.
The New York Times, which earlier previewed the announcement, writes that "negotiations between the bank's executives and senior government officials went into the night before being announced early Monday.
All this happens as CEOs from some of the nation's leading banks, including Citi, head to the White House for a meeting later today with President Barack Obama. According to Politico, industry officials say that "facing White House pressure to increase lending," the CEOs plan to tell the president that they are ready to "step up" and do more to boost the economy.
Last night on CBS-TV's 60 Minutes, the president assailed banking and Wall Street "fat cats" who he said don't "get it."
The government is winding down the bailout programs it arranged as financial markets convulsed late last year. Treasury Secretary Timothy Geithner said in a Dec. 4 interview that most taxpayer money injected into banks through TARP will eventually be recovered.
JPMorgan Chase & Co., Goldman Sachs Group Inc. and Morgan Stanley, all based in New York, repaid bailout funds in June. San Francisco-based Wells Fargo & Co., with $25 billion of TARP money, isn't subject to pay limits because it never needed a second helping of bailout funds.
We've all heard the complaints about crass commercialism this time of year and the need to put the Christ back in Christmas.
One Los Angeles retailer has managed to combine both themes, crass commercialism and Baby Jesus, in a window display.
The faceless manikin of the Virgin Mary strikes a sexy pose and wears a minidress. The "Wise Men" are female manikin's with shopping bags.
It being Los Angeles, the people on the street who give their reactions to a reporter say they like the display.
But we're pretty sure this isn't what critics of Christmas commercialism mean when they urge more of a focus on Jesus being the reason for the season etc.
Lloyd Blankfein, Goldman Sachs' CEO, will be taking home less cash this year along with 29 other top executives. (Alessandro della Valle / AP Photo/Keystone)
By Frank James
Wall Street investment banker Goldman Sachs is giving in to its investors who had complained about the size of the company's bonus pool and argued that the company should be funneling more of its profits to its shareholders.
There's also the not-so-little image problem the company has suffered generally as critics have stewed about Goldman paying its execs big bonuses while millions of Americans worry about their unemployment benefits running out or being foreclosed on.
The company announced Thursday that its top 30 managers won't be getting cash bonuses this year. Instead, they'll be getting the value of their bonus in Goldman stock which they must hold onto for five years.
Goldman also has a clawback feature in the new compensation package that will allow the company to yank back shares from employees who don't exercise appropriate judgment in the investment decisions they make on behalf of the bank or its clients.
* The firm's entire 30-person management committee, which comprises all global divisional and regional leadership, will receive 100 percent of their discretionary compensation in the form of Shares at Risk, which are subject to restrictions for five years. Discretionary compensation represents the vast majority of senior management's compensation and is directly tied to the firm's overall performance.
* Shares at Risk cannot be sold for five years, in addition to other restrictions.
* The five-year holding period on Shares at Risk includes an enhanced recapture provision that will permit the firm to recapture the shares in cases where the employee engaged in materially improper risk analysis or failed sufficiently to raise concerns about risks. Enhancing our recapture provision is intended to ensure that our employees are accountable for the future impact of their decisions, to reinforce the importance of risk controls to the firm and to make clear that our compensation practices do not reward taking excessive risk.
Longtime magazine Editor and Publisher is closing down after 108 years of operation. The journal, which also appears online, follows the newspaper business from news to advertising and circulation. The Associated Press reports owner Nielsen is also shuttering Kirkus Reviews.
United is ordering its first new planes in a decade, including Boeing 787s like the one being built in this photo. (Mic Smith / AP Photo)
By Frank James
It's the Christmas shopping season which means a lot of searching for bargains. And that mentality apparently extends to airlines. United Airlines announced Tuesday it's putting in an order for its first new airplanes in a decade because the price is right.
And it's spreading the wealth around, ordering 50 airplanes, half from U.S. maker Boeing, the balance from Airbus, Boeing's European competitor.
NPR's David Schaper reported the following for the network's newscast:
Chicago-based United is taking advantage of a slow market for new jetliners and thus, low prices, as it orders 50 new planes for about $10 billion.
United is ordering 25 jetliners from it's Chicago neighbor, Boeing, and 25 more from Europe's Airbus, and in the process, the airline will be able to cut fuel costs and emissions.
Both widebodies, the Boeing 787 Dreamliner and the Airbus A-350 are more fuel efficient than United's current fleet. Airline officials say the new planes will slash fuel consumption, cost and emissions by a third over the 747's and 767's they will replace.
As we've reported, there's breaking news in the business world -- Comcast Corp. plans to buy a majority stake in NBC Universal for $13.75 billion.
And as we just posted, a suicide bomber in Mogadishu, Somalia, killed three government ministers and as many as 16 other people at a graduation ceremony.
As for other stories making headlines this morning, they include:
-- Morning Edition -- National Security Adviser Jones Says Afghan Strategy Is Comprehensive. The major story of the week remains President Barack Obama's decision to send 30,000 more U.S. troops to Afghanistan in the hope that they'll be able to help speed a handover of authority there to Afghan forces. ME co-host Steve Iskeep spoke with President Obama's national security adviser, Jim Jones, about the plan:
Related story by Politico -- "Troop Surge Rattles Political Landscape": "With his announcement of a troop increase in Afghanistan, President Barack Obama has complicated an already hazardous political landscape and introduced a highly combustible element into scores of House and Senate races."
-- Bloomberg News -- "Bernanke May Defend Fed Powers In Senate Confirmation Hearing": " Ben S. Bernanke, who led the most expansive use of the Federal Reserve's powers in its 96-year history, may fight efforts to curtail its authority and independence during his confirmation hearing today."
The Senate Banking, Housing & Urban Affairs Committee's hearing begins at 10 a.m. ET. It will be webcast here.
-- The Associated Press -- "Obama Rejoining Economic Debate With Jobs Summit": "Under pressure from Republicans and an impatient public to fix the sputtering economic recovery, President Barack Obama is refocusing on this politically potent issue by talking job creation with business and labor leaders today at the White House."
Related report from NPR's Scott Horsley: "After opening remarks from the president, participants will break into small groups, focusing on areas such as small-business financing, green jobs, and efforts to promote more U.S. exports. Some participants -- such as Nobel laureate Paul Krugman -- have called for a much more aggressive government effort to encourage job growth, but the Obama administration has been wary of adding to the federal deficit."
Comcast Corp. announced Thursday it plans to buy a majority stake in NBC Universal for $13.75 billion, giving the nation's largest cable TV operator control of the Peacock network, an array of cable channels and a major movie studio.
The combination of assets creates a leading media and entertainment company with the proven capability to provide some of the world's most popular entertainment, news and sports content, movies and film libraries to consumers anytime, anywhere. The joint venture will provide consumers the broadest possible access to content, and support high-quality, award-winning content development across all platforms including film, television, and online. It will be anchored by an outstanding portfolio of cable networks and regional sports networks that will account for about 80% of its cash flow, including USA, Bravo, Syfy, E!, Versus, CNBC and MSNBC. The joint venture will be financially strong with a robust cash-flow-generation capability.
The Wall Street Journal says that "combining Comcast -- the nation's largest cable operator and third-largest phone service provider -- with a major media and entertainment conglomerate that owns cable and broadcast TV networks, a major film studio and a theme parks business threatens to further shake up a media industry already reeling from the rise of digital media."
As Bloomberg News notes, though, the deal will face a "gauntlet" of regulators. It writes that the proposed takeover "will draw scrutiny from Obama administration regulators who have said consolidation of U.S. media companies may thwart competition. "
On Morning Edition, NPR's David Folkenflik talked with co-host Renee Montagne about the merger. He says regulators will be asking some tough questions about how much the new company would try to force consumers to pay for its programming:
Pedestrians walk past a Bank of America ATM near the Bank of America headquarters in Charlotte, N.C. (Nell Redmond / AP Photo)
Bank of America said it plans to repay all of the $45 billion it got in federal bailout money by using cash it has on hand and raising more money from a stock offering to repurchase the federal government's ownership stake in the financial institution.
Repaying the money from the Troubled Asset Relief Program or TARP would allow BofA to get out from under some of the federal pay caps it's been operating under ever since the Obama Administration began imposing limits on TARP recipients.
Under terms of the authorization from the U.S. Treasury and banking regulators to repay the $45 billion investment made under TARP, Bank of America will repurchase all 600,000 shares of the company's Fixed Rate Cumulative Perpetual Preferred Stock, Series N; all 400,000 shares of the company's Fixed Rate Cumulative Perpetual Preferred Stock, Series Q; and all 800,000 shares of the company's Fixed Rate Cumulative Perpetual Preferred Stock, Series R. The shares were issued to the U.S. Treasury as part of TARP. Bank of America is not exercising its right to repurchase the related warrants at this time.
Bank of America plans to repay the $45 billion in TARP funds using $26.2 billion in excess liquidity and $18.8 billion in proceeds from the sale of "common equivalent securities." The $18.8 billion issuance of "common equivalent securities" would be treated as Tier 1 Common capital. Shareholders would be asked at a special meeting to be held within 105 days of issuance to approve an increase in the authorized shares outstanding in order to allow the "common equivalent securities" to be converted into common stock. The "common equivalent securities" carry warrants to buy a total of 60 million shares of common stock at $0.01 per share and other benefits if shareholders do not approve an increase in authorized common shares.
General Motors' former chief executive Frederick "Fritz" Henderson, left, and company chairman of the board Ed Whitacre Jr. (Carlos Osorio, File / AP Photo )
By Frank James
In a move that was a surprise, at least to people without an intimate knowledge of internal dynamics of GM's leadership, the automaker announced Tuesday that its CEO, Fritz Henderson, resigned.
Ed Whitacre, the automaker's chairman said he would serve as interim chairman until a replacement for Henderson is found.
Henderson's departure is the second by a GM CEO in 2009. Rick Wagoner was forced out earlier this year when the Obama Administration demanded a new leader in exchange for the billions of dollars of federal taxpayer money the beleaguered auto giant received as part of a controversial bailout.
Whitacre said he wanted to reassure all GM's stakeholders, it's unionized workers and dealers, that the company's "business operations would continue as normal."
He added:
You know I remain more convinced than ever that our company is on the right path and that we will continue to be a leader in offering the worldwide buying public the highest quality, highest value cars and trucks. But we now need to accelerate our progress toward that goal which means the return to profitability and repaying the American and Canadian taxpayers as soon as possible.
The Detroit Free Press's Freep.com site is reporting a few interesting things. One is that the Obama Administration had considered jettisoning Henderson the same time it got rid of Wagoner but reconsidered because of the time it would take to find a new CEO.
It's also reporting that Whitacre has a reputation as a very difficult boss. So Henderson's exit may have something to do with that dynamic.
An Freep.com excerpt:
Gerald Meyers, a professor at the University of Michigan School of Business, has known Whitacre for years. Meyers described him as a demanding boss who "takes no prisoners."
Henderson, Meyers said, "didn't stand a chance with Ed as his boss. If it was Jesus Christ, he would have bowled him over."
As we reported a short time ago, a sheriff's spokesman in Pierce County, Washington, says police have shot and killed the man suspected of killing four officers on Sunday.
The story that's getting top play across most media outlets, understandably, is tonight's address to the nation by President Barack Obama -- when he will lay out the reasons why he's decided to send more than 30,000 additional U.S. military personnel to Afghanistan and what he sees as the mission they're being asked to complete.
Also on Morning Edition, NPR's Don Gonyea looked back at another speech delivered by a president at West Point -- then-president George W. Bush's 2002 address in which he was upbeat about the war in Afghanistan:
White House spokesman Robert Gibbs, on CNN's American Morning, said that the president will also discuss how long he things U.S. forces will need to stay in Afghanistan.
The New York Times writes that Obama "issued orders to send about 30,000 additional American troops to Afghanistan as he prepared to address the nation Tuesday night to explain what may be one of the most defining decisions of his presidency."
The independent Stars and Stripes reports from Afghanistan that "with President Barack Obama poised to announce on Tuesday a surge of additional U.S. troops into Afghanistan, U.S. and Canadian forces stationed in the south of the country are anticipating reinforcements to help them secure the crucial city of Kandahar and turn the tide against rebels in this longtime Taliban stronghold."
ABC News' Political Punch blog says its been told by a "senior administration official" that the president will try to deliver this tough message: "The era of the blank check for (Afghan) President (Hamid) Karzai is over."
And over at Politico, there's more criticism for the president from former vice president Dick Cheney: "On the eve of the unveiling of the nation's new Afghanistan policy, former Vice President Dick Cheney slammed President Barack Obama for projecting 'weakness' to adversaries and warned that more workaday Afghans will side with the Taliban if they think the United States is heading for the exits."
NPR will have extended coverage of the president's address, which is scheduled to begin at 8 p.m. ET. Click here to find an NPR station near you.
NPR.org will have the audio, and The Two-Way will be live-blogging.
Other stories making headlines include:
-- The New York Times -- "In Wake Of Dubai, Trying To Predict The Next Blowup": "As Dubai, that one-time wonderland in the desert, struggles to pay its bills, a troubling question hangs over the financial world: Is this latest financial crisis an isolated event, or a harbinger of still more debt shocks? For the moment, at least, global investors seem to be taking Dubai's sinking fortunes in their stride. On Monday, the American stock market rose modestly, even as share prices plunged throughout the Persian Gulf."
-- The Atlanta Journal-Constitution -- Atlanta Votes On New Mayor: "Early Atlanta voters faced cold but dry weather Tuesday as they headed to the polls to cast ballots in the mayoral runoff." Candidate Mary Norwood, a two-term city councilwoman, faces off against Kasim Reed, a former state senator. "Several polls suggest the race is tight and both candidates have attacked each other's record with increased intensity. The volatile issue of race is also a factor in the runoff. Most voters cast their ballots along racial lines in the Nov. 3 general election, and Norwood has said 'some' are trying to divide the city along racial lines in this election. Norwood is white and Reed is black." Reed is a Democrat. Norwood is an independent -- though, as Georgia Public Broadcasting has reported, local Democrats accuse her of leaning toward the Republican side of he aisle.
As markets around the world continue to quiver because of Dubai's debt problems, it's worth refreshing our collective memory about the United Arab Emirates and its six states -- including Dubai.
The Trucial States of the Persian Gulf coast granted the UK control of their defense and foreign affairs in 19th century treaties. In 1971, six of these states -- Abu Zaby, 'Ajman, Al Fujayrah, Ash Shariqah, Dubayy, and Umm al Qaywayn - merged to form the United Arab Emirates (UAE). They were joined in 1972 by Ra's al Khaymah. The UAE's per capita GDP is on par with those of leading West European nations. Its generosity with oil revenues and its moderate foreign policy stance have allowed the UAE to play a vital role in the affairs of the region.
Then there's the extensive reporting that American Public Radio's Marketplace did from Dubai last year. One piece of that package -- Amy Scott's look at how different the opulent Dubai is from other cities in the region:
And we have to mention Burj Dubai, the world's tallest structure. The 2,500-foot-tall skyscraper is set to open in January. It is, author Jim Krane tells CNN.com, a symbol of the city's problems:
"Dubai doesn't really need to have to build tall asides from prestige purposes. If you look at it, it's a really bad idea. It uses as much electricity as an entire city. And every time the toilet is flushed they've got to pump water half a mile into the sky," he said.
Krane is due on Morning Edition tomorrow. Here's part of his conversation with co-host Renee Montagne. As he tells her, Dubai has long been refuge for those in the region who want to escape oppressive regimes:
Click here to find an NPR station near you that broadcasts ME.
President Barack Obama is scheduled to lay out his latest plans for the war in Afghanistan tomorrow evening, and stories continue to emerge about what he's expected to say and how he will say it.
As NPR's Cokie Roberts told Morning Edition's Steve Inskeep, Obama will be addressing several audiences -- including the American public, which wants to hear details about the goals and timetable for withdrawal of U.S. forces; and Pakistan, which he will seek to assure that the U.S. won't completely leave the region "for a good time to come":
The New York Times writes that the president "plans to lay out a time frame for winding down the American involvement in the war in Afghanistan when he announces his decision this week to send more forces."
USA TODAY adds that Obama's plan "involves more than sending additional forces" and will address reducing civilian casualties, protecting the Afghan population, concentrating forces in key regions and "increasing the pace of training Afghan police and soldiers."
There's related news about one of Afghanistan's important neighbors. The Washington Post writes that "President Obama has offered Pakistan an expanded strategic partnership, including additional military and economic cooperation, while warning with unusual bluntness that its use of insurgent groups to pursue policy goals 'cannot continue'. "
NPR's Michele Kelemen reported on Morning Edition that in the past, the U.S. has not monitored aid to Pakistan very well. The aim of much of the aid now, she says, will be to fund very "visible" projects such as bringing running water to schools and medical clinics:
Other stories making headlines this morning include:
-- Bloomberg News -- Dubai Concern Eases: "Emerging-market stocks rebounded (today), sending the MSCI Emerging Markets Index to its biggest gain in two weeks, as Abu Dhabi's pledge to back Dubai's banks soothed investors. The dollar retreated, sending commodities higher."
From a related story by The Guardian: "The share falls seen in Abu Dhabi and Dubai have not been mirrored around the world. In fact, many stock markets have seen pretty decent rallies today. Japan's Nikkei closed nearly 3% higher, with the Hong Kong Hang Seng index gaining 3.25%."
From a related report from Larry Miller in London -- Some Asian Markets May Have Overreacted:
-- The Associated Press -- Conservative Rancher Elected In Honduras: "Honduras has a newly elected president. The question is whether he can convince the world the vote was legitimate and show that Hondurans want to put a summer coup behind them. Announcing that conservative rancher Porfirio Lobo was headed for victory in Sunday's presidential contest, election officials said more than 60% of registered voters cast ballots, an increase from the last election, when about 55% voted."
-- The Orlando Sentinel -- Tiger Woods Hires Lawyer, Declines To Speak To Police, Says Accident Was His Fault.
As we just posted, there's considerable reporting and analyses out there about what President Barack Obama will be saying next week when he outlines his plan for sending more U.S. troops to Afghanistan and the mission they will be asked to perform.
Other stories making headlines this morning include:
-- Dawn.com (of Pakistan) -- Seven Indicted Over Mumbai Attacks: "A Pakistani court on Wednesday charged seven suspects in connection with the Mumbai attacks that killed 166 people one year ago, a defense lawyer said. The men were indicted at an anti-terrorism court in a high security prison in the city of Rawalpindi on the eve of the first anniversary of India's worst militant attacks, which dramatically soured relations with rival Pakistan. All seven pleaded not guilty to the charges."
From a related story by the Associated Press: "Proceedings are taking place behind closed doors at a maximum-security prison not far from the capital, Islamabad. Lawyers for the suspects have said they are unable to disclose any details of the charges against the men, who have appeared in court for pre-indictment hearings in recent months."
-- The Associated Press -- "Toyota To Replace 3.8 Million Gas Pedals": "Toyota Motor Corp. will replace gas pedals on 3.8 million recalled vehicles in the United States to address problems with sudden acceleration or the pedal becoming stuck in the floor mat, The Associated Press has learned."
2007 to 2010 MY (model year) Camry, 2005 to 2010 MY Avalon, 2004 to 2009 MY Prius, 2005 to 2010 MY Tacoma, 2007 to 2010 MY Tundra, 2007 to 2010 MY ES350, 2006 to 2010 MY IS250, and 2006 to 2010 MY IS 350.
-- Morning Edition -- File Error Might Have Stalled FBI Inquiry Into Fort Hood Suspect Hasan.NPR's Daniel Zwerdling reports that "the FBI might have missed important and troubling clues about the behavior of Maj. Nidal Hasan, the alleged Fort Hood shooter, due to a simple oversight -- FBI agents did not ask Hasan's supervisors at Walter Reed Army Medical Center for the most relevant information from a filing cabinet":
-- The Associated Press -- Eleven More Bodies Recovered In Philippines Killings: "Philippine authorities, under intense public pressure to make arrests in the country's worst election massacre, said Wednesday they are investigating a member of a powerful clan allied with the government along with four police commanders. Officials recovered 11 more bodies Wednesday -- six in a large pit buried alongside three vehicles and five in a mass grave -- bringing the death toll in Monday's attack on an election caravan to 57, including 18 journalists."
To friendship. (Nicholas Kamm/AFP/Getty Images)
-- Morning Edition -- With Summit And State Dinner, Leaders Of U.S. And India Work At Getting Comfortable With Each Other. NPR's Don Gonyea and Andrea Seabrook report on Tuesday's pomp and policy:
Update at 8:10 a.m. ET. And here is video of the two leaders delivering their toasts:
Contributing: Chinita Anderson of Morning Edition.
General Motors confirmed today that the proposed sale of its Saab subsidiary to Koenigsegg Group AB was terminated at the discretion of the buyer.
"We're obviously very disappointed with the decision to pull out of the Saab purchase," said GM President and CEO, Fritz Henderson. "Many have worked tirelessly over the past several months to create a sustainable plan for the future of Saab by selling the brand and its manufacturing interests to Koenigsegg Group AB. Given the sudden change in direction, we will take the next several days to assess the situation and will advise on the next steps next week."
"Microsoft has had discussions with News Corp. over a plan that would involve the media company being paid to 'de-index' its news websites from Google, setting the scene for a search engine battle that could offer a ray of light to the newspaper industry," The Financial Times reports.
As the FT adds:
Microsoft's interest is being interpreted as a direct assault on Google because it puts pressure on the search engine to start paying for content.
News Corp. -- the global giant run by Rupert Murdoch -- includes The Wall Street Journal among its holdings. At the Journal's website this morning, it's being reported that the company "has held discussions with Microsoft Corp. about a partnership that could result in News Corp. removing its newspaper content from Google Inc.'s search engine while continuing to feature it on Microsoft's online properties, according to people familiar with the matter."
At another News Corp. publication, Barron's, the Tech Trader Daily blog wonders whether Murdoch just figured out "how to save the newspaper industry".
Boing Boing's Rob Beschizza writes that "it's easy to believe that (Microsoft) may spew senseless riches into publishers' pockets, radically distorting the news market, just to spite Google."
(Microsoft search engine) Bing can't buy all the news, it can only buy certain brands. If Bing can somehow become the only place you can find news results and working links to the Wall Street Journal and other top papers such as the New York Times, the Washington Post, and the LA Times, for instance, that would be a big reason to switch for a lot of folks. But it's not clear how much Bing would have to pay the news companies of the world for them to give up all the traffic Google sends them in return for a fraction of that traffic and some cash.
Goldman Sachs workers will help clean up after 10,000 Thanksgiving dinners like the above samples by celebrity chef Marc Spooner, center, are served to the needy. (Kathy Willens / AP Photo)
By Frank James
Just because they're masters of the universe doesn't mean the people of Goldman Sachs Group Inc. don't care about their fellow man.
Fairly or not, the investment bank, which reported a $3.2 billion third-quarter profit, is perceived by many as a company that places profits and political power ahead of the general good.
But would a corporate culture that didn't care have three hundred Goldman employees volunteering to tidy up next week after a Salvation Army Thanksgiving dinner for 10,000 needy people?
Or would it create a $500 million fund, as Goldman has, to help finance thousands of small businesses, many of which are having a difficult time finding credit to keep going in the present economic climate?
Internet icon AOL plans to cut about a third of its staff.
In an SEC filing made public today, the company says a proposed restructuring "if approved ... will include the reduction of approximately a third of the Company's current employee base, which will be conducted on a voluntary and involuntary basis."
The Dow Jones newswire says the company "told employees Thursday that it will ask for 2,500 volunteers to be laid off as part of a restructuring effort to reduce its workforce by one-third, according to a spokeswoman."
In the SEC filing, AOL adds that:
The goal of the Restructuring is to reduce ongoing annual operating costs by approximately $300 million. If the Restructuring is approved, the Company expects to incur restructuring charges of up to $200 million.
As the Associated Press notes "the job cuts still need approval from the new AOL board. Time Warner, the New York media conglomerate, said this week that it will spin AOL off to investors Dec. 9."
Bloomberg News points out that AOL's operating revenue fell 50% in the third quarter, "as advertising revenue slumped 18%."
New York State hugely relies on the revenues it gets from Wall Street to help pay the state's bills. So it's small wonder that the New York officials welcomed the news that Wall Street's rise from 2008's financial ashes happened faster than many officials expected.
A report from the New York State Comptroller's office had the glad tidings:
The national economy is slowly improving, but Wall Street has recovered much faster than anyone had envisioned. Profitability is on track to exceed 2006 levels, which was a banner year for the industry. Strong profits have been driven by low interest rates, which reduce the cost of doing business.
Compensation is also increasing faster than expected, leading to expectations of higher bonuses. The federal government, which spent trillions of dollars to support the financial sector, has taken steps that may restrict cash bonuses and defer compensation to future years in an effort to reduce excessive risk-taking and reward long-term performance. While these initiatives may reduce personal income tax collections in the short term, New York State and New York City could benefit from increased stability in the financial sector.
Of course, this will not seem like good news to those predisposed to hate Wall Street for helping to cause the crisis in the first place and for its over-the-top bonuses. For Wall Street haters, this faster-than-expected financial industry recovery, even as the rest of the economy stumbles forward, will provide just one more argument to rein in the masters of the universe.
Get your Cokes while they last at Costco since the wholesaler refuses to restock the product until it reaches agreement with the beverage giant in a price dispute. (Paul Sakuma / AP Photo)
By Frank James
A pricing dispute has Costco refusing to sell Coca Cola which seems almost absurd as Costco declining to sell a six-month supply of anything.
But it's apparently a game of chicken between the two as each company tries to see which will blink first.
Industry analysts expect the fight to fizzle since these kinds of disputes are common in the industry though they usually don't break out into the public like this.
Both sides are just trying to protect what's most important to them. For Coke, it's the need to protect its pricing power at a time when consumers are looking for more deals than ever.
For Costco, it's the need to give those consumers the lowest prices possible, especially when they have to compete with the likes of Wal-Mart.
According to an Associated Press story, Costco isn't removing pallets of Coke from its stores. But it won't be restocking those products until the dispute ends.
IRS Commissioner Douglas Shulman. (J. Scott Applewhite / AP)
By Mark Memmott
The Internal Revenue Service says more than 14,700 taxpayers fessed up and disclosed they had tried to hide money in offshore bank accounts during its recent amnesty program.
"To put it simply, this is a historic milestone for the nation's hardworking taxpayers," IRS Commissioner Douglas Shulman said on a conference call with reporters this morning. In most years, about 100 such taxpayers come forward.
Americans with foreign bank accounts had until Oct. 15 to disclose them and pay past-due taxes and penalties. In exchange, they would get amnesty from stiffer fines or criminal prosecution.
Shulman said the IRS will be collecting "billions of dollars" thanks to the program, the Associated Press reports.
Dow Jones Newswire reports Shulman also said the accounts involved were at banks in more than 70 countries.
And, Forbes writes, Shulman promises the IRS "will be scouring" the disclosures to identify financial advisers who directed clients to the tax dodges.
General Motors "is expected to fully repay the $6.7 billion in U.S. government loans on its books by 2011, four years earlier than required, because its sales have exceeded expectations and its costs have been lower than planned," the Detroit Free Press reports, citing "people close to the talks between GM and the government."
The government debt represents about 13% of the $52 billion that U.S. taxpayers have invested in General Motors, the majority of which was exchanged for a 61% ownership stake in the company.
GM will announce the repayment plan Monday when it releases its preliminary third-quarter earnings results, the person said, speaking on condition of anonymity. The person was not authorized to speak publicly about the plan ahead of the announcement.
General Motors plans an 8 a.m. ET announcement on those third-quarter results. The news conference is to be webcast here.
In light of improving global economic conditions, stabilizing industry sales and its healthier cash position, GM announced today that it plans to accelerate repayment of its outstanding $6.7 billion in UST loans as well as the (Canadian)$1.5 billion (US$1.4 billion) in EDC loans ahead of the scheduled maturity date of July 2015.
GM plans to repay the United States, Canadian and Ontario government loans in quarterly installments from escrowed funds, beginning next month with an initial $1.2 billion payment to be made in December ($1.0 billion to the UST and $192 million to the EDC), followed by quarterly payments. Any escrowed funds available as of June 30, 2010 would be used to repay the UST and EDC loans unless the escrowed funds were extended one year by the UST. Any balance of funds would be released to GM after the repayment of the UST and EDC loans.
General Motors Co. says it lost $1.2 billion from the time it left bankruptcy protection through Sept. 30, far better than it has reported in previous quarters and a sign that the auto giant is starting to turn around its business.
The Federal Reserve is fighting to maintain all its regulatory responsibilities -- including in the area of consumer banking -- as some Democratic lawmakers discuss stripping it of some of its powers and giving them to a new consumer financial protection agency.
So, against that backdrop, the Fed unveiled on Thursday new rules meant to restrain some of the overdraft fees banks charge consumers.
The Federal Reserve Board on Thursday announced final rules that prohibit financial institutions from charging consumers fees for paying overdrafts on automated teller machine (ATM) and one-time debit card transactions, unless a consumer consents, or opts in, to the overdraft service for those types of transactions.
Before opting in, the consumer must be provided a notice that explains the financial institution's overdraft services, including the fees associated with the service, and the consumer's choices. The final rules, along with a model opt-in notice, are issued under Regulation E, which implements the Electronic Fund Transfer Act.
"The final overdraft rules represent an important step forward in consumer protection," said Federal Reserve Chairman Ben S. Bernanke. "Both new and existing account holders will be able to make informed decisions about whether to sign up for an overdraft service."
NPR's Tamara Keith reported on the new rules for the network's newscast. A snippet:
TAMARA: The new rules will require banks to ask their customers if they want overdraft protection on ATM and one-time debit card purchases. As it is now, consumers are often automatically enrolled in overdraft services that can lead to hefty fees on even small purchases. Starting July first, customers will have to actively opt in. Gail Hillebrand is with Consumer's Union.
Maybe bankers and other high finance types need to stop talking about God being on their side.
As commentator Jonathan Weil writes today at Bloomberg.com, those who argue that too-big-to-fail banks and other institutions need to be broken up must be cheering now that there's been a series of "we do God's work" type of quotes linked to executives from Barclays and Goldman Sachs. It's more fuel for their cause.
The juxtaposition of well-heeled Wall Street sorts -- some of whom are at firms that benefited from government bailouts -- making the case that huge profits and big bonuses are good for everyone and therefore must be pleasing to the Lord, are drawing some sharp barbs.
"I think the bankers who took government money and then gave out obscene bonuses are the same self-interested sorts Jesus threw out of the temple," writes Maureen Dowd of The New York Times.
"Wow, we knew Jesus was all about the meek inheriting the earth, but we never realized he meant for it to happen through trickle-down," says New York's Daily Intel blog.
Weil rounds up three of the recent quotes that have set tongues wagging and bloggers blogging:
Intel Corporation and Advanced Micro Devices today announced a comprehensive agreement to end all outstanding legal disputes between the companies, including antitrust litigation and patent cross license disputes.
In a joint statement the two companies commented, "While the relationship between the two companies has been difficult in the past, this agreement ends the legal disputes and enables the companies to focus all of our efforts on product innovation and development."
Under terms of the agreement, AMD and Intel obtain patent rights from a new 5-year cross license agreement, Intel and AMD will give up any claims of breach from the previous license agreement, and Intel will pay AMD $1.25 billion.
Intel has also agreed to abide by a set of business practice provisions. As a result, AMD will drop all pending litigation including the case in U.S. District Court in Delaware and two cases pending in Japan. AMD will also withdraw all of its regulatory complaints worldwide. The agreement will be made public in filings with the Securities and Exchange Commission.
As Frank wrote last week, though, Intel faces several other legal challenges to its practices.
Regarding today's announcement, The Wall Street Journal's Law Blog says "Wowza. Color us surprised. For a while there, the AMD/Intel antitrust situation had all the makings of a battle for the ages."
This combination will transform the networking industry and underscore HP's next-generation data center strategy built on the convergence of servers, storage, networking, management, facilities and services. The resulting business outcome will help customers simplify the network, deploy a unique and innovative edge-to-core network fabric for the enterprise and improve IT service delivery capabilities, all delivered with best-in-class price-performance.
"Companies are looking for ways to break free from the business limitations imposed by a networking paradigm that has been dominated by a single vendor," said Dave Donatelli, executive vice president and general manager, Enterprise Servers and Networking, HP. "By acquiring 3Com, we are accelerating the execution of our Converged Infrastructure strategy and bringing disruptive change to the networking industry. By combining HP ProCurve offerings with 3Com's extensive set of solutions, we will enable customers to build a next-generation network infrastructure that supports customer needs from the edge of the network to the heart of the data center."
Cadbury has rejected Kraft Foods attempt to get its hands on the British candymakers famous chocolate eggs. (Graeme Robertson / Getty Images))
By Frank James
Cadbury PLC, the British candy maker, rejected Kraft Foods Inc.'s hostile $16.3 billion takeover offer on grounds that the offer wasn't rich enough.
Kraft, a U.S. food giant, made an initial bid in September which was greeted with a thanks-but-no-thanks response from Cadbury. The American company followed up with a hostile bid at essentially the same terms as the earlier offer.
But Cadbury has rejected that bid too, saying that since Kraft's stock price has slid following its September offer, Kraft is actually offering Cadbury shareholders less value than before.
A Cadbury statement makes clear, however, that the rejection isn't all about money. Cadbury clearly prefers to remain an independent company.
Furthermore, Cadbury trash talks Kraft, calling itself an "exceptional standalone business" and Kraft a "low growth conglomerate." Ouch.
Sales results at some of the nation's biggest retailers may bode well for the always-crucial holiday shopping season, NPR's Scott Neuman reports:
It wasn't exactly a spending spree, but consumers spurred by early holiday discounts and a gradually improving economy helped push many retailers to better-than-expected sales for the month.
According to a Thomson Reuters survey, eight retailers posted results that beat Wall Street estimates. Five others missed their sales forecasts.
Among the winners were Costco, whose club store sales rose 5%, while the clothier The Gap, boosted by its discount Old Navy outlets, posted a 4% gain.
But Children's Place Retail Stores, teen fashion outlet Wet Seal and Stage Stores, an apparel and accessory retailer, all reported declines.
The October figures follow better-than-expected September numbers and could be a good sign for holiday shopping.
And here's the audio version of Scott's report. He just filed it for the NPR Newscast:
Intel, which dominates the global computer microprocessor business, has used illegal means to reinforce its power according to New York State Attorney General Andrew Cuomo who filed a federal antitrust lawsuit Wednesday.
New York State Attorney General Andrew Cuomo is the latest regulator to accuse microchip giant Intel of using illegal practices to hurt competitors and consumers. (Paul Sakuma / AP Photo)
Cuomo essentially accused Intel of violating federal and state antitrust laws by bribing computer makers to use its microprocessors and not those of its competitors.
Over the last several years, Intel has extracted exclusive agreements from large computer makers in which they agreed to use Intel's microprocessors in exchange for payments totaling billions of dollars. Intel also threatened to and did in fact punish computer makers that they perceived to be working too closely with Intel's competitors. Retaliatory threats included cutting off payments the computer maker was receiving from Intel, directly funding a computer maker's competitors, and ending joint development ventures.
"Rather than compete fairly, Intel used bribery and coercion to maintain a stranglehold on the market," said Attorney General Cuomo. "Intel's actions not only unfairly restricted potential competitors, but also hurt average consumers who were robbed of better products and lower prices. These illegal tactics must stop and competition must be restored to this vital marketplace."
To obtain exclusive agreements, Intel paid hundreds of millions of dollars annually - and in some years billions of dollars - in so-called "rebates" to individual computer makers. These rebates were actually just payoffs with no legitimate business purpose that Intel invented to disguise their anticompetitive nature. Intel also attempted to erase the most obvious traces of its anticompetitive scheme by eliminating crucial but flagrantly objectionable provisions from written agreements or by camouflaging language about illegal guaranteed market shares with terms like "volume targets."
The morning-after punditry is in full-swing now that the smattering of elections across the nation are over. As we wrote, Republicans had a good day -- winning the governors' mansions in New Jersey and Virginia. But Democrats managed to take advantage of a split with the GOP to take a New York congressional seat that had been in Republican hands since before the Civil War.
NPR's Political Junkie blog will have much more about the election results as the day continues.
Among the other stories making headlines:
-- The Guardian -- "British Soldiers Killed In Attack By Afghan Policeman": "Five British soldiers have been killed and several others injured in a gun attack by a 'rogue' Afghan policeman in Helmand province, the Ministry of Defense said today. The soldiers -- three from the Grenadier Guards and two from the Royal Military police -- were killed by gunshot wounds suffered in the attack, which happened in the Nad-e'Ali district yesterday."
NPR's Soraya Sarhaddi Nelson reports from Kabul: The Afghan police officer ran from the scene, and "the feeling is that he's crossed over and joined the Taliban."
-- BBC News -- "Iran Police Clash With Protesters": "Police have clashed with opposition supporters in the Iranian capital, Tehran, witnesses and state media say. Police used tear gas and batons, said witnesses. Unconfirmed reports said the authorities had also opened fire."
Related conversation on Morning Edition -- Protests Were Widespread Despite Government's Warning: Borzou Daragahi of the Los Angeles Times talks with host Steve Inskeep about this 30th anniversary of the takeover of the U.S. embassy in Tehran, and the remarkably different (anti-government) kind of protests that occurred today:
-- Morning Edition -- Secretary Clinton Says Her Comments About Israeli Settlements Did Not Create A "Long-Term Problem". The secretary of State spoke with NPR's Jackie Northam:
-- CNN International -- "Israel Detains Ship Loaded With Weapons": "The Israeli Navy detained a ship loaded with weapons that was traveling about 100 miles west of the country's coast and headed to Syria, Israeli officials said Wednesday. The ship was detained on Tuesday and was escorted to an Israeli port to be searched, an Israel Defense Forces statement said."
-- The Wall Street Journal -- "Fears Of A New Bubble As Cash Pours In": "Concerns are mounting that efforts by governments and central banks to stoke a recovery will create a nasty side effect: asset bubbles in real-estate, stock and currency markets, especially in Asia."
Related news to watch for today: Federal Reserve policymakers end two-days of meetings. They're expected to say this afternoon that they aren't going to adjust short-term interest rates, which it how is holding between zero and 0.25%.
-- The Times of London -- "German Government Blasts 'Unacceptable' GM U-Turn": "Germany's Economic Minister today branded a decision by America's General Motors to scrap the sale of its European business as 'totally unacceptable.' ... British unions were delighted with the decision, which was announced late yesterday after a GM board meeting in Detroit."
Related story by The Detroit News -- "GM Calls Off Sale, Keeps Opel": "General Motors Co.'s board of directors Tuesday voted to keep its German carmaker, Adam Opel GmbH, instead of selling it to Canada's Magna International Inc. and its Russian partner, Sberbank. The board based its decision, in part, on an improved business environment in Europe and GM's overall financial health and stability since emerging from bankruptcy court after receiving about $50 billion in federal aid."
Berkshire Hathaway Inc., the legendary business led by legendary investor Warren Buffett, announced this morning that it is spending $34 billion to buy the 78% of Burlington Northern Santa Fe Corp. that it doesn't already own.
In announcing the purchase, Buffet said that:
"Our country's future prosperity depends on its having an efficient and well-maintained rail system. Conversely, America must grow and prosper for railroads to do well. Berkshire's $34 billion investment in BNSF is a huge bet on that company, CEO Matt Rose and his team, and the railroad industry. Most important of all, however, it's an all-in wager on the economic future of the United States. I love these bets."
Berkshire also owns MidAmerican Energy Holdings, which controls power companies in the Midwest and Pacific Northwest. The railroad could be a strategic acquisition because its tracks run right through both regions, a major coal supply route for power plants.
Update at 10:30 a.m. ET. As NPR's Daniel Zwerdling reports, Buffett loves to invest in companies that do basic things:
Increased shipments of disinfecting products to meet demand associated with the H1N1 flu pandemic, reflected in all-time record shipments of Clorox disinfecting wipes to retail and institutional customers.
For all things flu- and health-related, see the NPR Health Blog.
"Goldman Sachs: Low Road To High Finance." That's the name McClatchy Newspapers has given to a multi-media report, based on five months of investigation, into "how Wall Street colossus Goldman Sachs peddled billions of dollars in shaky securities tied to subprime mortgages on unsuspecting pension funds, insurance companies and other investors when it concluded that the housing bubble would burst."
The firm tells McClatchy reporters it had no duty to tell those investors about what it thought was going to happen to the housing market. Check out the report and see if you agree.
As we just reported, President Hamid Karzai has been declared the winner in Afghanistan's presidential election -- without having to go through the runoff that had been scheduled for this coming Saturday.
His challenger, former foreign minister Abdullah Abdullah, dropped out of the runoff yesterday. Abdullah said he did not think the process would be transparent enough. Already, the results of the country's August election had been set aside because of widespread corruption.
This morning's news comes as President Barack Obama continues to review U.S. policy in Afghanistan and considers whether or not to send tens of thousands of more American troops there. Earlier, the Los Angeles Times reported that:
U.S. and other Western officials, who leaned heavily on Karzai to accept a runoff after the tainted election in August, are now pressing him and electoral officials to find a legally acceptable way to cancel the poll and declare Karzai the winner. Neither the U.S. nor the United Nations is prepared to risk more lives for an election with only one candidate, said a Western official familiar with the talks.
There will surely be lots of reaction and analysis about the news from Afghanistan as the day goes on. We'll pass them along as the story develops.
Meanwhile, other stories making headlines include:
The aftermath in Rawalpindi. (Aamir Qureshi/Getty Images)
-- The Associated Press -- "Bomb Outside Bank Kills 30 Near Pakistani Capital": "A suicide bomber killed 30 people outside a bank near Pakistan's capital Monday, as the U.N. said spreading violence had forced it to pull out some expatriate staff and suspend long-term development work in areas along the Afghan border. Islamist insurgents have carried out numerous attacks in Pakistan in recent weeks, killing some 250 people in retaliation for an army offensive in the Pakistani Taliban stronghold of South Waziristan, also along the frontier shared with neighboring Afghanistan."
Related report from NPR's Julie McCarthy in Islamabad: Today's attack in Rawalpindi appeared to target both military personnel and civlians. Both groups were in line at the bank at the time of the explosion.
Update at 9:30 a.m. ET: Both Reuters and the Associated Press are now reporting that the death toll from the bombing stands at 35. We've also updated this post's headline, which earlier put the death toll at 30.
-- The Wall Street Journal -- "CIT Files Its Bankruptcy Plan": "CIT Group Inc. filed for bankruptcy protection Sunday, in a final attempt to restructure and keep the doors open at the century-old commercial lender."
Related report on Morning Edition: " The government lent CIT more than $2 billion a year ago. Taxpayers will probably lose that money as a result of the bankruptcy."
-- Boston Globe -- "Billions In Aid To Banks Not Reaching Many Seeking Loans": "Many small businesses are having a difficult time getting SBA loans from lenders that took government handouts. In addition to frustrating owners who say they need the money to survive, the banks' reluctance to lend undermines a goal of the federal stimulus program: Ease the credit crunch so companies can grow and hire again."
-- San Francisco Chronicle -- "Bay Bridge Stays Closed": "Pushing traffic turmoil into a second week, Caltrans said late Sunday that the workhorse Bay Bridge will probably remain closed through the morning commute after a fix meant to shore up a cracked beam failed a critical stress test. When the region's busiest span will reopen remains unknown. Caltrans officials refused to speculate."
-- Morning Edition -- Yankees Are One Win Away From 27th World Series Title: As NPR's Mike Pesca reports, a key at-bat by Johnny Damon led to the Bronx Bombers' 7-4 win last night in Philadelphia:
The Yankees lead the series three games to one. Game five is tonight, in Philadelphia, at 7:57 p.m. ET.
"Ford Motor Co. today reported (third-quarter) net income of $997 million, or 29 cents per share, compared with a net loss of $161 million, or 7 cents per share, a year ago," the Detroit Free Press writes.
It adds that:
Ford reported an operating profit off $873 million, or 26 cents per share during the third quarter, easily outperforming Wall Street's expectations. An operating profit is a company's earnings from ongoing operations before interest and taxes.
The Detroit News says the news has "stunned Wall Street," which "had been expecting the Dearborn automaker to lose 12 cents a share, according to a survey of 11 analysts by Thomson Reuters. Ford lost $129 million during the same three-month period a year ago."
"Our third quarter results clearly show that Ford is making tremendous progress despite the prolonged slump in the global economy. Our solid product lineup is leading the way in all markets. While we still face a challenging road ahead, our One Ford transformation plan is working and our underlying business continues to grow stronger."
The News adds that:
Ford's third quarter results received a much-needed boost by the federal government's "cash-for-clunkers" program, and by similar stimulus schemes implemented in other countries. But sales are still dramatically lower than they were before the economic crisis began.
Unlike GM and Chrysler, Ford was not shored up by federal bail-out money last year. The company said it did not need such funds.
Lehman Brothers may be gone but its art lives on, and it's for sale. (Brian Zak/Sipa Press / Sipa via AP Images)
By Frank James
It's a Wall Street version of the old saying "ars longa, vita brevis," meaning "art is long, life is short."
Lehman Brothers is no more, having gone bankrupt last year after losing its risky bets on the subprime mortgage market. But the modern and contemporary art that once adorned the walls of Lehman offices around the nation will be auctioned on Sunday by Freeman's, a Philadelphia auction house.
Later today, All Things Considered host Robert Siegel is due to speak with Lutz about how things went. In the meantime, here's the promotional video GM put together:
A coveted visa program that feeds skilled workers to top-tier U.S. technology companies and universities is on track to leave thousands of spots unfilled for the first time since 2003, a sign of how the weak economy has eroded employment even among highly trained professionals.
As the Journal says, "the program, known as H-1B, has been a mainstay of Silicon Valley and Wall Street, where many companies have come to depend on securing visas for computer programmers from India or engineers from China."
By insisting that the salaries of executives at bailed-out financial firms be slashed, the federal government is telling them "guys ... you can't party on like it's 2007," the head of the panel that oversees the bailout program said this morning.
Bad news Tuesday for thousands of employees of Sun Microsystems Inc. The company said it plans to lay off as many as 3,000 workers in the U.S. and abroad as it awaits European Commission approval of its acquisition by Oracle. The would-be acquirer is due to spend $7.4 billion to close the deal.
Sun Microsystems plans to lay off up to 3,000 more people. A year ago it announced it would layoff 6,000. (Paul Sakuma / AP Photo)
Effective October 20, 2009, the Board of Directors of Sun Microsystems, Inc. (the "Company"), in light of the delay in the closing of the acquisition of the Company, approved a plan to better align the Company's resources with its strategic business objectives, including reducing its workforce across the North America, EMEA, APAC and Emerging Markets regions by up to 3,000 employees over the next 12 months (the "Restructuring Plan"). The Company expects to incur total charges ranging from $75 million to $125 million over the next several quarters in connection with the Restructuring Plan, the majority of which relates to cash severance costs and is expected to be incurred in the second and third quarters of the fiscal year ending June 30, 2010.
It's Apple's world. The rest of us just live here. (Lisa Poole / AP Photo)
By Frank James
Apple Inc. once again defied the gravity of high general unemployment and a marketplace where most cell phones are sold like commodities, reporting that its fiscal fourth quarter profit rose 47 percent. Financially speaking, those are some mad hops.
Not surprisingly, the company reported it sold more Macs and iPhones in the fourth quarter which ended Sept. 26 than in any prior quarter.
Thus, its revenue for the quarter was $9.87 billion with a net profit of $1.67 billion, or $1.82 per share. That made the fourth quarter the most profitable quarter in Apple's history.
The 2009 fourth quarter compared with revenue for the year-earlier quarter of $7.9 billion and net income of $1.14 billion, or $1.26 a share. International sales were almost half Apple's revenue for the quarter, 46 percent to be precise.
The company sold more than 3.0 million Macintosh computers for a 17 percent increase in the 2009 fourth quarter over the year-earlier's quarter.
It also sold 7.4 million iPhones during the quarter, 7 percent more than the comparable, year ago quarter.
But its iPod sales suffered an 8 percent from the prior year's fourth quarter, with the company selling 10.2 million of those units. Consumers were clearly trading in their iPods for the more versatile iPhones.
The nation's second-largest bank, which lost $2.24 billion after accounting for preferred dividends, said its losses for failed loans came to almost $10 billion during the July-September period, up almost $1 billion from the second quarter. The bank also added $11.7 billion to its reserves to cover bad loans.
The company, hurt like other banks by consumers' inability to pay their bills, said credit problems would continue for the near future.
The Obama Administration is intent on making an example of departing Bank of America Chief Executive Kenneth Lewis by sending him into retirement without his 2009 salary and bonus.
Bank of America's exiting CEO Kenneth Lewis won't get his 2009 salary and bonus but he'll still leave with a ton of money. (Bebeto Matthews / AP Photos)
Kenneth Feinberg, the Obama Administration's Wall Street pay czar, wanted a pound of flesh from Lewis because of the billions in bailout money BofA received and the BofA chief agreed to give it. But while Lewis gave a pound, he still keeps a ton.
Mr. Feinberg's rationale is based largely on the fact that Mr. Lewis will leave the firm with a package of retirement benefits and other stock awards worth between $69.3 million and $120 million, these people said.
So shed no tears for Lewis.
As the Associated Press reports:
Kenneth Feinberg, the U.S. Treasury Department's special master for compensation, suggested that Lewis should get no pay for the year and Lewis agreed, Bank of America spokesman Robert Stickler said.
In fact, Lewis will pay back about $1 million he has received so far of a $1.5 million salary.
Wall Street has been eagerly awaiting Feinberg's decisions about pay at seven firms that got the most taxpayer money.
There have been more attacks on military sites in Pakistan today, as we just reported, and a loud explosion has been heard in the city of Peshawar. We'll keep an eye on events there as the day continues.
The economy will be in the news again this morning. At 8:30 a.m. ET, the Bureau of Labor Statistics releases the September consumer price index -- the most-watched measure of inflation at the consumer level. And at 9:30 a.m. ET, stocks resume trading on Wall Street. Will the Dow Jones industrial index move even higher after cracking the 10,000 mark yesterday?
Also today, President Barack Obama visits New Orleans for the first time since taking office last January. At an early afternoon town hall meeting, he'll get a chance to hear directly from residents about how the long, slow recovery from 2005's Hurricane Katrina is going.
Though most New Orleans-area residents were heartened by the news that Obama would be making his first presidential visit to the region Thursday, nine months into his first term, there also has been carping that his itinerary is on the light side.
From WWNO in New Orleans, Eileen Fleming reports that some local officials wish Obama was spending more than a few hours in their battered region:
Other stories making headlines include:
-- The Associated Press -- "Italy Denies Paying Off Taliban In Afghanistan": "The Italian government denied a newspaper report Thursday that its secret services paid the Taliban thousands of dollars to keep an area in Afghanistan controlled by the Italians safe. Premier Silvio Berlusconi's office called the report in the Times of London 'completely groundless.' The defense minister said the paper published 'rubbish.' "
Times of London -- "Berlusconi Attempts To Duck Afghanistan Bribe Scandal": "Silvio Berlusconi today sought to duck the blame for a series of secret Italian payments to Taliban fighters that left French soldiers exposed in Afghanistan. The Italian prime minister denied any knowledge of money paid to Afghan warlords in an apparent attempt to divert attention over the clandestine deals to his predecessor's administration. The Times has learned that when French soldiers arrived to assume control of the Sarobi area, east of Kabul, in mid-2008, they were not informed that the departing Italians had kept the region relatively peaceful by paying local Taliban fighters to remain inactive.
In Kabul, a U.S. spokesman for NATO forces in Afghanistan denied the allegations. "We don't do bribes," Col. Wayne Shanks said. "We don't pay the insurgents."
-- Morning Edition -- Zazi Allegedly Made Contact With Top Al-Qaida Operative. "The man arrested last month for allegedly plotting to blow up targets in New York contacted one of Osama bin Laden's right-hand men, U.S. intelligence officials say." NPR's Dina Temple-Raston reports:
-- The New York Times -- "Public Option Is Next Big Hurdle In Health Debate": "As the White House and Congressional leaders turned in earnest on Wednesday to working out big differences in the five health care bills, perhaps no issue loomed as a greater obstacle than whether to establish a government-run competitor to the insurance industry."
Bruce Wasserstein, the chief executive of Lazard Ltd. and one of Wall Street's biggest names, has died at the age of 61.
The New York Times reported this:
The cause of death could not be immediately learned, though he had been hospitalized earlier this week for what was described as an irregular heartbeat.
Bruce Wasserstein, one of Wall Street's best known investment bankers, is dead at age 61. (Michael Nagle / Getty Images)
Mr. Wasserstein was one of the pre-eminent deal makers of his time, helping forge the modern image and role of the investment banker.
The descendant of Eastern European immigrants, Mr. Wasserstein attended college at 16 and earned law and business degrees from Harvard. After a stint as a corporate lawyer, he decamped to investment bank First Boston Corp. There, he and another deal maker, Joseph Perella, helped unleash the mergers and acquisitions boom that defined the 1980s.
During that decade Mr. Wasserstein forged the persona of the modern investment banker. For Mr. Wasserstein and a cadre of other sharp-witted young guns, banking was no longer the gentlemanly art practiced at places like Lazard. It was more akin to brawling in expensive suits, with tortuous financial tactics, platoons of lawyers and public relations deployed as M&A weapons.
Wasserstein had a famous sister, playwright Wendy Wasserstein, who died of lymphoma in 2006.
Rather, according to the Journal, it's a sign of "stabilization":
It is the first time since JPMorgan Chase bought the collapsing Washington Mutual Inc. in September last year that assets and deposits didn't shrink. Loan balances continued to shrink as the recession took its toll, but lending became more profitable.
JPMorgan shareholders also cheered hints from executives that the firm's nickel-per-share dividend could be restored to as much as a dollar if everything comes up aces for the firm early next year. And even though the bank's loan loss reserves nearly doubled again in the third quarter, there appears to be a light at the end of that tunnel as well.
As MarketWatch and the Associated Press report, the news from Morgan and a good earnings report from Intel have pushed stock futures higher. That raises the prospect of the Dow Jones industrial average crossing the 10,000-level; perhaps today. It closed Tuesday at 9,871.
Watch for renewed outrage today over bonuses paid to executives at financial firms that got federal bailouts as Congress hears that the Treasury Department did not understand AIG's pay system well enough to prevent the billions in bonuses that the ailing insurer handed out last fall.
The New York Times writes that Kenneth Feinberg, the so-called federal pay czar, is "to force the American International Group to reduce $198 million in bonuses promised to employees of its trading unit, where problems posed a threat to the global financial system last year."
But, says the Times, Feinberg "is running into legal hurdles because those bonuses fall outside new rules against bonus payments at companies receiving government assistance. The bonus agreements at issue were struck before last year's emergency rescues by the Treasury and the Federal Reserve, and thus are not directly covered by the new rules."
Hummer display at a car show in Shenzhen city in Guangdong province in June 2009.( Imaginechina via AP Images)
By Frank James
It has been widely expected that General Motors' Hummer unit, the maker of trucks inspired by the U.S. military's Humvee, would soon have a new Chinese owner.
On Friday, Hummer's sale became official with GM announcing that had reached a definitive agreement with China's Sichuan Tengzhong Heavy Industrial Machinery Co. Ltd.
GM didn't disclose the sales price. But reports are that the sale price was about $150 million, much less than the $500 million GM had estimated it could sell the company for in its bankruptcy filing.
Once a symbol of the American penchant for really giant gas-guzzling vehicles, the Hummer brand became something of an automotive dinosaur when U.S. gas prices soared to $4 a gallon last year.
NPR's Frank Langfitt reported the following for the network's newscast:
Tengzhong makes things like dump trucks -- not passenger vehicles.
Auto analysts say it's buying Hummer in part for the brand name and technological know-how.
Crystal Jiang follows the Chinese auto industry as an associate professor of management at Bryant University in Rhode Island.
She thinks Tengzhong wants to develop a more fuel-efficient Hummer and sell it to China's new rich.
JIANG: "Look how Chinese consumers buy vehicles. It's not about the flexibility, utility or reliability. It's about my social status"
Under the terms of the definitive agreement, the buyer will acquire the ownership of the HUMMER brand, trademark and tradenames, as well as specific IP license rights necessary for the manufacture of HUMMER vehicles. The buyer will also assume the existing dealer agreements relating to HUMMER's dealership network.
Tengzhong intends to purchase HUMMER through an investment entity, in which it will hold an 80 percent stake. Mr. Suolang Duoji, a private entrepreneur with holdings that include the Hong Kong-listed thenardite producer Lumena, will hold the remaining 20 percent stake. Financial terms of the agreement were not disclosed.
As we reported a short time ago, the 2009 Nobel Prize in Physics was awarded today to three scientists who pioneered fiber optics and the transmission of digital data over those lines.
Coming up this afternoon, President Barack Obama will visit the National Counterterrorism Center in McLean, Va. The Washington Post says he will tell intelligence officials "that their recent successes have proved how effectively multiple agencies can perform when they work in concert." As the Post adds:
The White House has been charting a delicate course as it attempts to turn the page on Bush-era anti-terrorism policies. Even as Obama wages a war in Afghanistan that he has called critical to curbing terrorism, his administration is trying to defend itself from criticism by former vice president Richard B. Cheney and other Republicans for casting aside what they say are critical tools for protecting the United States.
Obama aides pointed to the events leading up to the recent arrest of Najibullah Zazi as a prime example of what they say is the president's deep involvement in anti-terrorism efforts.
As for other stories making headlines, they include:
-- The Independent -- Arab States, China, Russia, Japan And France Are Discussing Not Using Dollar For Oil Trading: "In the most profound financial change in recent Middle East history, Gulf Arabs are planning -- along with China, Russia, Japan and France -- to end dollar dealings for oil, moving instead to a basket of currencies including the Japanese yen and Chinese yuan, the euro, gold and a new, unified currency planned for nations in the Gulf Co-operation Council, including Saudi Arabia, Abu Dhabi, Kuwait and Qatar. ... The plans, confirmed to The Independent by both Gulf Arab and Chinese banking sources in Hong Kong, may help to explain the sudden rise in gold prices, but it also augurs an extraordinary transition from dollar markets within nine years."
Related story by Bloomberg News -- "Saudi Bank Governor Denies Talks To Replace Dollar": "Saudi Arabia hasn't held talks with China and other countries on dropping the dollar as the currency for pricing oil, Saudi Central Bank Governor Muhammad al-Jasser said, denying a report in the U.K.'s Independent newspaper. The Independent report is 'absolutely incorrect' and there has been 'absolutely nothing' of that nature discussed between Saudi Arabia, the world's biggest oil exporter, and other countries, al-Jasser told reporters in Istanbul, where he's attending an International Monetary Fund summit. The dollar pared losses after his remarks."
-- Morning Edition -- McChrystal In Hot Water Over "Appearance" Of Speaking Out Of Line.NPR's Tom Bowman reports that the comments made by the top U.S. and NATO commander in Afghanistan are not all that unusual:
Related story by The Wall Street Journal -- "Afghan War Units Begin 2 New Efforts": "The Pentagon is establishing two new units devoted to the Afghan war, highlighting the military's focus on the conflict even as the White House considers scaling back the overall U.S. mission there. The units -- a so-called Afghan Hands program run out of the Pentagon and a new intelligence center within Central Command, which oversees the wars in Iraq and Afghanistan -- are designed to help troops deepen their intelligence about the country's complex political and tribal dynamics."
-- The New York Times -- "U.S. Push To Expand In Pakistan Meets Resistance": "Steps by the United States to vastly expand its aid to Pakistan, as well as the footprint of its embassy and private security contractors here, are aggravating an already volatile anti-American mood as Washington pushes for greater action by the government against the Taliban."
-- Morning Edition -- "Tale Of Exploding Assassin Worries Security Officials": An al-Qaida suicide bomber who had hidden an explosive inside his body managed to have a private meeting with a Saudi prince. The resulting explosion killed the bomber, the prince was only slightly injured -- and security experts are deeply troubled. NPR's Mary Louise Kelly reports:
Contributing: Chinita Anderson of Morning Edition.
It is somewhat ironic, of course, for a company that spent 30 years or so defending itself against complaints from the Beatles over the name "Apple" to be involved in something like this.
But the story really got this blogger thinking back to the days of "five and dimes", or "5 & 10s" as dad would say. F. W. Woolworth (no relation to the Australian company) was the big name. But the nearest to home was Newberry's, which had wonderful pneumatic tubes running from the counters to a mysterious office in the back where change was made. Money was literally flying back and forth across the ceiling.
Any five and dimes left where you are?
No, we're not quite old enough to have been in this photo. (Hulton Archive / Getty Images)
These aren't the kinds of things you hear from many Western executives when their companies are in trouble:
-- Bloomberg News -- "Toyota Motor Corp., the world's biggest automaker, is 'grasping for salvation' as it predicts a second straight annual loss, President Akio Toyoda said. ...
"The automaker is one step away from 'capitulation to irrelevance or death,' Toyoda said, citing a study of how companies fail. Toyota has forecast a record loss of 450 billion yen ($5 billion) in the year ending March after the worldwide recession pummeled car demand."
-- The New York Times -- "From grief over a fatal crash linked to Toyota floor mats to regrets over the company's forecast for a second consecutive annual loss, the executive offered a litany of apologies to astonished reporters gathered for a briefing Friday at the Japan National Press Club."
-- Kyodo News -- "Toyoda said a 'once-in-a-century shakeup' is necessary to free the battered auto industry from oil dependence and promised to bring the company back to its roots in pursuing a customer-first policy."
Update at 11:10 a.m. ET: Our original headline on this post was "Michael Vick Lands New Deal With Nike, Agent Says".
Now, Reuters reports:
Nike Inc. on Thursday denied it has an endorsement deal with Michael Vick more than two years after dumping the National Football League quarterback following his arrest for bankrolling a dog-fighting ring.
Nike said it was only supplying gear for Vick as it does with many athletes. In such deals, Nike does not pay the athlete.
"Nike does not have a contractual relationship with Michael Vick," Nike spokesman KeJuan Wilkins said in a statement. "We have agreed to supply product to Michael Vick as we do a number of athletes who are not under contract with Nike."
Two years ago, after Vick's conviction on charges stemming from his involvement in a dogfighting ring, Nike cut its ties with him. Now that he's out of prison and back on an NFL roster with the Philadelphia Eagles, they're apparently partners again.
Consider that Vick's jersey is the NFL's fourth highest-selling since he returned to the league last month (via CNBC). Protests at Eagles games have been minimal, and the Eagles sponsors largely stayed loyal to the team after they announced the Vick signing last month.
But ultimately, the it could be Nike that's putting an early stamp of approval on Vick's vow that he'll be a starter again in the NFL. The shoe giant wouldn't be lining itself up with a backup quarterback.
Cable TV giant Comcast Corp. calls reports that it has agreed to buy NBC Universal for $35 billion "inaccurate," Reuters says.
As the wire service adds, though:
Comcast stopped short of quashing speculation it was interested in NBC Universal, which is owned 80% by General Electric Co. and 20% by French media group Vivendi SA.
NBC Universal, which owns TV networks including NBC, USA and CNBC, along with local TV stations, Universal Studios and theme parks, is valued at between $21 billion and $23 billion, according to a recent report from research firm Sanford C. Bernstein. Another analysis, from J.P. Morgan, pegs NBC Universal's value at $30 billion to $35 billion, valuing Vivendi's investment as high as $7 billion.
The news outlet that has laid claim to the "exclusive" news about the purported deal is still pumping the story. The Wrap, which reports on the entertainment and media businesses, broke the story yesterday afternoon.
Kenneth Lewis, Bank of America's CEO, plans to retire at the end of the year. (Bebeto Matthews / AP Photos)
By Frank James
Ken Lewis, the controversial CEO of Bank of America, will resign at the end of the year.
Lewis, 62, was a lifer at BofA, working there for 41 years and was widely viewed until recently as an unalloyed American success story, the son of a single mother living in Walnut Grove, Mississippi, he eventually became one of the most powerful men in global finance.
He lost some of his gloss amid the chaos of the financial crisis. He oversaw BofA's purchases of both troubled mortgage giant Countrywide and stricken investment banker-brokerage Merrill Lynch.
The Merrill acquisition has caused huge headaches for Lewis. BofA was sued by the Securities and Exchange Commission which alleged that both BofA and Merrill misled investors about huge executive bonuses paid to Merrill employees at the same time BofA was getting billions of dollars in taxpayer money through the Troubled Asset Relief Program.
BofA settled with the SEC but a federal judge threw out the settlement as insufficient.
One subject of debate as Congress considers an overhaul of banking and financial services regulations is whether the Federal Reserve should be turned into something of a "super regulator"; a plan the Obama administration favors.
In a conversation this afternoon, Senate Banking, Housing & Urban Affairs Committee Chairman Chris Dodd told All Things Considered host Robert Siegel about why he opposes giving the Fed superpowers. Basically, the Connecticut Democrat thinks the central bank needs to remain focused on its traditional mission -- setting monetary policy -- and that it would be dangerous to do anything that might threaten the Fed's independence:
Much more from Robert's conversation with the senator is due on today's edition of ATC. Click here to find an NPR station near you.
Planet Money is one place to go for more coverage of all things financial.
"There will be death panels enacted by this Congress, but they will be for non-bank financial institutions that will not be considered too big to die," House Financial Services Committee Chairman Barney Frank, D-Mass., vowed today.
The always quotable Frank's comment came during a hearing in which Treasury Secretary Timothy Geithner endorsed Democratic efforts to "narrow the scope of a new consumer protection agency," the Associated Press writes.
Here's Frank making his point -- which is that letting some financial institutions become "too big to fail" is a large part of what caused the financial crisis that erupted one year ago:
"Death panels," of course, have been much discussed -- and debunked -- in the debate over health care.
General Motors Co. dealers want the automaker to ship as many as four times the number of vehicles the company initially planned to build in October, top executives said Thursday.
In an internal report, obtained by the Detroit News, GM officials were surprised to find dealers wanted far greater numbers than the company had projected. There was higher interest in vehicles such as the Chevrolet Equinox, Buick LaCrosse and GMC Terrain.
The News adds that "Ford Motor Co. announced production increases in August when it became clear that the clunkers program was having a big impact on sales" and that "Chrysler recently announced it was increasing production by 50,000 units and that number will increase by 10,000 when the second shift at its Belvidere, Ill., plant is recalled in mid-November to make more Dodge Calibers."
"Policies that set the pay for tens of thousands of bank employees nationwide would require approval from the Federal Reserve as part of a far-reaching proposal to rein in risk-taking at financial institutions," The Wall Street Journal writes.
Quoting "people familiar with the plan," the Journal says that "under the proposal, the Fed could reject any compensation policies it believes encourage bank employees -- from chief executives, to traders, to loan officers -- to take too much risk."
As the Journal also notes:
Some congressional critics, especially Republicans, argue the Fed is exerting itself too aggressively, a complaint that will surely be amplified by its move to oversee bank pay practices.
There's fresh news from Iraq as the day begins. Convicted "shoe-thrower" Muntadhar al-Zeidi, famous around the world for throwing his footwear at then-president George W. Bush last December in Baghdad, was released from prison.
At the TV station where he's a reporter, al-Zeidi told other journalists today that he was tortured by Iraqi security forces while in prison. The abuse included beatings, whippings and electric shocks, al-Zeidi said. NPR's Nora Raum introduces this report from Quil Lawrence, who is in Baghdad:
Other stories making headlines include:
-- Politico -- Democrats To Vote Today On "Resolution Of Disapproval" Aimed At Rep. Wilson: "House Democratic leaders will move ahead with a 'resolution of disapproval' against Rep. Joe Wilson, R-S.C., on Tuesday afternoon, following through on their threat to sanction the conservative lawmaker for heckling President Obama during his speech to Congress last week." Wilson famously shouted "you lie!" at the president. He has since apologized to the White House -- but has declined to apologize from the House floor.
Reminder -- Last Thursday, we started this online poll -- and as of this morning, nearly 16,000 votes had been cast and the split was an even 50-50. Add your vote if you wish:
-- The Associated Press -- Sen. Baucus Close To Releasing Health Care Plan: "Senate Finance Committee Chairman Max Baucus has been trying for months to write a health care bill that could win Republican support. If he succeeds he may find it's fellow Democrats he has to worry about. Baucus, D-Mont., said Monday that 'we're getting very close' to finalizing sweeping health legislation to enact President Barack Obama's priorities of extending coverage to most of the 50 million uninsured and holding down spiraling health care costs. Following weeks of closed-door negotiations with two other Democratic senators and three Republicans, Baucus plans to unveil his bill Wednesday, and he hopes Republicans are with him. Such a bargain could mark a turning point for Obama's top domestic priority."
-- The New York Times -- "Pakistan Army Is Said To Be Linked To Many Killings In Swat": " Two months after the Pakistani Army wrested control of the Swat Valley from Taliban militants, a new campaign of fear has taken hold, with scores, perhaps hundreds, of bodies dumped on the streets in what human rights advocates and local residents say is the work of the military."
-- Related story on Morning Edition -- "Training A 'Flip-Flop Army' ". Capt. Benjamin Tupper has some stories to tell about his work with new Afghan soldiers. His new book, Welcome to Afghanistan: Send More Ammo, details his time as an embedded trainer in the Afghan National Army:
-- Bloomberg News -- Treasury & Citigroup Exploring Sale Of Government's Stake: "The U.S. Treasury Department and Citigroup Inc. have begun discussing how to sell the 34% stake that the government acquired in the rescue of the bank, people familiar with the matter said. The Treasury, which owns 7.69 billion common shares after a recent preferred-stock conversion designed to shore up the bank's capital, may start unloading the stake as soon as October, one of the people said. It aims to sell the holdings over the next six to eight months, the person said."
-- Morning Edition -- For Swayze, Dancing Was "Most Intense Way To Connect": Actor and Dirty Dancing legend Patrick Swayze died Monday afte ra long battle with pancreatic cancer. He was 57. Jesse Baker profiles the man who set millions of girls' hearts fluttering:
Farewell. (Jae C. Hong / AP)
Over at Monkey See, Linda Holmes recalls what it was like to be 16 when Dirty Dancing came out. And as she says, "making things that are beloved certainly isn't everything, but it is something, and Swayze made things that were beloved broadly and without cynicism."
As for things to watch today, they include President Barack Obama's speech this afternoon to the AFL-CIO in Pittsburgh. And, the Bureau of Labor Statistics issues the latest news on inflation -- the August wholesale prices report.
Saying that $33 million is a "trivial penalty for a false statement that materially infected a multi-billion dollar merger," a federal judge has rejected a proposed settlement between the Securities and Exchange Commission and Bank of America over $3.6 billion in bonuses paid by Merrill Lynch just before it was absorbed by BoA last year.
We've already covered the morning-after news about President Barack Obama's health care address to Congress -- here and here.
As for other stories making headlines, they include the serious and the not-so-serious:
-- The Associated Press -- Commission Orders Some Ballots Be Voided In Afghanistan: "The U.N.-backed commission investigating fraud in Afghanistan's Aug. 20 presidential election has issued its first orders to completely exclude some ballots from the final tally. A statement issued Thursday by the Electoral Complaints Commission says all ballots from five polling stations in Paktika province should be voided because they show clear evidence of fraud. This is a more severe step than ordering a recount, in which the votes could eventually be included."
Related statements from the commission -- Some ballots also voided in:
-- Dow Jones Newswire -- GM To Sell Opel To Canada's Magna: "General Motors Co. said Thursday it had made a decision on the future of German unit Adam Opel GmbH and its U.K. sister company Vauxhall, as people familiar with the matter told Dow Jones Newswires that GM's board had recommended a sale to a consortium led by Canadian car parts maker Magna International Inc."
-- New York Post -- Ellen Lands Place On Idol's Judging Panel: "Ellen DeGeneres is replacing Paula Abdul on American Idol. 'I just finally got the OK ... just moments ago to announce this to you today,' DeGeneres told her studio audience during yesterday's taping of The Ellen DeGeneres Show, airing today."
Related statement at AmericanIdol.com: "As the new judge, Ellen will offer her own unique perspective to the contestants throughout the competition."
Cheap is coming back and that's a good thing, journalist Lauren Weber argues.
Author of the new book In Cheap We Trust, she talked with Morning Edition's Steve Inskeep about why she believes the old American virtue of thriftiness has been on the rise and is just what the economy needs:
There's more about Weber's theory here, including an excerpt from the book. The premise got us wondering about Two-Way readers:
Cheap is a popular word in the news media these days, by the way.
Skype, started in 2002, lets people make calls from their computers to land lines and mobile phones, as well as other computers. It makes money when users call regular phones, set up voice mail and use text-messaging services.
Will Mickey team up with Spidey now? Or maybe the X-Men will turn up as Hannah Montana's body guards?
Walt Disney Co. this morning announced it is acquiring Marvel Entertainment -- parent of the Marvel Comics empire that includes such super characters as Iron Man, Spider-Man and Captain America -- for $4 billion.
Marvel shareholders will be getting $30 a share and 0.745 Disney shares for each one of Marvey that they now own.
-- MarketWatch says it's up to debate whether Disney can " take advantage of the multitude of Marvel characters by creating lucrative new franchises in movies and across other platforms." Also, that Disney CEO Bob Iger "is taking a sizable chance with his own reputation, too. So far in his tenure, he has been a darling of the investment community. With this decision, he expects that Wall Street will applaud his sense of adventure and willingness to take a risk."
-- The Wall Street Journal's Deal Journal is live-blogging the conference call that Disney and Marvel executives are holding this morning. Iger, it reports, said that Disney's marketers will help unlock Marvel's "treasure trove" of characters.
General Motors is boosting production at factories in Lordstown, Ohio, and Orion Township, Mich., to meet increased demand for some vehicles that's been driven by the government's "cash for clunkers" program, the Associated Press reports.
As the AP adds, "Ford Motor Co., Honda Motor Co., Toyota Motor Corp., Hyundai Motor Co. and Chrysler Group LLC all have also announced production increases due to the clunkers program."
In other GM-related news, the Detroit Free Press write that the company "pledged financial support to American Axle & Manufacturing Inc. in a deal that could help the Detroit-based auto supplier avoid a bankruptcy filing and would give GM an ownership stake in the supplier."
Add Reader's Digest to the growing list of famous publishing brands that will be operating under Chapter 11 bankruptcy protection as its parent company tries to rework its debt in a bid to survive.
Reader's Digest over the years. (Reader's Digest / AP Photo)
People of a certain age will remember visiting their doctor's or dentist's offices and passing the time in the waiting room flipping through the Reader's Digests which typically carried boiled down versions of stories that first appeared in other publications. Millions of homes received the paper-back book sized magazine too.
But like many other periodicals, the venerable Reader's Digest has been hammered by the Internet, which has given advertisers a cheaper way to reach consumers, and the economy, which has many companies cutting their advertising budgets.
What makes this story especially interesting is that Reader's Digest Association's CEO Mary Berner, pooh poohed speculation in March that her company would be seeking Chapter 11 protection.
At least she didn't say "never." CEOs often don't want to admit before hand that they intend to file for bankruptcy protection since other businesses and customers often get skittish about dealing with a company they know is headed into bankruptcy court.
Yesterday, a federal judge in Florida "issued a temporary restraining order against Colonial BancGroup freezing $1 billion of its assets," the Montgomery Advertiser writes. As The Birmingham News adds, there's also a federal criminal investigation into "a Florida-based division of Colonial."
The m.p.g. estimates are calculated under the U.S. Environmental Protection Agency's draft procedure for plug-in electric vehicles. (GM CEO Fritz) Henderson added that GM believes it will also get triple digit m.p.g. for a combination of city and highway driving. He didn't give a highway m.p.g. ...
Mileage ratings are tricky to calculate with the Volt. In theory, some drivers would burn no gas for extended periods of time.
It is an electric-drive vehicle, not a hybrid. GM has said it wants the Volt to have a 40-mile range on an electrical charge alone.
The Volt is due to go into production in late 2010 and is expected to cost about $40,000.
Now, according to details released by the companies today, consumers will be able to " 'click and buy' new cars, crossovers and trucks online from participating California Chevrolet, Buick, GMC and Pontiac dealers."
According to the Associated Press, "eBay users who live outside California can contact dealers to see if they're willing to sell and ship vehicles to them."
Goldman Sachs CEO Lloyd Blankfein has warned his employess to avoid making big-ticket, high-profile purchases as the gold-plated Wall Street firm hunkers down amid a firestorm of public and political anger over outsize bonus payments.
The Post says it has gotten that news from "sources at the bank." For the record, Goldman Sachs "declined to comment."
Our friends over at Planet Money last month had the chance to sit down with Goldman Sachs spokesman Lucas Van Praag to talk about the help his company got from taxpayers -- and the billions of dollars it's now making after getting that assistance.
As Planet Money notes, Goldman Sachs:
Just released a fantastic report on its earnings, with net revenues of $23 billion for the first half of 2009. Goldman is setting aside almost half of that money for paying its 30,000 employees. In rough terms, that amounts to almost $400,000 for each worker.
Wall Street executives could see restrictions put on the bonuses they would earn by a bill passed just a short time ago in the House.
As the Associated Press puts it, members bowed "to populist anger" over bonuses paid at banks that received billions of dollars in government bailouts by voting -- almost strictly along party lines -- 237-185 in favor of the measure.
"This is not the government taking over the corporate sector. ... It is a statement by the American people that it is time for us to straighten up the ship," said Rep. Melvin Watt, D-N.C.
Prescribe joint regulations that prohibit any compensation structure or incentive-based payment arrangement that encourages inappropriate risks by financial institutions or their officers or employees that could: (1) threaten the safety and soundness of covered financial institutions; or (2) present serious adverse effects on economic conditions or financial stability.
Its prospects are "uncertain" in the Senate, Reuters says.
Of the 237 "aye" votes today, 235 came from Democrats. All but 16 of the "no" votes came from Republicans. Here's a link to the roll call of the vote.
The two Republicans who crossed party lines: Tim Murphy of Pennsylvania and John Duncan of Tennessee.
The 16 Democrats who crossed party lines: Marion Berry of Arkansas, Dan Boren of Oklahoma, Allen Boyd of Florida, Bobby Bright of Albama, Henry Cuellar of Texas, Parker Griffith of Alabama, Deborah Halvorson of Illinois, Ann Kirkpatrick of Arizona, Frank Kratovil of Maryland, Betsy Markey of Colorado, Michael McMahon of New York, Harry Mitchell of Arizona, Glenn Nye of Virginia, Mike Ross of Arkansas, Vic Snyder of Arkansas and Harry Teague of New Mexico.
Exxon Mobil Corp. reports this morning that it earned $3.95 billion in the second quarter -- a huge amount, but down 66% from the second-quarter 2008's record $11.7 billion, when soaring oil prices boosted the company's results.
According to the Associated Press, the company's earnings "missed the average Wall Street profit forecast by a wide margin."
Not too surprisingly, Exxon Mobil's stock is down about a full percentage point in early trading -- even though the market overall is up.
When times are tough and prices plunge, some grab the chance to scoop up bargains.
The Los Angeles Times says that "in a move that could nearly double its Southern California footprint, the 7-Eleven convenience store chain is taking steps to lease up to 600 new locations in the region. ... (The) seven-year expansion ... would add to the 800 stores that 7-Eleven operates from San Luis Obispo County to the Mexico border."
The federal minimum wage increases tomorrow from $6.55 to $7.25 an hour. On Morning Edition, NPR's David Greene told the story of waitress Jamie Clark and others like her who are hoping the increase will make their lives just a little better. But as David also reported, there's a familiar debate underway about whether the increase might also force some employers to eliminate jobs:
This afternoon on All Things Considered, David summarizes the debate this way:
Amazon.com is usually in the selling business but today it made news for a purchase. The company announced that it's buying online shoe retailer Zappos.com in a deal valued at about $800 million.
WSJ.com has this bit of reporting on the deal which includes the information that Zappos.com's CEO sees the company's business as not just selling shoes but "delivering happiness:"
Amazon.com's overall sales have been rising as more people shop online, some brick-and-mortar stores close and it offers additional product categories. The company has made a series of acquisitions recently, acquiring visual-product-search company SnapTell Inc. for an undisclosed amount last month.
"We are joining forces with Amazon because there is a huge opportunity to utilize each other's strengths and move even faster towards our vision of delivering happiness to customers, employees and vendors," said Tony Hsieh, CEO of Zappos. "We will continue to build the Zappos brand and culture in our own unique way, and we believe Amazon is the best partner to help us do this over the long term."
Just like Coca-Cola, Southwest Airlines and United Airlines found a way to make money in the Great Recession. The two carriers just posted small profits in the second quarter of this year.
NPR's Wade Goodwyn reports that Southwest brought in $54 million and United $28 million. Goodwyn call the returns:
"more of a blip on the radar screen than it is an indication of any sort of turnaround in air travel. But it does speak to the nimbleness of management and workers at two of the nation's most important carriers. Southwest Airlines' traffic has declined, but not as much as many other carriers, as Southwest has filled it seats with discount-ticket passengers.
Southwest's revenue fell nearly 9 percent from the same period last year. Goodwyn notes that it still fared better than Continental Airlines, where a revenue decline of more than 22 percent translated into a quarterly loss of $169 million.
UPDATE: Apple reports it just had its best non-holiday quarter in history, selling 2.6 million Macs and 5 million iPhones and notching a profit of $8.3 billion. NPR's Wendy Kaufman says it helped that Apple cut prices on its computers, introduced a new iPhone and cut the cost of older models. And Yahoo posted second-quarter profits of $141.4 million, up 8 percent, despite a revenue decline of $1.57 billion, or 13 percent.
Real Chinese postal worker, porcelain dog. Stephen Shaver/AFP/Getty Images
Coca-Cola found a way to make money in the Great Recession, posting a 43 percent increase in profits last quarter -- more than Wall Street expected. NPR's Kathy Lohr reports that the beverage giant gulped down $2 billion, up from $1.4 billion at the same time last year.
The secret formula of Coke's continued success? A switch to juices and water as the public grows wary of soft drinks and increased sales overseas, especially in large, fast-growing nations like China and India. From Kathy Lohr:
Case volume in North America fell by one percent, but international case volume increased 5 percent in the second quarter.
Coke, based in Atlanta, would have made more money if it hadn't been for the strong dollar. When customers overseas pay in yuan or rupees, companies have to deal with the exchange rate -- just like tourists. Coke's latest report also benefited from the relatively weak one last year, when the company absorbed big hits from its ongoing restructuring.
"The downturn in economic activity appears to be abating and financial conditions have eased somewhat, developments that partly reflect the broad range of policy actions that have been taken to address the crisis," Federal Reserve Chairman Ben Bernanke just reported to Congress.
The Fed's latest Monetary Police Reportwas just posted here. Bernanke is delivering it to the House Financial Services Committee this hour.
Tomorrow, he testifies on the same subject before the Senate Committee on Banking, Housing & Urban Affairs.
We'll have more from the report and Bernanke's testimony as the House hearing gets going.
Update at 10:35 a.m. ET. Projections:
In April, the Fed was forecasting a drop in gross domestic product of between 1.3% and 2% this year. Now, it's expecting a decline of 1% to 1.5%, according to the Monetary Policy Report.
As for next year, the Fed now expects GDP growth between 2.1% and 3.3%. That's almost unchanged from its previous projection of 2% to 3%.
But, the Fed is expecting the jobless picture will be slightly worse than it previously thought. It's now saying the unemployment rate could go as high as 10.1% this year, vs. the "worst case" forecast previously of 9.6%. And it's expecting the jobless rate to remain high in 2010 -- at 9.5% to 9.8%.
Basically, the Fed says, unemployment has already risen more than policymakers thought it would -- so the jobless rate will likely stay high longer than they anticipated.
Update at 10:25 a.m. ET. Collapse averted?
In his prepared testimony, Bernanke says that "aggressive policy actions taken around the world last fall may well have averted the collapse of the global financial system, an event that would have had extremely adverse and protracted consequences for the world economy."
(10:55 a.m. ET. Here's the matter-of-fact tone Bernanke used in delivering that assessment:)
Looking ahead, he sees better times in 2010 and 2011:
In conjunction with the June FOMC meeting, Board members and Reserve Bank presidents prepared economic projections covering the years 2009 through 2011. FOMC participants generally expect that, after declining in the first half of this year, output will increase slightly over the remainder of 2009. The recovery is expected to be gradual in 2010, with some acceleration in activity in 2011. Although the unemployment rate is projected to peak at the end of this year, the projected declines in 2010 and 2011 would still leave unemployment well above FOMC participants' views of the longer-run sustainable rate. All participants expect that inflation will be somewhat lower this year than in recent years, and most expect it to remain subdued over the next two years.
Greg Smith of Annapolis, Md., has a new Camaro. Frank Langfitt/NPR
By Mark Memmott
It may not save General Motors, but the latest version of the Chevrolet Camaro is generating lots of buzz for the company and putting some excitement back into its showrooms, NPR's Frank Langfitt reports on Morning Edition.
"I wish I had a thousand to sell tomorrow, because I could sell them," Neil Kopit, who handles marketing at Criswell Chevrolet in Gaithersburg, Md., tells Frank.
As this photo gallery from over the years shows, the Camaro has always looked like a classic American muscle car. Now, Frank says, GM is trying to market it as a "21st Century sports car" that gets 29 mpg on the highway.
Many of the banks that got federal aid to support increased lending have instead used some of the money to make investments, repay debts or buy other banks, according to a new report from the special inspector general overseeing the government's financial rescue program.
Now that report's been released, and we've put a copy here (fair warning, it's a big file and may take a little while to download).
This statement stands out in the executive summary:
TARP has become a program in which taxpayers (i) are not being told what most of the TARP recipients are doing with their money, (ii) have still not been told how much their substantial investments are worth, and (iii) will not be told the full details of how their money is being invested.
As the Post points out, "the government so far has invested more than $200 billion in more than 600 banks under a program that began in October with investments in nine of the largest banks. Some banks have started to repay the aid even as others continue to apply for it."
Today, Morning Edition guest host Linda Wertheimer spoke with Neil Barofsky, the special inspector general for the Troubled Asset Relief Program (he's the SIGTARP). Linda asked Barofsky about whether using TARP funds to buy other banks is a good use of such funds by institutions who've gotten the government aid. He said it's not a black-and-white issue:
There will be more from Linda's conversation with Barofsky on tomorrow's Morning Edition. Click here to find an NPR station near you.
A widely watched barometer that's supposed to signal how the economy will be doing six to nine months from now rose 0.7% in June, its third consecutive monthly increase, the private research group the Conference Board just announced.
Seven of the 10 components of the board's leading indicators index rose.
Yes! 2007 photo of Cuban by Ronald Martinez/Getty Images
By Mark Memmott
A federal judge in Texas today dismissed a Securities and Exchange Commission law suit that alleged Dallas Mavericks owner Mark Cuban engaged in "insider trading" when he sold 600,000 shares of the Internet search engine company Mamma.com Inc. in 2004.
The SEC alleges that in 2004 Cuban was informed by the chief executive of Mamma.com, a company in which Cuban held a substantial amount of stock, that the company would raise money by issuing low-priced shares, a move that would probably hurt the value of Cuban's shares. Cuban then allegedly sold his stake in order to avoid getting hit by the stock price drop after the low-priced share offering became public.
Prior to his purchase of the Mavericks, Cuban co-founded Broadcast.com, the leading provider of multimedia and streaming on the Internet, in 1995, selling it to Yahoo! in July of 1999. Before Broadcast.com, Cuban co-founded MicroSolutions, a leading National Systems Integrator, in 1983, and later sold it to CompuServe.
"We were at the brink of catastrophe at the beginning of the year, but we have walked some substantial distance back from the abyss," Lawrence Summers, head of the president's National Economic Council, plans to say in a speech this morning.
And, the White House says, Summers will add that "substantial progress has been made in rescuing the economy from the risk of economic collapse that looked all too real six months ago."
Update at 12:30 p.m. ET. The White House has now released the full text of Summers' prepared remarks. He spends considerable time talking about why unemployment has gone up more than many economists expected, and points to employers' zeal to boost productivity as one major reason. That's a theme that NPR's Chana Joffe-Walt has explored before.
Here's what Summers has to say about current conditions and what lies ahead:
One more bit of corporate earnings news to pass along:
General Electric's second-quarter earnings were down 49% from a year earlier, but were just slightly better than Wall Street had expected and could be a sign that the worst is over for a company that has its feet in both the financial and industrial worlds.
The company made $2.6 billion in the quarter, after paying preferred dividends.
Another big bank that last year needed billions of taxpayer dollars to survive has just reported a big profit in the second quarter. As the Associated Press writes:
Citigroup has surprised Wall Street, reporting a $3 billion second-quarter profit instead of the big loss analysts expected.
As the clock ticks on lending giant CIT, some observers in the financial industry think the federal government is running a "terrible risk" in letting the company fail, reports NPR's Jim Zarroli.
"I don't think they have a solid handle on the devastation, the impact it would have throughout the retail industry," Michael Cipriani, executive vice president of CIT competitor Rosenthal and Rosenthal, tells Zarroli on today's All Things Considered.
My kid's Crocs broke just like this. hahahohah/Flickr
By Laura Conaway
Remember a couple of summers back, when every living human seemed to be running around in an ugly, rubbery version of the Dutch clog? Crocs were big in boom times, writes the Washington Post's Ylan Q. Mui, and now they're going the way of that golden prosperity.
Crocs -- whose shoes are made of a specialized foam, Mui writes -- sold 100 million pairs in the last seven years, but apparently not enough of those sales happened recently. The company lost $185.1 million last year and now has until September to pay off its debt. From the WP:
"The company's toast," said Damon Vickers, who manages an investment fund at Nine Points Capital Partners in Seattle. "They're zombie-ish. They're dead and they don't know it."
Croc's stock is down 76 percent, the WP says. At about $30, they're still cheap enough for many. At my house, it's more an issue of what that $30 buys. We've had to stitch the strap back into place on both shoes in our seven-year-old's pair. Just saying.
UPDATE: Croc's CEO responded to WP report on the company's blog. John Duerden acknowledged Croc's financial difficulties, but said his company's line of more than 120 styles of shoes makes this "a good business to be in at a time when families are watching their budgets, and we're confident in the future of our company."
The dollar buys the most burger in Asia. A Big Mac costs 12.5 yuan in China, which is $1.83 at today's exchange rate, around half its price in America. Other Asian currencies, such as the Malaysian ringgit and Thai bhat, look similarly undervalued. Businesses based in continental Europe have most to be cheesed off about. The Swiss franc remains one of the world's dearest currencies. The euro is almost 30% overvalued on the burger gauge. Denmark and Sweden look even less competitive.
As The Economist explains it:
The Big Mac Index is based on the theory of purchasing-power parity (PPP), which says that exchange rates should move to make the price of a basket of goods the same in each country. Our basket contains just a single item, a Big Mac hamburger, but one that is sold around the world. The exchange rate that leaves a Big Mac costing the same in dollars everywhere is our fair-value yardstick.
Kids, do not surprise your parents with this kind of credit card statement -- and parents, if you get one in the mail, it's likely a mistake:
Dear William,
This e-mail is being sent to notify you that the balance on Daniel XXXX's card is $-23,148,855,308,184,400.00.
Yes, that's $23 quadrillion. The Visa statement, from Wachovia, came to a friend of NPR's Beth Donovan. It's the result of a glitch in the credit card system has recently affected a small number of people.
Higher gas prices fueled an uptick in inflation at the wholesale level last month and helped push up the value of retail sales in June as well.
The Bureau of Labor Statistics just reported that its producer price index rose 1.8% in June, which the Associated Press says is the biggest one-month increase since November 2007. It was also double the 0.9% gain that economists had expected.
Meanwhile, the Census Bureau just said that retail sales rose 0.6% last month, thanks to the higher gas prices and a slight increase in auto sales.
Orders to factories rose 1.2% in May from April, the biggest jump in almost a year, the Census Bureau says. Orders have now risen three of the past four months.
Businesses cut 467,000 jobs from their payrolls in June, the Bureau of Labor Statistics just announced, as the nation's jobless rate ticked up to a 26-year-high 9.5% from 9.4% in May.
There were 322,000 jobs cut from payrolls in May. Since the economy officially went into recession in December 2007, the number of people out of work has risen by 7.2 million.
Update at 9:25 a.m. ET. What do the losses in payroll employment look like in a graph? Here's a fever line, courtesy of the BLS' database. It starts in January 2007. You can see that employment edges up until December that year (when the recession officially began) and then heads down sharply:
June's payroll reductions were deeper than the 363,000 that economists expected.
However, the rise in the unemployment rate from 9.4 percent in May wasn't as sharp as the expected 9.6 percent. Still, many economists predict the jobless rate will hit 10 percent this year, and keep rising into next year, before falling back.
Update at 8:40 a.m. ET: In a separate report, the Labor Department says the number of people filing first-time claims for unemployment benefits dipped by 16,000 last week to 614,000.
Activity at the nation's factories continued to weaken in June, but the pace of decline wasn't as steep as in the previous month, according to the latest index from a trade group that monitors how things are going in the manufacturing sector.
Any reading below 50 is a sign that manufacturing is weakening. So the June figure seems to signal that "a slow recovery for manufacturing is forming" but that things aren't great just yet, Norbert Ore, chair of the group's manufacturing business survey committee, tells the Associated Press.
Among the data the ISM looks at to produce its index are orders, production, employment and prices.
Job seekers lined up last month at a job fair in Chicago. Scott Olson/Getty Images
By Mark Memmott
Just a quick heads-up for those who pay close attention to key economic indicators:
Because most federal workers will have Friday off (since July 4 falls on Saturday), the Bureau of Labor Statistics' June employment/unemployment report will be released at 8:30 a.m. ET tomorrow. Normally, the figures are released on the first Friday of each month. The report should be posted here at that time.
The preliminary report for May showed a drop in payroll employment of 345,000 jobs and an increase in the jobless rate to 9.4% from 8.9% in April.
Sale signs were all around at this Home Depot store in Danvers, Mass., on Monday. Lisa Poole/AP
By Mark Memmott
After two straight gains, consumer confidence declined a bit this month, the private research group the Conference Board says.
Its widely watched consumer confidence index slipped to 49.3, from 54.8 in May.
Lynn Franco, director of the board's Consumer Research Center, says the indicator is pointing to "less-negative conditions in the months ahead, as opposed to strong growth."
Translation: It could be another signal that the worst is over for the economy -- but also that things aren't going to be great anytime soon.
Economists watch the index because consumers account for about two-thirds of all spending on goods and services. So when they're happy, demand is usually pretty good.
Saying that "the Federal Reserve acted with the highest integrity throughout its discussions with Bank of America regarding that company's acquisition of Merrill Lynch," Fed Chairman Ben Bernanke is on Capitol Hill right now getting grilled by members of the House Committee on Oversight and Government Reform.
The Associated Press is leading its story on the hearing with this:
Federal Reserve Chairman Ben Bernanke told Congress Thursday he didn't pressure Bank of America into acquiring Merrill Lynch in a deal that ultimately cost taxpayers $20 billion.
By not saying more about Chairman Steve Jobs' serious health problems did Apple withhold important information from investors -- and possibly violate some federal securities rules?
BusinessWeek.com reporter Arik Hesseldahl thinks the Securities and Exchange Commission is "too lax" when it comes to requiring that companies keep the public informed about the health of their key executives.
Apple has taken the position that Jobs' health is mostly a private matter.
-- The Commerce Department says gross domestic product shrank at a 5.5% annual rate in the first quarter, not much changed from its last estimate of a 5.7% decline.
It's the third monthly increase this year, but the Associated Press says "signs of any housing recovery are fragile at best."
As AP notes, economists thought sales had gone up even more in May.
Sales of previously owned homes are closely watched because of their ripple effects. In many cases, sellers use their proceeds to buy another home and then to furnish and renovate their new places. Buyers also spend money to move and to furnish and fix up the homes they've purchased.
Update at 11:15 a.m. ET:Planet Money says tax breaks for first-time buyers are likely helping to boost sales.
Saying that all three of the traditional U.S. automakers continue to improve the quality of their vehicles, J.D. Power and Associates reports today that three of the top 10 brands were American in its latest annual "initial quality study."
While the top spot went to Toyota's Lexus brand, General Motors' Cadillac came in at No. 3. Ford was No. 8 and GM's Chevrolet was No. 9.
The automakers are ranked by the number of problems reported during the first three months after a vehicle is purchased. Lexus owners reported 84 problems per 100 vehicles.
Last year, Ford's Mercury brand and Ford cracked the top 10. The year before that, Ford's Lincoln brand and Ford were among that group. This year, Mercury came in at No. 12 but still had a better rating than the industry average.
New vehicles sold by Chrysler, Ford and GM's domestic brands have improved in initial quality by an average of 10% compared with 2008, but Toyota Motor Corp. was the star of this year's study on initial quality from J.D. Power and Associates.
Consumers buying a foreign or domestic car should expect the same quality of vehicle, according to J.D. Power and Associates Initial Quality Study released Monday afternoon at the Detroit Athletic Club.
"Domestic and import quality is exactly the same for cars," said Dave Sargent, a vice president of automotive research at J.D. Power.
As we've already reported, there's breaking news from Iran -- where supreme leader Ayatollah Ali Khamenei today left no doubt about where he stands regarding last Friday's disputed presidential election. He endorsed the official position that President Mahmoud Ahmadinejad won a landslide victory over reformist Mir Hossein Mousavi.
So, now it's time to keep an eye on what happens in the streets of Tehran and other major cities, where there have been daily protests over the official election results.
As for other stories making headlines today, they include:
-- Morning Edition -- Some Community Banks Are Nervous About Obama's Financial Overhaul: NPR's Scott Horsley outlined President Barack Obama's plan to "transform the Federal Reserve into a super-regulator," while Chris Arnold spoke with community bankers who say they didn't break the financial system and are frustrated about being lumped in with the big banks who did and will be burdened by new regulations:
-- The Washington Post -- "Billionaire Financier Stanford Surrenders To FBI": "R. Allen Stanford, under investigation in an alleged $8 billion fraud involving sales of certificates of deposit through his Antiguan bank, surrendered to federal agents yesterday, his attorney said. The case is one of the largest alleged financial frauds in U.S. history and comes just months after New York financier Bernard L. Madoff pleaded guilty to charges in a Ponzi scheme of up to $50 billion."
-- The Wall Street Journal -- "U.S. Fortifies Hawaii To Meet Threat From Korea": "The U.S. is moving ground-to-air missile defenses to Hawaii as tensions escalate between Washington and Pyongyang over North Korea's recent moves to restart its nuclear-weapon program and resume test-firing long-range missiles."
-- USA TODAY -- "Mortgage Foreclosures Heading Through The Roof;" Aid Is Plagued By Delays: "The Obama administration's $75 billion program to reduce foreclosures has been beset by backlogs and delays, leading many overstretched homeowners to complain about unreturned phone calls and inaccurate information from lenders, while others say they were denied help for reasons that weren't clear."
Contributing: Chinita Anderson of Morning Edition.
Details had already been leaked, but now President Barack Obama's plans for overhauling regulation of financial institutions and for creation of a new consumer protection agency are online.
CEO Sergio Marchionne of Fiat is now CEO of Chrysler as well, thanks to the closing of the deal that puts the U.S. automaker in the hands of the Italian company.
As the Detroit News puts it, the deal combines "the good assets from the bankrupt Chrysler and technology from Fiat" to form a company that will focus on smaller, more fuel efficient vehicles than Chrysler has been known for in recent years.
The Associated Press notes that Fiat "won't put any money into the deal but will give Chrysler billions worth of small car and engine technology."
We calculated the percentage of dealerships in each community type that are closing. The highest percentages are in the big-city "Industrial Metropolis" and the wealthy, populous "Monied 'Burbs." This suggests that Chrysler believes its future lies outside America's most densely populated areas.
And the Associated Press files this video report about a Chicago dealer who's down to his last three vehicles:
"The Treasury Department has approved 10 of the nation's largest banks to repay $68 billion in government bailout money," the Associated Press writes.
Treasury hasn't yet named the banks, AP adds, but it notes that "among the banks that passed government 'stress tests' last month and likely were approved to repay the bailout funds are: Goldman Sachs Group Inc., JPMorgan Chase & Co., and American Express Co."
But, the panel said, "serious concerns remain." It offered these recommendations:
-- The unemployment rate climbed to 9.4% in May, bringing the average unemployment rate for 2009 to 8.5%. If the monthly rate continues to increase, the 2009 average may exceed the 8.9% assumed under the more adverse scenario, suggesting that the stress tests should be repeated if that occurs.
-- Stress testing should also be repeated so long as banks continue to hold large amounts of toxic assets on their books.
--Between formal tests conducted by the regulators, banks should be required to run internal stress tests and should share the results with regulators.
-- Regulators should have the ability to use stress tests in the future when they believe that doing so would help to promote a healthy banking system.
This hour, panel chair Elizabeth Warren is testifying before the Joint Economic Committee on Capitol Hill. That hearing is being webcast here.
In a blow to the Obama Administration and the auto industry, the U.S. Supreme Court has sided with the Indiana pension funds request to delay Chrysler's sale to Fiat. More to come.
Update: 4:12 pm:
The Associated Press has this report:
WASHINGTON (AP) - Supreme Court Justice Ruth Bader Ginsburg has
temporarily delayed Chrysler's sale to Fiat.
Ginsburg says in an order Monday that the sale is "stayed pending further order."
The action indicates that the delay may only be temporary.
Chrysler has said a delay could scuttle the deal.
A federal appeals court in New York had earlier approved the sale, but gave opponents some time to file an appeal with the Supreme Court.
"General Motors has a tentative deal to sell its Saturn brand to former race car driver and dealership group owner Roger Penske, according to two people briefed on the deal," the Associated Press reports.
As the Freep says, Penske "led the city's Super Bowl preparations and downtown cleanup program and revived Grand Prix racing on Belle Isle."
Not that familiar with Penske? His official bio is here. Penske Racing "manages businesses with revenues in excess of $20 billion, operates in more than 1,700 locations and employs 40,000 people worldwide."
Top executives from General Motors and Chrysler are planning to tell senators this afternoon that the companies have to dramatically slash the number of dealers that sell their vehicles if they are to survive.
According to the Associated Press, which has copies of the statements that GM's Fritz Henderson and Chrysler's James Press plan to deliver at a 2:30 p.m. ET Senate Commerce Committee hearing, the executives will say "that there are too many dealers and the networks date from the 1940s and 1950s when motorists lived farther apart and Detroit automakers led the world in sales."
Committee Chairman Jay Rockefeller, D-W.Va., plans to say that what the automakers are doing is "just plain wrong."
"I don't believe that companies should be allowed to take taxpayer funds for a bailout and then leave local dealers and their customers to fend for themselves with no real notice and no real
help," Rockefeller's prepared statement reads, according to the AP.
Is General Motors conceding it won't be No. 1 again in U.S. sales?
No way, GM CEO Frederick "Fritz" Henderson just told All Things Considered co-host Robert Siegel:
Henderson conceded that GM has made its share of mistakes in recent years, but vowed it will transform into a company "that's focused around the customer":
Yesterday, GM filed for bankuptcy protection and President Barack Obama said the federal government is adding another $30 billion to the financial assistance it's given the company (which the government now has a majority stake in).
The changes end GM's 83 years as part of the iconic stock market indicator. Both GM and Citi have seen their stock prices plunge in recent months.
According to djaverages.com, the Dow's official website, only one of the 12 companies that were part of the index when it was created in 1896 is a part of the index today.
Which company is it? Click here to go to its website.
The names of other companies that have been dropped over the years read like a history of bygone industries. A sampling:
President Barack Obama is this hour speaking about General Motors' bankruptcy filing, the company's future and the $30 billion of additional financial assistance the federal government plans to give the automaker.
National Public Radio is providing anchored coverage of the president's comments, starting at 11:40 a.m. ET. That coverage will be broadcast on many NPR stations (click here to find a station near you) and is being webcast here: Listen Live: Obama's Remarks
Also speaking this hour: GM CEO/President Frederick "Fritz" Henderson.
We're live-blogging their remarks in this post. Just click the "play" button below and our updates should flow in automatically:
Update at 1:30 p.m. ET. Here's a clip of the president, speaking about why he believes the government will not be running GM:
"We've made a lot of sacrifices" to make sure General Motors survives, United Auto Workers President Ron Gettelfinger just told Morning Edition co-host Renee Montagne.
In an interview that will air on ME shortly, Gettelfinger said that among the things his union has given in on as GM enters bankruptcy are collective bargaining concessions, modifications to the health care plan for retirees and a promise not to strike in the immediate future.
"I don't think anybody ever truly believed it would come to this," Gettelfinger added, referring to the automaker's filing for Chapter 11 protection.
As for the prospect of U.S. automakers being able to convince U.S. consumers to buy smaller, more fuel-efficient vehicles, Gettelfinger said the price of gasoline will be a large factor -- and that the trend makes it likely smaller cars will start to sell again.
"I don't think any of us can realistically expect gasoline prices to stay lower," he said.
Also looking into the future, Gettelfinger said of GM that "it's going to be a much smaller company than any of us had envisioned" -- but also predicted that "they're going to regain a bit of market share."
Update at 10:35 a.m. ET. Here's a clip from the Gettelfinger interview:
As General Motors files for bankruptcy protection, President Barack Obama has this to say about the latest development in Chrysler's move through Chapter 11:
"The decision by Judge Gonzalez of the United States Bankruptcy Court for the Southern District of New York to approve the Chrysler sale transaction paves the way for the new Chrysler to successfully emerge from bankruptcy as a new, stronger, more competitive company for the future.
"Only a month ago, this great American company's very future was in doubt. Now, as a result of a substantial commitment by the U.S. government, and tough sacrifices from all stakeholders involved, Chrysler has a new lease on life. We said this process would be completed quickly and efficiently, and that's exactly what has been accomplished today. Tens of thousands of American jobs will be saved as a result of this extraordinary effort."
The merger that was supposed to shake the media world, but never quite worked, is over.
"Time Warner Inc. is dumping AOL after spending nearly a decade trying to build a new-age media empire only to wind up in a weaker position than when the marriage began," the Associated Press writes.
It adds that "the divorce will spin out AOL as a separate Internet company run by former Google Inc. advertising executive Tim Armstrong. He was hired in March to try to restore the luster
to a brand once known as America Online."
The way the deal will work, according to AP:
Time Warner owns 95% of AOL and will buy out Google Inc.'s 5% stake during the third quarter. From there, AOL will be spun off into a separate publicly traded company around the end of the year.
Time Warner has issued a statement from Chairman and CEO Jeff Bewkes, who says that "we believe that a separation will be the best outcome for both Time Warner and AOL."
As USA TODAY writes, the announcement brings to an end "the famously troubled merger of old and new media unveiled with great fanfare just days after the beginning of the new millennium."
Update at 10:40 a.m. ET. Dan Blumberg of NPR member station WNYC has filed this report:
The United Auto Workers union says it has reached a tentative agreement on contract concessions with the U.S. government and General Motors Corp., a key step toward GM's effort to restructure out of bankruptcy court.
The UAW has reached a tentative understanding with the U.S. Treasury and General Motors on an addendum to the 2007 UAW GM collective bargaining agreement. The tentative understanding contains modifications to the labor agreement and to the independent Voluntary Employee Beneficiary Association (VEBA) trust.
Details are being withheld pending explanation and ratification meetings for UAW GM members, which are in the process of being scheduled.
The Detroit Free Pressadds that the deal "is an important step as GM works to restructure while operating on a government loan. It also must restructure its debt by June 1, and Chapter 11 bankruptcy reorganization is seen as highly likely for the giant automaker."
Update at 1:15 p.m. ET. NPR's Frank Langfitt reports that:
Union officials agreed to changes in labor costs and company contributions to a retiree health care trust fund.
But UAW leaders would not disclose details before taking the changes to workers for a vote.
By itself, a deal would not prevent a bankruptcy -- which many observers see as inevitable. But it would help a bankruptcy proceeding go more quickly, which GM says is critical to its survival.
The company still has to cut deals with bondholders to whom it owes $27 billion dollars.
The White House has given GM until the end of this month to radically restructure or
file for protection under Chapt. 11 of the bankruptcy code.
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