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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