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May 15th, 2009
12:00 PM ET

Financial Dispatch: GM Dealerships Hit Hard

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Gene P. Bloch
Managing Editor
CNN New York

CNNMoney.com was the first to report this morning that General Motors has notified 1,100 dealerships targeted to be shut down. The company has indicated up to 2,600 of its dealerships – or 42% – will be closed over the next year. Unlike Chrysler’s announcement Thursday which detailed a list of 789 dealers as part of filing in bankruptcy court, GM says it will not put out a master list of dealers that are hearing from the company today. As CNNMoney reports, metro area and suburban dealers are expected to feel the biggest hit.

GM has a conference call to discuss its strategy on noon today – it’s headed toward a June 1 restructuring deadline, and a Chapter 11 filing is looking increasingly likely.

No relief at the gas pumps – AAA reports regular unleaded rose 9-tenths of a cent to $2.29 a gallon, the 17TH straight increase. The average price is still 44% lower than last July.

In today’s Energy Fix, gas prices should go down if electric cars hit the market in large numbers. When that times comes, car shoppers will find the new vehicles look different than what’s on the road right now. The GM and Ford designers we talked to said that taking out the internal combustion engine and the cooling system that goes with it, a whole new world of design possibility opens up. Ford is even taking it’s inspiration from nature… fish and other animals!

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Filed under: 360° Radar • auto bailout • Economy • Finance • Gene Bloch • Unemployment
May 11th, 2009
03:39 PM ET

Financial Dispatch: $2 trillion in health care savings?

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Andrew Torgan
CNN Financial News Producer

President Barack Obama says he has secured the commitment of several industry groups to do their part to rein in the growth in health care costs.

This pledge from the private sector could reduce the growth in health care spending by 1.5 percentage points a year, for a savings of $2 trillion over 10 years.

Overall, it could amount to a 20% reduction in the growth of health care spending. Six trade associations representing unions, hospitals, insurers and the drug industry have signed on to the commitment.

However, the savings depend in part on Congress passing health care reform this year.

GM may shuffle board

Another shakeup is reportedly in the works at General Motors.

The Wall Street Journal says the automaker has hired an executive search firm to help it find replacements for at least half of its 12 directors.

Since the government could end up with a controlling stake in a bankrupt or restructured GM, it’s expected to name some of the directors, as will the United Auto Workers Union. This move comes almost 2 months after the government ousted former GM CEO Rick Wagoner.

Separately, current GM CEO Fritz Henderson said today the automaker intends to keep its headquarters in Detroit, even though its U.S. operations are in far worse shape than some of its growing overseas units.

Henderson also repeated his earlier statements that he believes a bankruptcy filing is now “probable” as the company tries to reach agreements with creditors, the UAW and its dealership base to cut costs.

The company has been given until the end of the month by the Treasury Department to reach those agreements or file for bankruptcy.

Senate targets credit card rates and fees

Key negotiators in the Senate today reached a deal on legislation targeting credit card rates and fees.

The development could spur the bill to a Senate vote as early as this week, although the battle is far from over when it comes to reconciling the Senate’s bill with an earlier version that passed the House. President Obama said Saturday he'd like to have the bill on his desk by Memorial Day.

According to copies of the legislation distributed by lobbyists, the Senate's new bill is tougher than a similar bill passed in the House, and would, among other things, prevent those under 21 from getting a credit card unless they can prove they have an income stream to pay off debt or have their parent's signature. It would also ban gift card issuers from charging "dormancy fees" on cards redeemed too late.

USPS strives to survive

Finally, if the mail must go through, it's going to cost a little more. The United States Postal Service hiked the price of stamps today, as well as other delivery services.

But as the cash-strapped and debt-ridden agency fights for financial survival, it's considering much more drastic changes than adding 2-cents to the cost of a 42-cent stamp.

In testimony before the Postal Service's Board of Governors in January, Postmaster General John Potter said it "could become necessary to temporarily reduce mail delivery to only five days a week," from the current six-day service, which would effectively end Saturday delivery. The Postal Service estimates savings of $3.5 billion annually.

That’s significant, considering that in its most recent fiscal year ending Sept. 30, 2008, the Postal Service reported a loss of $2.8 billion. And in the six months since then, losses accelerated to $2.3 billion.


Filed under: 360° Radar • Andrew Torgan • auto bailout • Economy • Finance
May 7th, 2009
12:51 PM ET

Financial Dispatch: ‘Stress tests’ results due & GM posts $6B loss

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Andrew Torgan
CNN Financial News Producer

Today we find out just how safe our banking system really is.

But the results of the so-called "stress tests," due out at 5:00 p.m. ET after the stock market closes, may not offer any stunning revelations. That’s because the results may be the worst-kept secret of all time - there have been numerous leaks in recent days regarding the results of the tests.

Reports say that Bank of America may need roughly $34 billion in capital to weather a more painful economic environment. Wells Fargo and Citigroup have also been frequently mentioned as two institutions in need of capital.

Other institutions, namely American Express, Goldman Sachs, JPMorgan Chase and MetLife, are believed to be in good shape.

As for the banks that need to raise more capital, they’ll have a month to present regulators with a fundraising plan and six months to raise the funds.

And some heads may roll.

Banks will have to review their management and board within a month, "to assure that the leadership of the firm has sufficient expertise and ability to manage the risks presented by the current economic environment," regulators said in a statement. White House spokesman Robert Gibbs indicated Wednesday that the government might lean on companies whose boards and managers aren't seen as up to snuff.

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Filed under: Andrew Torgan • auto bailout • Economy • Finance • Unemployment • Wall St.
May 5th, 2009
04:25 PM ET

Financial Dispatch: Banks get “stress tests” results

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Andrew Torgan
CNN Financial News Producer

Reports out today indicate the government will direct about half of the 19 banks undergoing “stress tests” to boost their capital reserves, a move that officials hope will quell fears about the solvency of the financial sector.

Regulators reportedly plan to brief the nation's largest banks today on the final results, with a public announcement scheduled for Thursday afternoon. The “stress tests” are meant to determine whether the banks in question have sufficient reserves to weather the recession.

Preliminary results are said to show that firms including Bank of America, Citigroup, Wells Fargo and several regional banks may be required to take remedial action.

Wall Street retreats

Stocks slumped today as investors slammed on the brakes after pushing the major gauges to multi-month highs in the previous session.

Stocks rallied Monday on bets that the economy is closer to stabilizing. The Nasdaq ended at a 6-month high and the Dow and S&P 500 ended at nearly 4-month highs.

Swiss bank’s outlook cloudy

Also on Wall Street’s radar today… Swiss banking giant UBS, one of the hardest-hit banks in the global financial crisis, confirmed that it posted a net loss for the first quarter, illustrating that it continues to struggle with write-downs even as rivals show signs of business picking up.

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Filed under: Andrew Torgan • auto bailout • Economy • Finance • Gasoline Theft • Wall St.
May 4th, 2009
03:24 PM ET

Financial Dispatch: Obama’s corporate tax crackdown

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Andrew Torgan
CNN Financial News Producer

President Barack Obama today detailed his administration’s plans to close tax loopholes on U.S. multinational corporations that allow them to legally avoid paying billions in taxes, as well as crack down on overseas tax havens.

The goal is to help create new jobs in the United States and make the tax code fairer.

"I want to see our companies remain the most competitive in the world. But the way to make sure that happens is not to reward our companies for moving jobs off our shores or transferring profits to overseas tax havens," Obama said in announcing his proposals.

But tax policy experts and corporate lobbyists say such measures, unless accompanied by a reduction in the corporate tax rate, will push more companies to move their operations - and jobs - overseas to more tax-friendly countries.

In addition, the White House wants to tighten rules that have allowed thousands of wealthy Americans to open offshore bank accounts - think Switzerland and the Cayman Islands - in an effort to duck taxes at home.

No increase expected for Social Security Benefits

Recipients of Social Security checks are in for a shock: for the first time in more than 30 years, they will not be getting any increase in their benefits next year.

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Filed under: Andrew Torgan • auto bailout • Economy • Finance • Wall St.
May 1st, 2009
04:09 PM ET

Financial Dispatch: Chrysler plants, workers face uncertain fate

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Andrew Torgan
CNN Financial News Producer

With Chrysler now in bankruptcy, what may happen to the automaker's 22 U.S. plants and thousands of workers remains largely an unanswered question.

During a conference call to discuss the bankruptcy on Thursday, government officials said Chrysler has no immediate plans to permanently lay off workers or close factories.

Chrysler did say all of its plants planned to shut down temporarily during bankruptcy starting Monday, and it did confirm that some plants were already closing as of today due to problems getting parts from suppliers.

And Chrysler this morning identified four plants with almost 5,000 jobs between them slated for closure by the end of 2010, according to a filing with the bankruptcy court. The plants on the chopping block are the Sterling Heights, Michigan assembly plant that makes the Chrysler Sebring and Dodge Avenger; the St. Louis North assembly plant that builds the Dodge Ram pickup; the Twinsburg, Ohio stamping plant and an engine plant in Kenosha, Wisconsin.

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Filed under: 360° Radar • Andrew Torgan • auto bailout • Economy • Finance • Unemployment • Wall St.
April 24th, 2009
01:34 PM ET

Financial Dispatch: Detroit’s drive to survive

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Andrew Torgan
CNN Financial News Producer

Could Detroit’s Big Three soon be the Big One?

Ford this morning reported a smaller-than-expected loss for the first quarter, and the company says it remains on track to meet its internal financial targets despite the worst quarter for auto sales in 26 years.

Ford, the only American automaker that did not take any federal bailout money, posted net losses of $1.4 billion. Revenue plunged 37% during the quarter to $24.8 billion as vehicle sales in the U.S. dropped 43%. But revenue was also better than analysts' forecasts.

Still, the latest losses come on top of $30 billion in net losses the company reported from 2006 through 2008.

Ford CEO Alan Mulally says that the company is still confident it will not need a federal loan unless the economy gets significantly worse, or unless there is an uncontrolled bankruptcy in the industry that disrupts the flow of parts from Ford's suppliers.

Meanwhile, privately-held Chrysler has one week to reach deals with Fiat, unions and banks, raising doubts it can avoid bankruptcy.

The New York Times is reporting that the Treasury Department is directing the automaker to prepare a Chapter 11 bankruptcy filing as soon as next week.

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Filed under: Andrew Torgan • auto bailout • Economy • Finance • Unemployment • Wall St.
April 23rd, 2009
02:00 PM ET

Financial Dispatch: Jobless claims keep climbing

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Andrew Torgan
CNN Financial News Producer

More troubling news on the unemployment front today... the number of Americans filing initial claims for jobless benefits increased last week while the number of people continuing to claim benefits set yet another record high.

First-time claims for unemployment insurance rose by 27,000 to 640,000 from the previous week revised figure of 613,000. And the number of people receiving benefits for one week or more rose by 93,000 to 6,137,000 million. That’s the highest number on records dating back to 1967.

Earlier this month, the government reported that 2 million jobs have been lost since the beginning of 2009 through March, bringing the nation's unemployment rate to the 25-year high of 8.5%.

Home sales drop in March

Sales of previously-owned homes fell in March but analysts say the housing market is showing signs of stabilization.

The National Association of Realtors said that so-called “existing home sales” fell last month to a seasonally adjusted annual rate of 4.57 million units, 3% lower than the downwardly revised rate of 4.71 million in February.

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April 14th, 2009
01:20 PM ET

For Motown, The Bird was the word

[cnn-photo-caption image=http://i2.cdn.turner.com/cnn/2009/images/04/14/art.mark.fidrych.jpg caption="Mark 'The Bird' Fidrych #20 of the Detroit Tigers prepares to pitch to the Minnesota Twins during a regular season game on June 20, 1976 in Minneapolis, Minnesota."]

Paul Caron
CNN Producer

There was another time in Detroit history when a bailout was needed. In the mid-1970s, the Big 3 American automakers were humming along in a heyday never to be seen by them again, but the Motor City’s baseball team was old and stinky.

In 1975, they were the worst team in baseball, with 102 losses and a roster filled with many players well past their prime. But along came Mark Fidrych, a 21-year-old goofball lanky kid with a heavy Massachusetts accent, who won over a city in just a few months. And uncommon back then, the athlete morphed into a celebrity, for one brief, albeit magical season.

He made the Tiger regular season roster after only two seasons drafted out of high school, not projected to be much of an impact player immediately. He was making the major league minimum salary at the time, $16,500, probably a player’s weekly per diem these days. One of his minor league coaches called him “The Bird,” as his blond curly locks that protruded from his baseball hat looked a little like the coat of Sesame Street’s “Big Bird.”

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April 13th, 2009
01:04 PM ET

Financial Dispatch: Tax deadline looming

[cnn-photo-caption image=http://i2.cdn.turner.com/cnn/2009/images/04/10/art.getty.money.jpg]Andrew Torgan
CNN Financial News Producer

The April 15 deadline to file your taxes is just days away, but today is “Tax Freedom Day.”

Americans had to work 103 days from January 1 before they earned enough to pay their taxes for 2009, according to the Tax Foundation. Everything after that is theoretically theirs to keep.

April 13 is the earliest date since 1967. That's eight days earlier than 2008’s “Tax Freedom Day” and a full two weeks earlier than 2007’s.

The Tax Foundation cited two reasons for the shift to an earlier date: The recession has reduced tax collections faster than it has reduced income; plus, the Obama administration's stimulus package includes large temporary tax cuts for 2009 and 2010.

So with millions of Americans facing job losses and the threat of foreclosure, what do you do if you can't pay your taxes? IRS Commissioner Douglas Shulman will make an appearance at the National Press Club in Washington today to discuss his agency's new initiatives to help those in financial distress, including giving IRS employees the flexibility to adjust or defer tax payments for certain taxpayers in hardship situations.

Shulman is also expected to highlight the new tax credits available this year, such as those for first time home buyers and car buyers, and give offer advice on what to do if you're having trouble paying your taxes.

CNNMoney.com has launched a special section: “Get Ready for April 15

In it, you will find tax tips for the unemployed, advice for 10 million late filers and 8 tips to slash your tax bill.

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Filed under: Andrew Torgan • auto bailout • Economy • Gas Prices • Oil • Taxes • Wall St.
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