Business Highlights: Automakers on short leash

Business Highlights: Obama puts GM, Chrysler on short leash, GM CEO Rick Wagoner forced out

  • Monday March 30, 2009, 7:18 pm EDT

Related:

Obama puts GM, Chrysler on short leash

WASHINGTON (AP) -- President Barack Obama asserted unprecedented government control over the auto industry Monday, bluntly rejecting turnaround plans by General Motors Corp. and Chrysler LLC, demanding fresh concessions for long-term federal aid and raising the possibility of quick bankruptcy for either ailing auto giant.

Obama took the extraordinary step of announcing the government will back new car warranties issued by both GM and Chrysler, an attempt to reassure consumers their U.S.-made purchases will be protected even if the companies don't survive.

GM CEO Wagoner forced out as part of gov't plan

DETROIT (AP) -- Time and time again, General Motors Corp.'s board of directors reaffirmed its support for Chairman and CEO Rick Wagoner, even as the company piled up billions of dollars in losses and begged for government loans to stay alive.

But Wagoner is now a high-profile casualty of government intervention, forced out as part of the Obama administration's sweeping last-ditch effort to save the century-old auto giant. He stepped down effective immediately, the company said in a statement early Monday. He was replaced as CEO by Fritz Henderson, the company's vice chairman and chief operating officer.

Stocks tumble as automaker plans are rejected

NEW YORK (AP) -- Wall Street's March rally is on hold after the White House rejected turnaround plans from General Motors Corp. and Chrysler and gave investors an economic reality check.

Major indexes fell about 3 percent Monday, including the Dow Jones industrial average, which lost about 254 points but finished well off its lows at 7,522.02. Financial stocks weighed heavily on the market amid worries that banks will need fresh injections of capital.

Fears of an automaker bankruptcy have been looming over investors for months, and the latest developments made the market even more uneasy. However analysts said the pullback wasn't surprising after the average surged 21 percent over just 13 days.

Oil tumbles below $49 on gloomy economic outlook

HOUSTON (AP) -- Oil prices tumbled below $49 Monday as unease about the economy -- from Asia to Wall Street -- raised doubts about the global appetite for energy.

Benchmark crude for May delivery fell more than 7.6 percent, or $3.97, to settle at $48.41 on the New York Mercantile Exchange.

In London, Brent prices fell $3.19 to settle at $47.99 a barrel on the ICE Futures exchange.

Gasoline futures plunged more than a dime a gallon.

New GM CEO says bankruptcy still an option

DETROIT (AP) -- General Motors Corp.'s new chief executive said Monday there's a greater risk that the company will have to reorganize through bankruptcy, because of greater demands from the Obama administration to get debt off its balance sheet.

Fritz Henderson told reporters on a conference call that the company would still prefer to restructure outside of court, but the various support mechanisms Obama outlined Monday would provide a better cushion for the company to reorganize under a court-order bankruptcy if necessary.

EPA head announces new port emissions proposal

NEWARK, N.J. (AP) -- The head of the Environmental Protection Agency wants to limit emissions along the nation's coastline and within its seaports, just as the agency does along highways, with tougher pollution standards on large commercial ships.

EPA Administrator Lisa Jackson said Monday that the United States and Canada have applied to the International Maritime Organization to create a 230-mile emissions control area around much of their coastline.

The move is intended to ensure the shipping industry does its part to improve the air quality of major seaport communities.

Google, music labels launch China download service

BEIJING (AP) -- Google Inc. and major music companies launched a free Internet music download service for China on Monday in a bid to help turn a field dominated by pirates into a profitable, legitimate business.

The advertising-supported service will offer 1.1 million tracks, including the full catalogs of Chinese and Western music for Warner Music Group Corp., EMI Group Ltd., Sony Music Entertainment and Universal Music and 14 independent labels, the companies said. It will be limited to use by computers whose Internet protocol, or IP, addresses show they are in mainland China.

Sales of second homes fall 22 percent

WASHINGTON (AP) -- Sales of vacation and investment homes slid 22 percent last year, a sign that tough economic conditions and tight lending requirements shut out buyers, the National Association of Realtors reported Monday.

Second home sales comprised 30 percent of the entire housing market, down from a peak of 40 percent in 2005 when financing was easier.

Just 9 percent of sales last year were for vacation homes, down from 12 percent in 2007. Proportionally, investment properties held steady at 21 percent.

Fifth Third sells stake in processing business

CINCINNATI (AP) -- Fifth Third Bancorp said Monday it is selling a majority stake in its payments-processing business to global buyout firm Advent International for $561 million.

Cincinnati-based Fifth Third said it will retain a 49 percent stake in the new company, Fifth Third Processing Solutions LLC, which is valued at $2.35 billion, before any adjustments. The unit processes electronic payments such as debit, credit and merchant transactions.

FDA: Bristol-Myers diabetes drug appears safe

WASHINGTON (AP) -- A potential blockbuster diabetes medication from Bristol-Myers Squibb appears free from heart-related side effects that have plagued similar treatments, federal health officials said Monday.

Despite low rates of heart attacks and related problems in testing, the Food and Drug Administration will still ask an outside panel to scrutinize the company's safety data at a meeting Wednesday.

By The Associated Press

The Dow Jones industrial average fell 254.16, or 3.3 percent, to 7,522.02.

The Standard & Poor's 500 index fell 28.41, or 3.5 percent, to 787.53, while the Nasdaq composite index fell 43.40, or 2.8 percent, to 1,510.80.

Benchmark crude for May delivery fell more than 7.6 percent, or $3.97, to settle at $48.41 on the New York Mercantile Exchange.

In London, Brent prices fell $3.19 to settle at $47.99 a barrel on the ICE Futures exchange.

In other Nymex trading, gasoline for April delivery tumbled 10.8 cents to settle at $1.3799 a gallon while heating oil slipped 9.02 cents to settle at $1.3426 a gallon. Natural gas for May delivery rose less than a penny to settle at $3.739 per 1,000 cubic feet.