The week kicked off with optimistic guidance from home improvement store Lowe’s (LOW), though it missed expectations for the quarter.
A report was released that said applying the government’s stress tests to small and medium-sized business showed that they needed to raise $24 billion to be able to handle worsening economic conditions. The research, done at Sandler O’Neill, found capital shortfalls in 38% of the 200 banks that are just smaller than the largest 19 in the U.S. It also found that as many as 500 banks could end up closing.
Geithner was in the news quite a bit this week, beginning on Monday when he said that he sees some signs of economic improvement, but expects more unemployment still to come.
And the bulls came back to town as positive retail and bank news renewed economic hopes and sent the Dow up 235 points. This was the biggest rally in over a month. The Average closed at 8504.
California to Vote on Budget Measures
GM, UAW Negotiate Factory Closings
The Geithner Giveaway
Study: Small Banks Need Capital
Nationwide Average
$2.39 a gallonTuesday
Several of the nations biggest 19 banks have asked the government if they can begin repaying money they borrowed through the TARP program. These include JPMorgan Chase (JPM), Goldman Sachs (GS), and Morgan Stanley (MS). The government is expected to approve a group of the biggest banks to repay the money at once, rather than approving individual applications.
Meanwhile, President Obama announced sped-up fuel economy standards for cars sold in the U.S. Efficiency will need to be upped by 5% a year beginning in model year 2012, eventually reaching 35.5 miles per gallon in 2016. The 2009 requirement, for perspective, is 25 miles per gallon. These changes are supposed to help remove 900 million metric tons of carbon dioxide from the air. Though, challengers to the standards say it’s unfair for the government to tell car makers and buyers how their cars are designed.
JPM, GS and MS Pushing to Repay TARP
FBN Takes Fed to Court Over TARP Details
Cavuto's Deal: Autos All In
Cavuto's Capper: Loose Lips Sink Ships
Wednesday
Congress approved new rules for credit cards Wednesday. Sweeping new limits were passed in the House and are expected to be signed into law by President Obama. This bill will restrict credit card issuers from being able to increase interest rates on existing balances and charge fees, among other things.
Oil hit a six-month high, climbing above $62 a barrel after a steep drop in inventories ahead of summer was reported by the Energy Information Administration.
Later, bankrupt auto maker Chrysler announced that Robert Nardelli would be stepping down as chairman of the company and replaced by Robert Kidder once the merger of Fiat is finished. Kidder is currently the lead director for Morgan Stanley, Schering-Plough, and Microvi Biotech.
CA Treasurer: Not Asking for Bailout
Ford Dealership Hiring Despite Sale Slump
Cavuto's Deal: Governator Plan Terminated?
Intel Chairman on Stepping Down
Thursday
Another big guy stepping down was announced Thursday. Chairman and CEO of AIG (AIG) Ed Liddy said he will step down from both those roles once replacements for them are found. He recommended that these roles be separated, which the board agreed to.
Meanwhile, General Motors (GM) and the United Auto Workers reached a deal on the auto maker’s restructuring. An agreement was made to cut labor costs and change the terms of retiree health-care debt. This would need to be ratified by the 54,000 UAW-represented factory workers. This is one of the key steps needed to be taken in order to meet the company’s government-imposed restructuring deadline of June 1.
Standard & Poors, a credit ratings agency, cut Britain’s (yes, the country) outlook to negative for the first time. The agency said debt could near 100% of the nation’s GDP. Fears of similar rating cuts for the U.S. have been on the minds of investors here as well.
Florida’s BankUnited was shut down in what is the biggest bank failure so far this year. The bank will be bought by a group of private equity firms.
UAW Reaches Tentative Deal With GM, U.S.
GMAC Bailout Aids Alternative Energy?
Cavuto's Deal: Obama vs. Cheney
Cavuto's Capper: Not Easy Being Cheney
Friday
GM reached a tentative deal with its Canadian union, a day after it worked out concessions from the UAW. These agreements, which will help cut costs, will help steer the company into bankruptcy should the Obama Administration’s attempt to win over GM bondholders fail.
Meanwhile, the Treasury said it will invest an additional $7.5 billion into auto finance company GMAC and convert a loan it made to GM into a stake of one-third in GMAC. This now brings the taxpayer investment in the lender to $12.5 billion.
And analysts at Morgan Stanley said most U.S. banks will repay their TARP money by the fourth quarter. They also said banks will probably make more stock offerings up until that point.
Last-Minute Travel Deals
Tova Borgnine Details Path to QVC Stardom
Mom and Pop’s Kids
Top Economic Adviser on Credit Card Rules
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