NYT: “Union leaders said Sunday that they had reached an agreement with Chrysler that meets federal requirements for the automaker to receive more financing. The deal includes Fiat … Neither the United Automobile Workers union nor the company released details of the tentative agreement, which would modify the union’s 2007 contract and reduce the amount of money Chrysler must pay into a new health fund for retirees. The union plans to have its 26,000 Chrysler workers vote on the deal by Wednesday … The union deals increase pressure on Chrysler’s lenders to come to an agreement to reduce the automaker’s $6.9 billion in secured debt.”
AP: “The storied Pontiac brand is dead and more car factories and jobs are about to disappear — the latest casualties of a massive restructuring plan that GM is counting on to help it stave off bankruptcy protection. The struggling automaker will announce details of its plan at 9 a.m. ET Monday as it makes an offer to its bondholders to swap debt for company stock.”
Republican Assault Planned on Climate Bill
The Hill reports on upcoming coordinated GOP attack on clean energy/climate protection bill: “House and Senate Republicans intend to ramp up their attack of the Democratic-sponsored clean-energy legislation this week in an effort to brand the measure a ‘national energy tax.’ According to a GOP leadership aide, the Democrats’ American Clean Energy and Security Act of 2009 that minority party members refer to as ‘cap and tax’ offers them a ‘huge opportunity, and we will use it to hammer that tax message in a communications offensive over the next four weeks — that this bill amounts to a national energy tax that will destroy jobs and increase costs for every single American.’ … [After Dem Rep. John] Dingell barked to witnesses – including former Vice President Al Gore – ‘nobody in this country realizes that cap-and-trade is a tax, and it’s a great big one’ … GOP leadership sources said that Dingell gave them a ‘huge gift’ … Republicans plan to coordinate their message around Dingell’s comments…”
NYT’s Tom Friedman offers messaging suggestion: “…in the long term, your actual bills and expenses will go down because your car, appliances and factory will become steadily more productive and give you more power for less energy. I call it the ‘Carbon Tax Cut.’ You won’t receive the dividend in the first week or month, but you will get it soon, and it will be a permanent tax cut, a gift that will keep on giving.”
Grist’s David Roberts counsels ignoring right-wing lunacy: “…progressive bloggers, journalists, and activists are wasting a lot of their time … Republicans in Congress have decided on a program of total obstruction … They are shrinking into themselves, drifting into the wilderness, becoming more and more cultish. There is, in short, no reason to pay much attention to them … Meanwhile, among the other 60-70%, there’s a serious debate happening about how best to act on climate and energy. There’s broad understanding that there’s a problem and broad support for moving forward, but among industrial state Dems and many citizens there’s fear that the transition will be painful. The rational response to this landscape would be to spend time arguing—and displaying real confidence—that the transition will in fact be good for the entire country; that industrial states will benefit as well…”
USA Today on U.S. Climate Action Partnership alliance between some businesses and environmentalists for compromise climate bill: “…a number of USCAP recommendations are now part of the draft bill … Companies could buy offsets … Carbon polluters could ‘bank,’ or save allowances for use in future years … a reserve of allowances … would be made available if the price of the permits rose to ‘unexpectedly high levels’…”
USA Today also covers utility industry lobbying: “Fifty of the nation’s largest electric utilities amped up spending on lobbyists by 30% late last year to influence the debate in Congress just underway on one of the biggest issues facing lawmakers: climate change … ‘It’s what industry does with legislation. They make it better for their bottom line,’ said John Coequyt of the Sierra Club…”
Fed Aims For Negative Interest Rate
Fed shooting for effective negative interest rate. FT: “The ideal interest rate for the US economy in current conditions would be minus 5 per cent, according to internal analysis prepared for the Federal Reserve’s last policy meeting … A central bank cannot cut interest rates below zero. However, the staff research suggests the Fed should maintain unconventional policies that provide stimulus roughly equivalent to an interest rate of minus 5 per cent … The assessment that the US central bank needs to provide stimulus equivalent to a substantially negative interest rate is unlikely to have changed ahead of this week’s policy meeting.”
NYT expose questions Geithner’s close ties to Wall Street titans: “An examination of Mr. Geithner’s five years as president of the New York Fed, an era of unbridled and ultimately disastrous risk-taking by the financial industry, shows that he forged unusually close relationships with executives of Wall Street’s giant financial institutions. His actions, as a regulator and later a bailout king, often aligned with the industry’s interests and desires, according to interviews with financiers, regulators and analysts and a review of Federal Reserve records.”
LA Times explores concerns with toxic assets plan: “[it] is now generating widespread fear that it is vulnerable to manipulation and carries sharp risks for taxpayers … The program is trying to create an artificial market for assets that have no known value, something that has never been done before on this scale. The only way to accomplish that is for the government to accept a mountain of risk. In the process, critics fear that the banking system could be further damaged and the program subjected to a boom in fraud.”
Bloomberg expects banks to convert TARP funds into “common shares:” “U.S. banks that received results of their federal stress tests last week were given three options if they need additional capital to withstand the recession. The reality is they may only have one … changing the preferred stock held by the U.S. Troubled Asset Relief Program into common shares. Doing so would prop up capital under accounting rules and dilute the value of shareholdings for current investors.”
Salon’s Michael Winship on the need for a grand inquest into the financial crisis, presses the President: “President Obama needs to get involved immediately and publicly back an independent Pecora-style commission’s work.”
Time reports credit card companies looking to subvert any restoration of rules, speculates on final legislation: “The most likely outcome is a bill somewhere between [Rep. Carolyn] Maloney’s and [Sen. Chris] Dodd’s that prevents credit card companies from boosting rates on existing balances but allows them to jack them up for future purchases, eliminates a variety of unfair billing and payment gimmicks the card companies use to jack up fees, and gives the consumer more ways out if the card companies do try to squeeze them. And what if the banks ultimately deliver on their threats, simply jacking up initial interest rates on everyone thereafter and constraining credit? ‘Then you’ll continue to see us changing the law and the regulations so that eventually they’re out of options,’ says [a] Democratic leadership aide.”
Global Finance Ministers Meet
“The World Bank on Sunday urged donor nations to speed up delivery of the money they’ve already pledged – and open their wallets wider – to help poor countries reeling from recessions rooted in rich nations … The World Bank meeting capped three days of talks in Washington about the economic crisis, but yielded no new pledges of money from governments.”: AP.
Reuters reports Geithner pledges to resist protectionism: “Treasury Secretary Timothy Geithner said Sunday that it was vital to speedily implement agreed plans to bolster resources of global lenders and put in place policies to stimulate growth … He said the lenders needed to strengthen their own risk management procedures and ensure there was adequate cooperation between the IMF and World Bank to make sure they were achieving development goals like cleaner air and water. But Geithner said the lenders need backing from all their members in the form of policies that help, not hurt, the poorest countries, including a commitment to resist protectionist trade measures.”
“The Group of Seven finance chiefs’ ability to handle banks’ toxic assets will determine the strength of the economic recovery they now say will begin this year. In warning that the world economy could still take another turn for the worse, the finance ministers and central bankers who met over the weekend in Washington singled out the banks’ impaired balance sheets as the biggest threat to a sustainable recovery.”: Bloomberg
“Universal Coverage Makes You Healthier. Here’s Proof.” says The Treatment’s Harold Pollack.
W. Post reports on Obama proposal for higher taxes on wealthy highlights impact on small businesswoman who, as the Post notes itself, represents merely 2-3% of the small business community.
Terrance Heath contributed to the making of this Breakfast.