Tuesday morning headlines

Tribune deal approved: By shareholders, that is. They're selling their shares as part of an $8.2 billion buyout that's led by Sam Zell. Now, the question is whether enough money can be borrowed – and at the right price - to complete the deal. Most likely it can, but given the company's poor performance and the current credit crunch, Wall Street is divided on whether Tribune has much of a future. Here's a news flash that could point to that future: Rating services Standard & Poor's cut its corporate debt rating on Tribune a single level to B+ from BB- yesterday and said it expects to reduce the rating again when the deal is completed. That's junk status, folks - just the way Zell likes it. (Bloomberg)

Calming down yet?: Sorta. Maybe. Stocks have entered the snooze zone, but that could be because everybody is moving over to T-bills, at least for now. Yields saw their biggest drop since the market crash of 1987 (the return on a three-month Treasury bill was 3.09 percent yesterday; at the end of July, it was nearly 5 percent). And despite the initial hoopla when the Fed cut the discount rate, there's a growing consensus that more will have to be done to ease the credit crunch (it will be several days before the central bank can determine whether the rate cut did any good). (Bloomberg)

Buffett and Countrywide?: There's nothing going on as far as we know, but it wouldn't be so far-fetched for the billionaire investor to be looking at the nation's biggest lender (or at least parts of it). Buffett is sitting on $50 billion in cash and now that the private equity boys are scaling back, this may be his time. The WSJ's Heard on the Street column raises the speculation, pointing out that Countrywide's assets, including its debt-servicing business, could be attractive to Buffett's Berkshire Hathaway. No wonder the stock is up 6.4 percent this morning. Meanwhile, Countrywide Bank suffered a "little more than normal" outflow of funds Thursday and Friday but was "back to normal" on Monday, according to Pierre Habis, managing director of retail banking.

Loan legislation: Well, it’s about time. Consumer advocates are pressing the state Legislature to tighten standards used to approve loans. Under one proposal, lenders would have to ensure that home buyers can meet their monthly payments, even when rates increase in the future. Meanwhile, state regulators are close to finishing a provision that would require brokers to provide more upfront, written disclosures about how much the payments rise with each subsequent adjustment for the first five years of a loan. From the LAT:

"California has seriously lagged behind other states in its response to the meltdown in the mortgage market," said Paul Leonard, California office director of the Center for Responsible Lending in Oakland. He noted that 36 other states had adopted rules that apply new federal lending guidelines to state-licensed lenders and brokers. State regulators bristled at the criticism and said they were close to finishing new rules that lock the federal loan-review procedures into state law. A spokesman for the mortgage industry stressed that companies, responding to the market, had toughened lending standards independently.

Mattel under fire: There's no indication that any youngsters playing with Mattel toys have been injured from eating lead paint or swallowing magnets, but plaintiffs attorneys are trying to get the El Segundo-based company to pay for medical tests through what are known as medical-monitoring funds. A class action suit was filed on Monday in Superior Court. About 15 states, including California and Illinois, would likely allow such suits, but the Supreme Court has cast doubt on the practice. Opponents say that medical monitoring suits violate a fundamental principle of the legal system - that a person must prove injury before recovering money. Others say that it's enough that plaintiffs prove future economic injury - and that companies should be responsible for the costs associated with getting medically tested. (The Legal Intelligencer)

Falling gas prices: The government's latest survey shows that the average price of a gallon of unleaded gasoline was $2.818, down from $2.889 last week. Meanwhile, oil prices are hovering around $71 a barrel, down a couple of bucks after it became clear that Hurricane Dean would steer clear of oil operations in the Gulf. (EIA)

Shuttered legal site: As reported on LAObserved, the Hollywood Reporter, ESQ, an online review of Hollywood law, will cease publication as a standalone product after about a year. ESQ content will now be integrated into THR.com as a dedicated channel. (LAObserved)

Lacter on radio: This morning's business chat with KPCC's Steve Julian covers Mattel's efforts to regain consumer trust, Wall Street cooling off on Hollywood financing, and Wal-Mart introducing high-end grocery stores.