GM thinking small: With sales of SUVs and pickups pretty much in the toilet, the automaker this morning announced the closing of four North American plants – as well as an accelerated a push to introduce smaller passenger cars. GM also said it may put its Hummer division up for sale (yaaaaay!!). CEO Rick Wagoner says that problems in the car business are "more structural than cyclical." GM's sales report for May is due out later today. (AP)
The World Savings hex: Ever since Wachovia purchased the California S&L last year, things have not gone well, to put it mildly. The mortgage mess is part of the explanation, but what led to Monday's ouster of Wachovia CEO Ken Thompson goes well beyond that. From the WSJ:
In recent years, the bank pushed aggressively into commercial real estate, becoming the nation's second-largest construction lender since the end of 2004. At the end of the first quarter, it had $23.9 billion worth of construction loans outstanding, nearly half linked to the troubled housing sector, according to Foresight Analytics, an economic and real-estate research firm.
In recent weeks, Wachovia's image was tarnished by revelations of a federal criminal investigation into alleged laundering of drug money between U.S. banks and Mexican and Colombian money-transfer companies. Separately, Wachovia paid $144 million to settle another case involving an alleged telemarketing scam conducted by firms that fraudulently obtained bank-account data from elderly Wachovia customers. Wachovia says it is cooperating with the money-laundering probe; it neither admitted nor denied guilt in the telemarketing case, but said the situation was "unacceptable, and we regret it happened."
Another banker under fire: It’s Bank of America CEO Ken Lewis, who continues to defend the purchase of beleaguered Countrywide Financial. On a lengthy conference call, Lewis seemed to be doing a lot of ahmana-ahmanas. LAT columnist Tom Petruno was listening:
As for the timing of the deal, "It certainly would be hard to make the case that it is the top of the market, but obviously you wonder -- the concern would be that you've still got dramatic ways to go before you get to the bottom," Lewis said. "We did not, at the time we announced the deal, think that the market had bottomed in terms of housing. We expected further deterioration, as has happened…. We've been told consistently even by the regulators that people think they’re very good operators," Lewis said, referring to Countrywide. "They know what they are doing. Now, they blew it on the credit side, obviously, but that wasn’t the operators' problems. That was the orders they were given."
Big hospital sale: Tenet Healthcare facilities in Encino, San Dimas and Garden Grove are being bought by Victorville-based Prime Healthcare, which has come under fire for how the company cancels most insurance contracts once it takes over. That allows it to charge higher, non-negotiated rates - and prompts many privately insured patients to seek care elsewhere. Critics say the business model puts profit above patients. Prime executives say they are rescuing the hospitals from financial collapse. (LAT)
No more Kinko's: FedEx, which purchased the copy-service chain in 2004 for $2.4 billion, plans to stop using the Kinko's name on its stores. From now on, it will be known as FedEx Office. Old-timers might recall that Kinko's was started almost 40 years ago near UC Santa Barbara (founder Paul Orfalea had kinky hair). Kinko's had been based in Ventura, but later moved to Texas. (Bloomberg)
Terry Semel dealing overblown?: As reported yesterday, the former Yahoo and Warner Entertainment CEO is interested in IMG, the big talent and marketing agency. But sources are telling the Daily Deal that Semel's interest is more wishful thinking than serious negotiating. Billionaire Ted Forstmann, who controls IMG, isn't believed to be interested in selling.
Bad news for truckers: As many as 40 percent of the independent truckers driving into and out of the ports would probably be denied health coverage because of existing conditions, according to a study prepared for the Port of Long Beach. Some believe that independents should be hired as employees of trucking companies, which would then pay for health care costs. Both ports face big changes in the way truckers operate because of a plan to cut emission standards. (Press-Telegram)
SAG talks resume: The actors and media companies go back to the bargaining table today after a three-day recess. They have four weeks to hash out a deal, but there are no signs yet of significant compromise on the key issues. Of course, talks could drag out beyond June 30, when the contract expires. (Variety)
Lacter on radio: This morning's business chat with KPCC's Steve Julian covers the slowdown in imports at the ports of Los Angeles and Long Beach and prospects for some relief at the gas pump. Also available at kpcc.org or via podcast.