Obama To Get Bailout Cash

It looks as if President-elect Barack Obama will get his $350 billion, the half of the TARP fund yet to be spent, the New York Times reports this morning. Despite growing hostility from many Democrat and Republican lawmakers, the second tranche of the $700 billion bailout is expected to pass its first vote in the Senate today. This time around the Obama team is giving plenty of reassurances that the money will go toward more homeowner relief on its watch. Lawrence Summers, Obama's designee to be director of the National Economic Council, promised "more oversight and a sweeping new effort to prevent home foreclosures" in a letter to congressional leaders. CNNMoney.com says Obama will likely get the money by next week, when he's sworn into office. "I felt that it would be irresponsible for me, with the first $350 billion already spent, to enter into the administration without any potential ammunition, should there be some sort of emergency or weakening of the financial systems," Obama is quoted by CNNMoney.com as saying.

While Obama may be feeling pretty flush at the moment, the economic picture is worsening across the pond in Europe and Asia. On Monday, Spain was flagged by ratings agency Standard & Poor’s for deteriorating public finances, the third EU country in as many days to give such a warning as recession in the euro zone worsens. The other two were Greece and Ireland, the Financial Times reports. Meanwhile, Germany passed overnight a 50 billion euro ($67 billion) stimulus package to revive the area's largest economy, BBC reports. And in Beijing the Chinese government released a distressingly poor trade report this morning that shows exports and imports declined for a second straight month in December despite the passage in November of a massive $585 billion stimulus plan, the Wall Street Journal writes. The figures reveal a possible area of further tension between China and its trading partners, the Associated Press writes. China's global trade surplus grew a staggering 12.7 percent in the past year.

Staying overseas, Spanish authorities opened a fresh investigation Monday into how Banco Santander lost its clients so much money by investing with disgraced financier Bernard Madoff, the WSJ leads off its coverage today. Europe's second largest bank lost its clients—some of Europe's and Latin America's wealthiest individuals—$3.1 billion. "Prosecutors said Monday they want to know the details of Santander's relationship with Mr. Madoff's firm and when Santander knew about problems related to it," the newspaper reports. Closer to home, the NYT writes that Madoff's lawyers are actively negotiating "a plea agreement that could conclude the baffling fraud case without a trial." The details emerged from a 30-page order released yesterday by Judge Ronald L. Ellis who determined Madoff could stay free on bail for now. The decision is triggering all kinds of tensions in the normally staid community of Manhattan's East 64th Street, where a media scrum has set up shop, Bloomberg reports from East 64th Street. Despite the around-the-clock vigil of news vans, some New Yorkers, including U.S. Rep. Anthony Weiner, want him thrown in jail. Weiner branded Madoff a flight risk during his press conference staged a few paces from Madoff's front door yesterday.

The news from this year's Detroit Auto Show this year has less to do with engines than with batteries, and less to do with new sales than with bailout details. According to the NYT, following a Monday presentation about a new lithium-ion battery pack, General Motors Chairman Rick Wagoner addressed the company's financial prospects. General Motors has enough cash to remain solvent through the first quarter, thanks to a $13.4 billion bailout from the federal government. "The automaker is now focused on its latest plan for how it will cut its labor costs, reorganize its debt and reduce the number of dealers and brands," all by a Feb. 17 deadline, the newspaper writes. It's no small task. GM has to strike a deal with the United Auto Workers on a massive cost-cutting plan, and it has to find a way to finance its $60 billion debt load or risk having the loans recalled. Back to the batteries now: carmakers are thinking "electric" to get them through this brutal sales cycle. The Los Angeles Times reports "this week at Detroit's auto show, nearly every major automaker, including General Motors Corp., Ford Motor Co. and Toyota Motor Corp., announced plans to develop more electric vehicles." The big question looms: Who is going to make the batteries? Nailing this component, "the most expensive and high-tech" in an electric car, could ultimately determine "the most powerful players in the industry," the newspaper writes.

Already reeling from last week's $1 billion Satyam fraud, India's tech sector gulped hard on Monday at the news that two more outsourcing specialists have been blacklisted by the World Bank for improper business dealings. Wipro Technologies and Megasoft Consultants Ltd. were banned for four years each from doing business with the World Bank, the WSJ writes. Wipro's crime is that it allegedly dealt IPO shares to World Bank officials back in 2000. Megasoft's infraction is that it allegedly double-dipped, taking part in a business venture with the World Bank while simultaneously conducting business with it. According to BusinessWeek, Wipro has been quick to distance itself from Satyam, whose stock is on life support after its founder admitted to the board last week that he invented a pile of cash that does not exist. WiPro's shares fell more than 9 percent on the news Monday. "It takes time for people to come to terms with this," Wipro's chief financial officer is quoted by BusinessWeek as saying. "Once people understand the story, the stock will be back."

And, finally, the business pages are starting to read like something out of a Raymond Chandler novel. First, we head to southern Germany where the NYT reports from Blaubeuren on the mysterious death of billionaire businessman Adolf Merckle. He died from injuries sustained when thrown in front of a train in an apparent suicide. Many in the little town of Blaubeuren are convinced Merckle's creditors pushed him to take his life. And then there's the tale of Indiana businessman Marc Schrenker, who, authorities suspect, faked his death by staging a plane crash this weekend, the Associated Press reports. Schrenker's tale appears easier to solve. The investigation is now focused on a town in Alabama where a disheveled man wearing aviator goggles and carrying an Indiana driver's license reported to police he'd been in a canoe accident.