Fix It Again, Fiat?

A potential white knight has emerged for the precarious Chrysler: Italy's Fiat, business pages across the U.S. and Europe are proclaiming this morning. According to the Wall Street Journal, the two automakers could announce a no-money-down deal in which Fiat takes control of Chrysler as soon as today. "Fiat, the stronger of the two, wouldn't immediately put cash into Chrysler," the newspaper writes. "Instead it would obtain its stake mainly in exchange for covering the cost of retooling a Chrysler plant to produce one or more Fiat models to be sold in the U.S., these people said." Chrysler gave the New York Times an everybody-is-talking-to-everybody-these-days type "no comment," fueling speculation that a Fiat-Chrysler tie-up is imminent. According to the Financial Times' source, U.S. lawmakers have already been informally briefed on the potential merger.

The NYT points out Fiat pulled out of the U.S. market in 1983 and hasn't been back. A Chrysler alliance, then, would allow it to "use Chrysler's American plants and dealers to introduce lower-emission, front-wheel drive vehicles," the newspaper adds, citing trade publication Automotive News, which first broke the report. The FT cannot resist taking a crack at Fiat's final days in the U.S. The Italian carmaker "withdrew its flagship brand from the US ... amid jokes that its cars were rust buckets," the newspaper writes. And, of course, there's the Fiat acronym "Fix it again, Tony," which the Los Angeles Times helpfully recalls. BusinessWeek, too, pours some cold water on the deal, dusting off a Bob Lutz quote from when he was president of Chrysler 20 years ago, the last time the two carmakers mulled an alliance. Back then, Lutz "called the Italian carmaker 'a bride … lying on her deathbed,'" BusinessWeek writes. It's true that Fiat CEO Sergio Marchionne has been the architect of an impressive comeback at Fiat. "But a savior for Chrysler? No. What Chrysler needs is a parent company with technological prowess and a lot of cash. Renault-Nissan comes to mind," BusinessWeek says.

If Monday's historic bank-sector bailout in Britain was supposed to calm investors' nerves, it failed, the seldom-patient British dailies point out today. The multibillion pound insurance policy for Britain's stricken banks sent shares tumbling in three giants: HSBC, Lloyds Banking Group, and, worst of all, Royal Bank of Scotland, the Guardian writes. RBS is trading for pennies today after its shares fell 66.5 percent following its posting of a record £28 billion writedown on Monday. The culprit was RBS' decision to bid on Dutch bank ABN Amro in 2007. As the WSJ writes, "The expected RBS loss suggests that the bank's participation in a European bank consortium's purchase of ABN Amro Holding NV may go down as one of the worst deals in recent banking history." RBS CEO Stephen Hester seems to concur. "We doubled up at the wrong time," he is quoted by the newspaper as saying.

In announcing the latest bailout plan, U.K. Prime Minister Gordon Brown did not mince words at a Monday press conference. His verdict? Some of Britain's top bankers made "irresponsible mistakes," the BBC reports.

It's official: The New York Times Co. cinched a $250 million loan from Mexican billionaire Carlos Slim Helú on Monday night to help it pay off its debt load, its newspaper reports. But the loaner does not come cheap. The WSJ writes that the notes carry an interest rate of 14 percent, plus an option to convert the warrants into an additional 15.9 million common shares. As Slim amasses a larger piece of the Times' business, questions loom about future ownership of the Times Co. If Slim were to exercise his warrants, he'd have 18 percent of the company. The Ochs-Sulzberger family holds about 19 percent and, of course, it controls the publisher through super-voting shares, the newspaper adds. Hedge fund Harbinger Capital Partners is the second-largest shareholder. In any event, there are more pressing matters at hand: The Times Co. is in a cash crunch. "It is far from certain that an injection of $250 million would be enough to enable the publisher to survive as an independent company," the WSJ writes.

Last week it was Microsoft, this week it is IBM that faces an EU probe into alleged anti-competitive business practices in Europe, the WSJ reports. T3 Technologies Inc. of Tampa, Fla., a maker of mainframe computers, says IBM used its connections to muscle T3 out of the European market, forcing T3's sales to collapse. The complaint is part of an ongoing legal skirmish between the two firms in the U.S. The considerably smaller T3 wants the EU to investigate whether IBM's strict software-licensing policy is anti-competitive. There is no certainty the EU will take up the case, the newspaper adds. Perhaps a more worrying development for IBM comes from networking-equipment-giant Cisco. According to the NYT, Cisco will make a big push into the computer-server market with a new product that "threatens to shake up the technology industry and put the company on a collision course with traditional partners like Hewlett-Packard and I.B.M."

And, finally, don't be surprised if you see a few more smiles—or perhaps just perplexed looks—at the local shopping mall this week. That's because the nation's biggest retailers and top cosmetics brands will team up on a mammoth, sweet-smelling give-away. "Today, major retailers nationwide, including Macy's, Nordstrom, Saks and Target, will start giving away $175 million worth of free high-end cosmetics made by Clinique, Estee Lauder, Lancome, L'Oreal and other companies" to settle a class action suit accusing the companies of price-fixing dating back to the 1990s, the Pittsburgh Post-Gazette reports. There's a hitch though: Shoppers will have to prove they bought certain cosmetics between May 29, 1994, and July 16, 2003, to qualify.