Unimpressed With $2.5 Trillion

Treasury Secretary Timothy Geithner, a one-time darling of Wall Street, unveiled a bold $2.5 trillion bank bailout plan yesterday, and stocks plummeted 5 percent in what the Wall Street Journal calls "the worst selloff since President Barack Obama assumed office." While Geithner outlined a plan to restart frozen credit markets and restore the health of America's sick banks, critics immediately took aim, saying the bailout was "neither well-funded enough to recapitalize troubled banks, nor detailed enough to assure investors that the government can solve the toxic asset problem plaguing banks," writes Fortune. What Geithner did outline was a "stress test" of banks' balance sheets; increased aid to troubled banks through the new Financial Stability Trust; a $1 trillion commitment to a public-private partnership that would buy up toxic loans; and a $1 trillion pledge to support student, auto, consumer, small-business, and commercial-mortgage lending.

Yet in an attempt to craft a "politically appealing plan," President Barack Obama and his team have "obscured the answer to the most important question: Who loses?" writes BusinessWeek. Any way you look at it, the administration's plan is "bigger than anyone predicted and envisions a far greater government role in markets and banks than at any time since the 1930s," writes the New York Times.

To the troubled auto sector now, where General Motors will cut 10,000 salaried jobs (14 percent of its white-collar work force) by the end of 2009, ahead of a make-or-break meeting with the Treasury Department in which it needs to outline a new path to financial stability, the NYT writes. The cuts aren't intended simply to appease the government; they are a clear signal to GM's main union and bondholders that they need to agree to concessions as required by the $13.4 billion federal loan package, writes the WSJ. Next week at the Treasury meeting the company is expected to say it will trim tens of thousands of hourly jobs and outline a detailed (and profitable) product vision for the future. If GM fails to sway the Obama administration, it might have to pay back the loan, and that "could trigger a bankruptcy filing by the 100-year-old auto maker, and could send the feeble U.S. car industry into a tailspin," adds the WSJ. One company already looking to exit the auto business is AIG. It's in talks to sell its personal car insurance unit to Zurich Financial Services, sources tell the WSJ, as it rushes to repay the $60 billion loan it received from the government in 2008. This major asset sale could net AIG up to $2 billion, writes the WSJ.

Meanwhile, Mel Karmazin has serious problems. The NYT writes that Karmazin's Sirius XM Radio is on the brink of bankruptcy as it creaks under a debt load of $3.25 billion and underwhelming subscriber numbers. The satellite radio network, which carries such on-air personalities as Howard Stern and Martha Stewart, has hired advisers to prepare a possible Chapter 11 filing, the newspaper writes, citing sources. If it chooses bankruptcy, it would be the second-largest Chapter 11 filing this year thus far, after Smurfit -Stone. "It is unclear how a bankruptcy would affect customers. Service is unlikely to be interrupted, but the company might have to terminate contracts with high-priced talent like Mr. Stern or Martha Stewart," the newspaper writes. With Sirius hurting, an old suitor is looming. Bloomberg writes that satellite TV group EchoStar Corp. chief Charles Ergen is stealthily buying up Sirius debt in an effort to possibly wrest control from Karmazin.

Today's business pages are booing and hissing at the proposed Ticketmaster-Live Nation merger. "If it goes through, don't expect the music business to ever be the same again," laments the Los Angeles Times. The Chicago Tribune agitates that the price of concert tickets will no doubt go up if this juggernaut is approved. "Concert ticket prices have doubled in the last decade, and consumers can expect no relief now," the newspaper writes. BusinessWeek urges the Obama administration to step in and strike down the Ticketmaster-Live Nation deal on antitrust grounds, earning an easy ovation from music fans. "Here you have not one but two companies that are despised, be it for high ticketing fees or tight control of what was once an exquisitely local business, by a large portion of their key customers," the magazine writes.

From rockers to the rocked now, we head to the United Kingdom, where the Royal Bank of Scotland yesterday said it will cut 2,300 jobs amid a comprehensive restructuring. The cuts came with an added bonus, a public apology from ex-RBS chiefs for their part in contributing to the banking crisis, the Guardian reports. A contrite Sir Fred Goodwin, the ousted RBS CEO, told parliamentarians, "If you want to blame it all on me and close the book, that will get the job done very quickly, but it's not going anywhere near" finding a solution. There was no such mea culpa from Credit Suisse this morning. The Swiss banking giant announced an annual loss of $7 billion, its largest ever, the BBC writes.

And, finally, the U.S. Postal Service is one of the few businesses to hike prices in this downturn. "The price for a first-class mail stamp will increase 2 cents to 44 cents, starting May 11," CNN.com reports.