No Stress Over Stress Tests

Stress-test grades are due this week for the nation's banking sector, and the New York Times, for one, is tipping positive results. "The administration seems prepared to argue that, while a few banks may need additional money, the broad financial system is healthier than many investors fear," the newspaper writes. Indeed, one unnamed government official told the NYT, "None of these banks are insolvent." That's a relief. The full details come Thursday, when the Treasury and Fed deliver a detailed summary of the sector that's expected to read like a lengthy analyst report. "In effect, the Treasury Department and Federal Reserve regulators will be handing over information to investors so that they can decide which banks they want to invest in—and which will ultimately need more bailout money," the newspaper writes. Over the weekend, Warren Buffett said he doesn't need to wait for the stress-test results to make his investment decisions. Buffett, no fan of the stress tests, says he's already stockpiling shares of Wells Fargo (WFC), U.S. Bancorp (USB), and M&T Bank Corp. (MTB) in his portfolio, Reuters reports.

Meanwhile, the vote of confidence in the banks will come as little relief to businesses looking to avoid a cash crunch. The Wall Street Journal reports that "banks are shortening the terms on lines of credit ... a sign that while lending is reviving, businesses are facing new hurdles to obtaining credit." The WSJ warns that, yes, the credit markets have thawed, but "many borrowers are facing tougher terms" like higher fees, or revolvers, and fluctuating interest rates.

Fiat's Sergio Marchionne is not finished kicking the tires. After pulling off the Chrysler coups last week, the Fiat chief has General Motors' (GM) Opel unit in his sights, the WSJ reports. Marchionne will be in Berlin today to meet with German government officials, a crucial piece of support if Marchionne is to build a new auto super-alliance around Fiat, Chrysler, and Opel. On Sunday, Fiat's board gave the green light to Marchionne to begin the negotiations, the newspaper writes. According to the Financial Times, Marchionne plans to build a publicly traded "European car supergroup," one that's even larger than the triumvirate described in the WSJ. "Marchionne wants Italy’s largest industrial group to separate Fiat Auto from its other divisions, join them with Opel / Vauxhall, Saab, and GM’s other European operations, and Fiat’s stake in Chrysler to create a company with about €80bn ($106bn) of revenues and sales of 6m-7m vehicles a year," the newspaper writes. If he pulls it off, the carmaker would be second to Toyota and roughly the same size as Volkswagen, the newspaper writes.

Away from the comparatively transparent world of Italian corporations and back to the murky land of U.S. banking: New York Fed Chairman Stephen Friedman is taking flak for his ties to Goldman Sachs (GS) during the time when the Fed was shoring up Goldman's finances. At that point, Friedman sat on Goldman's board and held a chunk of Goldman stock, "which because of Goldman's new status as a bank holding company was a violation of Federal Reserve policy," writes the WSJ. Ultimately, the New York Fed received a waiver for Friedman on that policy—but not before he had bought 37,300 more Goldman shares (which have increased $1.7 million in value). The situation demonstrates how a "tangle of overlapping interests can arise at a hybrid institution like the New York Federal Reserve Bank" as the U.S. government gets embroiled in day-to-day banking business.

The fate of the Boston Globe remains undecided as we go to press (well, as we hit the publish button) after New York Times Co. (NYT) execs and Boston Newspaper Guild representatives failed to agree on radical concessions before a midnight deadline. Late last night, the Times Co. said "it would file a notice under federal law stating its intention of closing The Globe within 60 days," the NYT reports. The union rebutted what it called "bullying" tactics by saying it had "made a proposal that exceeded management’s demands." One union, the Teamsters, agreed to some $2.5 million in concessions, reports the Boston Globe, and negotiations continue with the guild. One union official summed up the Times Co.'s blunt negotiating position as, "Do or die."

And, finally, got a can't-miss flight to Mexico scheduled? Not to worry. The world's biggest airlines have added a series of in-flight additions to reassure air passengers during the current H1N1 virus outbreak. "Lufthansa has placed a doctor on board each of its flights to Mexico; American Airlines has issued medical kits to cabin crews; British Airways is distributing face masks; and Alaska Airways is removing pillows as fears of a flu pandemic rattle the global aviation industry," the NYT writes.