Banks: It's Payback Time!

The Obama administration is set to announce plans to let some of the nation's big banks pay back billions in federal aid, the Washington Post reports. Financial giants like JPMorgan Chase (JPM) and American Express (AXP) have spent the last month scurrying around, raising capital in a rush to prove their viability and hence to buy their way out of federal servitude. "[O]fficials say they now are confident that the strongest banks no longer need the money, and they want to provide those banks with a public vote of confidence," writes the Post. Yet even as the administration prepares to unshackle some the banks, some officials caution that the hastily constructed federal safety net of "cheap loans, debt guarantees and a promise that big banks will not be allowed to fail" has created an artificial atmosphere of buoyancy for the financial sector. While the banks are eager to pay back the direct loans, few "have expressed eagerness for the government to end the other forms of support, creating concern that these programs will be habit-forming and more difficult to terminate," adds the Post. The Treasury Department also plans to beef up executive pay oversight for banks and corporations that have received two rounds of federal bailouts, the New York Times reports. Few issues in the current financial mess have raised populist ire more than executive pay. Under the new proposals, twice-bailed-out companies like Citigroup (C), Bank of America (BAC), the American International Group (AIG), General Motors (GMGMQ), and its finance arm, GMAC, would have to "submit any major executive pay changes for approval by a new federal official who will monitor compensation."

For many years smug headline writers (ourselves included) have been referring to Beijing's attempts to censor foreign Web sites as the "great firewall of China." Today, the Chinese government has redoubled that effort by dictating that all new personal computers sold in the country include software that blocks access to certain Web sites, "a move that could give government censors unprecedented control over how Chinese users access the Internet," the Wall Street Journal reports. Nothing has been announced formally, but the WSJ reports this new crackdown is officially aimed at protecting China's young people from "harmful" content, which is said to mean pornography. The still-secretive software, code-named Green Dam, poses a number of problems for PC makers: Many fret that it will conflict with PC applications, causing glitches or even system crashes and could also leave computers vulnerable to hacking and viruses. But the greater issue concerns how Western companies will handle another Chinese attempt to censor the Internet. Major PC manufacturers like Dell (DELL) and Hewlett-Packard (HPQ) "have more than just sales in China to consider when the government asks them to do something: Major PC companies also have investments in factories and research facilities in China," notes the WSJ.

Meanwhile, Chrysler's bankruptcy exit strategy is proving to be one bumpy road. CNNMoney.com reports that those pesky Indiana pension funds that succeeded in getting the Chrysler-Fiat merger delayed last week, only to lose on appeal, have brought their legal argument to the Supreme Court. This is probably the final hurdle. The Chrysler-Fiat deal will go through on Monday afternoon unless the Supreme Court intervenes, Chrysler attorney Corinne Ball told CNN. With the legal drama still hanging over Chrysler, the WSJ this morning looks at Ford's future. Ford may be the healthiest of the Big Three automakers, but Chrysler and General Motors have a powerful backer these days—the federal government. GM and Chrysler, the WSJ writes, "are in line to get $62 billion in investments from the Treasury Department. As a result, the pair are expected to cut their debt and shrink their dealership networks, which will make them leaner competitors once they emerge from bankruptcy-court protection." Debt-ridden and money-losing Ford (F), meanwhile, must compete with "a bloated dealer base" and monstrous pension obligations. Not much of a fair fight.

From autos to airlines now: The global airline industry will lose a staggering $9 billion this year "amid what it said were the worst conditions it has ever faced," the NYT reports, citing the latest forecast from trade group the International Air Transport Association. Only in March, IATA predicted the global industry would lose $4.7 billion this year, the BBC reports. But as the number of passengers and containers of freight carried on-board dropped like a stone, the group had to revise the forecast downward. The worst-hit region will be Asia, where carriers are expected to lose about $3.3 billion; North American carriers, by contrast, will lose just $1 billion. But the $9 billion loss is a slight improvement on a year ago, when airlines lost a combined $10.4 billion as the price of oil soared to $165 a barrel, the NYT reports. 

Finally, forget peak oil. Has the U.S. hit peak coal? Despite having an estimated 240 years' supply of the hard, black stuff to mine—a figure that has earned the United States the moniker "the Saudi Arabia of coal"—new analysis by the U.S. Geological Survey of Wyoming's Gillette coal field, the nation's biggest and most productive, found "that less than 6% of the coal in its biggest beds could be mined profitably," writes the WSJ, adding: " 'Peak coal' theorists argue that current production levels may be unsustainable and, if anything, create a false sense of security."