Biz Beat: Busy day in business
Tuesday was a great day for business. And by business, I mean covering business news. Earnings reports. Bankruptcy fallout. TARP. Czars. Credit ratings falling. Higher taxes on the wealthy. And health care debate fizzling on Capitol Hill.
Goldman Sachs saw earnings soar 33 percent over the first quarter, just nine months after relying on the U.S. taxpayers to bail it out. It has been an incredible turnaround, from bust to best.
Meanwhile, General Motors, fresh out of bankruptcy protection, announced Tuesday it had cut former CEO Rick Wagoner's retirement pay 60 percent. Wagoner will get $8.6 million over the next five years, down from the $23 million he was in line for last fall. Still too much for a man who led what was once the greatest company in America to financial ruin?
As more financial firms pay back Troubled Asset Relief Program, or TARP, funds, the federal government may soon be sending the money out again. The Obama administration is considering floating billions in TARP money to help struggling small businesses. Keep in mind what TARP was originally intended to do - help "too big to fail" financial firms. The auto industry and, if the plan goes through, small businesses, are far from major investment banks. Perhaps the leftover TARP money should go back to U.S. taxpayers.
News broke Tuesday that car czar Steven Rattner was resigning just as allegations emerge he was involved in a pay-for-play scheme at his former firm. The Obama administration has replaced Rattner with former United Steelworkers official Ron Bloom, meaning the car czar is now pro-union. (Keep in mind, there's already a czar for auto workers, Ed Montgomery.)
Major credit analysts downgraded California's bond rating Tuesday because of the state's $26 billion debt. This looks to have a cyclical effect, as a lower bond rating means an investment in California is riskier. The state will have to pay higher interest rates to attract investors, meaning they'll lose more money.
House Democrats unveiled their health care bill Tuesday, complete with a 5.4 percent surtax on couples earning more than $1 million. It's expected to raise more than half a billion dollars over 10 years, still not enough to pay for the massive health care plan. But key Democrats, such as Nebraska Sen. Ben Nelson, aren't on board. For their part, Republicans offered a weak alternative with no specifics.
In a recession, it's good to be a business journalist. Everyone's looking to you to explain where our money's going.