Financial Headlines

White House task force rejects GM, Chrysler turnaround plans the Obama administration's autos task force, led by former investment banker Steve Rattner, warned that both General Motors and Chrysler could be forced through bankruptcy to reduce debt as it rejected their turnaround plans. "We have unfortunately concluded that neither plan submitted by either company represents viability and therefore does not warrant the substantial additional investments that they requested," a senior official said. At Rattner's request, GM CEO Rick Wagoner was forced out, an official said. CNBC/The Associated Press (30 Mar.)

Some lenders to need much government aid, Geithner warns terms of the public-private program to buy troubled assets from banks "cannot change," or investor confidence in the plan will plunge, U.S. Treasury Secretary Timothy Geithner said. He also said some lenders will need "large amounts of assistance." About $135 billion remains in the government's financial-stability fund, Geithner said, but he declined to say whether additional funding will be requested. "If we get to that point, we'll go to the Congress and make the strongest case possible and help them understand why this will be cheaper over the long run to move aggressively," he said. Bloomberg (30 Mar.)

Banks abandon foreclosure proceedings to save money. Banks holding defaulted residential mortgages are increasingly walking away from their foreclosure actions because the costs of maintenance, repairs and legal fees are more than the properties are worth. A bank walkaway, as it is called, can turn into a nightmare for the borrower, who is still on the title and legally responsible for the property, which often suffers from vandalism after it becomes vacant. The New York Times (29 Mar.)

Bernanke concerned about Fed's independence. Federal Reserve Chairman Ben Bernanke is concerned that the agency's work with the White House to resolve the financial crisis might lead to political pressure that could delay the Fed's efforts to battle inflation. To relieve those concerns, the Fed and the U.S. Treasury released a statement on each agency's responsibilities. "This is all about independence," said Laurence Meyer, vice chairman of Macroeconomic Advisers. "Even though the Fed is cozying up to the Treasury, it is important to know that the Fed would maintain some stability over monetary policy." Bloomberg (30 Mar.)

Regulatory reform could make money-market funds safer. Individual investors could find the traditional safe haven of money-market funds a little safer under wide-ranging reforms to the U.S. financial regulatory system proposed by Treasury Secretary Timothy Geithner. He asked Congress to enact tougher regulations on these funds to limit liquidity and credit risk, in hopes of heading off runs on funds of the kind triggered by Lehman Brothers' bankruptcy. The Washington Post (29 Mar.)