Carmakers in Crisis
Ford and Chrysler demanded concessions similar to those offered by unionized workers to General Motors as the industry's crisis deepened. GM retirees would contribute up to $752 a year for family health coverage, while current workers will give up cost-of-living pay hikes. GM chief executive Rick Wagoner warned of further benefit cuts and layoffs, but said reductions in base wages may not be needed. Ford, meanwhile, reported a $1.2 billion quarterly loss in its North American operations but delayed a major restructuring.
Refco filed for bankruptcy protection as clients rushed to unwind complex positions in the wake of an accounting scandal. The country's largest commodities broker, Refco also ran highly profitable unit trading securities and financial futures for hedge funds. J.C. Flowers & Co., a private equity firm, offered $768 million for the commodities business, which appears uninvolved in questionable trading that is under investigation by federal regulators. Fallout from Refco's collapse reverberated through energy and derivatives markets.
Trade Talks Stall
Efforts to restart global trade negotiations hit a wall after Europe refused to agree in principle to phased but deep reductions in farm subsidies, tariffs and market barriers. Hopes had been raised after leading developing nations were encouraged by a U.S. proposal at informal talks in Geneva. But at France's urging, European Union negotiators insisted on maintaining existing protection for a wide range of "sensitive" products. The next round of formal talks, scheduled for Hong Kong in December, appears in jeopardy.
A tax reform panel recommended two plans -- one, a simplified income tax with four brackets, the other a progressive consumption tax. Both would eliminate the alternative minimum tax, reduce taxes on investment income, limit tax breaks for home mortgage interest and employer-paid health benefits and eliminate deduction for state and local taxes. The panel also endorsed reducing the top rate on corporate profits from 35 to 32 percent. The report will be analyzed by the Treasury Department before being sent on to the president.
More KPMG Charges
Ten more former KPMG employees, including former chief financial officer Richard Rosenthal, were indicted for their roles in designing and peddling what the government alleges were abusive tax shelters. A total of 19 defendants now face charges. The 69-page indictment focuses on shelters that generated tax savings of $2.5 billion but that many in the firm acknowledged would probably not pass muster with the Internal Revenue Service. It also claims the defendants concealed evidence and provided false information to government investigators.