Tuesday morning headlines

Stocks keep slumping: Wall Street is still worried about the big banks (second quarter earnings come out later this week), but there's lots of other stuff to fret over. GM is being forced to cut more salaried positions, speed factory closings and suspend its dividend; and a couple of not-so-hot government reports show a big jump in wholesale inflation and sluggish retail sales. A slower economy is actually bearish news for oil prices, which have tumbled $6 a barrel this morning, to $139. (NYT, Bloomberg, CNBC)

Economy will stay sluggish: Fed Chairman Ben Bernanke is offering a gloomy assessment on Capitol Hill this morning (though he still isn't using the word recession). Bernanke was especially pessimistic about any easing of energy prices because the market believes that demand is outstripping supply. Yet oil is down this morning because of concerns that the economy is slowing. Go figure…(NYT)

GM cuts: They include a 20 percent reduction in labor costs for salaried workers and the elimination of the quarterly dividend. Also, the automaker will stop providing health care coverage to salaried retirees at age 65. All told, the company wants to raise about $15 billion by the end of 2009. “These are tough but necessary actions,” said CEO Rick Wagoner, “and these, along with current cash and available credit lines will provide us with ample liquidity through 2009 even under conservative U.S. industry sales assumptions.” (NYT)

IndyMac halts foreclosures: The FDIC, which is now operating IndyMac, wants to keep borrowers in their homes. "We will very aggressively pursue loan-modification strategies for unaffordable loans to make them affordable on a long-term, sustainable basis," FDIC Chairman Sheila Bair told the WSJ.

In its effort to halt foreclosures, the FDIC has much more flexibility to intervene with the roughly $15 billion of loans that were owned by IndyMac. But IndyMac also was handling another roughly $185 billion in mortgages in its servicing business. Ms. Bair said that FDIC officials also were looking at the troubled loans in the broader portfolio to see if there was a way to help borrowers avoid losing their homes. "We can't make any promises," Ms. Bair said. "We're going to look at each one before we are going to let them continue on to foreclosure, and when we find people who want to stay in their homes, we are going to try to work with them to see if we can modify their loan."

Another bank to watch: Shares of locally based FirstFed Financial, which like Downey Financial has handled lots of nontraditional mortgages, is taking a huge hit, falling almost 20 percent on Monday. FirstFed has one of the higher ratios of defaulting and foreclosed loans, at 6.7 percent (though not nearly as high as Downey). FirstFed Chairman Babette Heimbuch noted that her bank had twice the level of funds that regulators considered necessary to be well-capitalized. The bank has cut back on risky lending. (LAT)

Paramount deal fizzles: This was to have been a $450 million film-financing deal with Deutsche Bank, which would have covered as many as 30 films. Paramount will either turn to other co-financing arrangements or pick up more of the bill itself. Paramount says that the deal had become unattractive. From Variety:

Deutsche declined comment late Monday, but word of a bloodletting had spread earlier in the day. Several finance vets reached Monday evening said Deutsche had axed the entire film finance team, which included Laura Fazio, the unit's top exec who was poached from Dresdner last year to try to kick-start Deutsche's Hollywood forays. But the bank was stuck selling senior debt at exactly the wrong moment. "The market has just sort of seized up," said one person who has arranged financing for several studios in recent years. "Things are going to take a while to be digested given the aversion to risk right now."

SAG members to get offer?: Leaders of the Screen Actors Guild might allow the rank and file to vote on what the media companies say is their final contract offer. (This runs counter to what SAG President Alan Rosenberg was saying last week.) If SAG members sign off on the deal, it could resolve the stalemate by mid-August, according to Variety. That mid-August target is important because the actors have been given until Aug. 15 to ratify the deal. Otherwise, the media companies threaten to pull the retroactive pay that guild members were to have received once a deal was reached.

Guild insiders have acknowledged they have few other options left in the face of the congloms' adamant refusal to change terms contained in the two-week-old final offer. It's becoming increasingly apparent that SAG's not going to ask its members for a strike authorization, since it's highly debatable whether the guild would achieve the 75% support level needed for a work stoppage. Although most major studio features have closed down due to the uncertainty over the Screen Actors Guild situation, producers are now pondering going ahead with such projects. Additionally, a dozen TV series have continued to shoot, and SAG has issued more than 500 waivers to indie features, under which companies agree to observe the terms of SAG's new deal.

Weinstein deal with Showtime: It's an exclusive seven-year agreement and comes three months after Paramount (also owned by Viacom) turned down the cable channel and formed a cable venture with Lions Gate and MGM. No terms were announced, but the unnamed spinsters were talking about up to $700 million to Weinstein Co. over seven years. Here is the THR story and from the WSJ:

The company has high hopes for its upcoming movies, including the musical "Nine," starring Daniel Day-Lewis, Nicole Kidman and Penelope Cruz, tentatively scheduled for December 2009, and the recently announced "Inglorious Bastards," to be directed by Quentin Tarantino. Bob Weinstein says the Showtime deal also will cover releases from the company's new animation division.

Daily News building: The paper provided a few details about its pending move to Burbank Boulevard in September (DN owner MediaNews signed a 15-year lease). "The good news (is) we got to start from scratch, (including) the lighting and attention to detail, conference rooms, break rooms, our own private deli on campus. It's a beautiful setting," said Publisher Douglas Hanes. He said the long-term lease demonstrates the company's commitment to the newspaper. (Daily News)

Lacter on radio: This morning's business chat with KPCC's Steve Julian looks at other banks that might be vulnerable to the mortgage problems and the status of contract talks involving port workers and actors. Also on kpcc.org and through podcast.