Wednesday morning headlines

IndyMac bill rises: Federal regulators say that the bank's failure has cost the deposit insurance fund $8.9 billion, up from the earlier estimate of $4 billion to $8 billion. That's based on IndyMac having more deposits covered by insurance than first thought - and it's a problem because the government's deposit insurance fund is now below its mandated level. (LAT)

More bank failures expected: There's also concern that the FDIC has fewer people and less money to cope with the industry's travails, especially if several institutions were to collapse. For the moment, though, banks are in better shape than they were during the S&L crisis. From the NYT:

To replenish its fund, the agency will probably have to raise the fees it charges banks by at least 14 cents for every $100 of deposits, according to estimates by analysts. [FDIC chairwoman Sheila] Bair declined to comment on the likely size of any increase but said the agency was proposing to revamp its fees so that institutions engaging in high-risk practices would pay higher rates.

Oil drilling approved: The Santa Barbara County Board of Supervisors voted 3-2 to support offshore drilling. Though the vote is just symbolic (the supes have no power to approve new drilling and Gov. Arnold Schwarzenegger has already come out against it), it shows how record gas prices are resonating - and how the memory of 1969's disastrous oil spill is fading. From the LAT:

John Deacon, a former oil man and senior manager with Tracer Environmental Sciences & Technologies, told the group that "I don't believe a spill of that magnitude could occur." His words did little to assuage the fears of many in the audience in Santa Maria, where the supervisors met Tuesday. "I would like to dispel some of the myths set forth in the proposed letter for the governor," said Linda Krop, chief counsel for the Environmental Defense Center. "First, oil production is not clean or safe. . . . On a global and national scale, there are too many accidents and incidents to count."

Southwest cutting back: Almost 200 flights will be eliminated early next year - about 6 percent of the schedule - because of higher fuel costs and a weakening economy. The cuts will include one daily flight from LAX to Chicago, Kansas City, Nashville, Oakland, Phoenix and San Jose. The airline will add round trips between Phoenix and Burbank. (AP)

Vons limits double coupons: Matching the pricing policy at Ralphs, the supermarket chain will no longer offer double coupons worth more than 50 cents. As part of the change, if a coupon is worth more than 50 cents but less than $1, its value will be capped at $1. All coupons worth $1 or more will be redeemed at their face value. (LAT)

Olive Garden parent in trouble: Darden Restaurants warned that its sit-down restaurants will report weaker-than-expected earnings for the quarter ended Aug. 24 and continue to struggle into the fall. Investors were spooked because, until now, Darden has been able to withstand the industry slump. From the WSJ:

Midprice sit-down restaurants got a little bump at the beginning of the summer from the government's federal tax-rebate checks, but that wasn't enough to salvage sales as high gas prices, shrinking home values and high unemployment slowed spending on restaurants, experts say. In the past two weeks, consumers have stayed home to watch the Beijing Olympic Games; during that period, restaurant chains cut back on television advertising.

[CUT]

Restaurants haven't been able to raise prices to cover higher ingredient, labor and energy costs as much as supermarkets and other food retailers have. Despite supermarkets' higher price increases, consumers still see them as a better value than restaurants. That's forcing chains to eat more of the cost of higher dairy products, meat, grains and other staples. John Glass, an analyst at Morgan Stanley, said part of what's made this slowdown seem so bad is that restaurants did so well for most of the period from 2001 through 2005. "I don't think the next couple of months are going to get any better," he said.

Sex sells: The National Enquirer Aug. 11 edition - the one that had the latest details on John Edwards’ affair with Rielle Hunter - sold 738,000 newsstand copies, the year's third-best-selling issue. Online traffic has been huge as well. The Enquirer is not putting this story down - the Aug. 18, Aug. 25 and Sept. 1 issues all feature cover stories on details of the affair. (WWD)