Today's Business Press

The New York Times leads its "Business Day" section, and the Wall Street Journal its "Business & Finance" news box, with word that Ford (F), General Motors (GMGMQ), and Chrysler have seen a slowing of the rapid slide in auto sales. New-vehicle sales in June fell 28 percent from a year earlier—the smallest decline in any month this year. In the United States, new-vehicle sales of cars and light trucks reached 860,000 in June. Invigorated by the news, executives at Toyota, GM, and Ford are calling a bottom, saying the industry has reached a turning point. The NYT highlights Ford's success at separating itself in the eyes of consumers from GM and Chrysler, which, the paper points out, have been forced to accept "government lifelines" and file for bankruptcy. Ford's sales were down 11 percent from June 2008 while GM's sales fell 33 percent and Chrysler's 42 percent.

According to the WSJ, "the sharp declines at GM and Chrysler were caused in part by significantly lower sales to fleet customers such as rental-car companies." Chrysler, for instance, posted a 95 percent decline in fleet sales. "The plant closings at GM and Chrysler cut sharply into both companies' sales to car rental companies and other business customers, but their bankruptcies have not scared away as many consumers as their executives say they had feared," the paper writes.  Helping sales were dealers who had to scramble "to clear their inventory before closing their franchises as part of the two companies' restructuring plans." Still, writes the Times, "even a modest recovery would not put the market anywhere near its levels for most of the last decade, when auto sales in the United States were about 17 million a year before plummeting in the second half of 2008." Since the beginning of the year, car sales have posted an overall 37 percent decline with fewer than 5 million vehicles sold.

In other car news, Southfield, Mich.'s Lear Corp., the world's second-largest auto-seating supplier, plans to file for Chapter 11 bankruptcy if it can get its remaining bondholders to agree to terms. The company will be able to obtain $500 million in bankruptcy financing in the process and will exit from a syndicate led by JPMorgan Chase (JPM) and Citigroup (C). "The [announcement] represents the largest in a string of recent failures of auto parts suppliers and highlighted the pressure on the sector from sharply curtailed production and bankruptcies at [GM and Chrysler]," Reuters says. More than 20 parts-makers have filed for bankruptcy this year, including major suppliers Visteon Corp. (VSTN) and Metaldyne Corp., Bloomberg adds. In May, Lear had said it aimed to restructure its debt outside of bankruptcy court. However, the company's largest customer last year was GM, which accounted for 23 percent of the supplier's $13.6 billion in sales (followed by Ford at 19 percent), and low production contributed to a $1.05 billion net loss at the company, a cut too deep for it to bear. Bankruptcy, senior Lear executives told the press, is the most efficient option.

Not to be left out of the auto news whirl, CNNMoney casts a critical eye on GM's recently appointed CEO, Fritz Henderson, who, it reports, critics say will not bring the fresh blood GM needs to complete a successful turnaround. Henderson, who has risen through the ranks since he started at GM 25 years ago after graduating from business school, replaced ousted CEO Rick Wagoner in March. However, "most successful turnarounds have been led by outsiders," Rob Kleinbaum, previously a GM market research and planning executive and now a managing director of consulting firm RAK & Co., told CNNMoney. Kleinbaum recently completed a study with researchers from the University of Michigan on corporate turnarounds. "GM's top rivals are now led by people who are not industry veterans. Ford went outside the auto industry to find CEO Alan Mulally, a top Boeing (BA) executive before he was tapped to run Ford in 2006. Chrysler, which emerged from bankruptcy last month, is now being run by Fiat CEO Sergio Marchionne, who himself was new to the auto industry when he took over Fiat (FIATY) in 2004," the story says. But not all "auto industry outsiders" have worked out well. In 2007, when Cerberus Capital Management bought Chrysler, it installed former Home Depot (HD) CEO Robert Nardelli, who "did little to turnaround the company's fortunes." As a supplement to the coverage, the site provides a video interview with reporter Poppy Harlow and Henderson.

The Washington Post leads its business coverage with a report that Genevievette Walker-Lightfoot, a lawyer in the Security and Exchange Commission's Office of Compliance Inspections, and Examinations, warned superiors of irregularities at Bernard L. Madoff's financial management firm but was told to focus on an unrelated matter: wrongdoing in the mutual fund industry. As early as 2004, following a review, Walker-Lightfoot sent e-mails to a supervisor alerting him that Madoff's numbers didn't add up and suggesting a set of questions to ask his firm. "Several of these questions directly challenged Madoff activities that much later turned out to be elements of his massive fraud," the paper says. "If pursued, [they] may have led to discovery of the fraud." Interestingly, one of Walker-Lightfoot's supervisors in 2004, Eric Swanson, an assistant director of the department, later married Madoff's niece. Their relationship is "now under review by the agency's inspector general, who is examining the SEC's handling of the Madoff case," the WP reports. Donohue still works for the SEC but did not provide a comment for the article. Swanson, who is no longer with the agency, declined to comment. Overall, the report fuels the notion that the SEC failed miserably in its ability to detect fraud for which it has taken extensive heat.

The WSJ leads its "Money & Investing" section with a look at rising compensation packages, which could return to 2007 levels "if the good times continue to roll." Goldman Sachs (GS) in 2009 "is on track to pay out as much as $20 billion this year, or about $700,000 per employee," nearly double the firm's $363,000 average last year and slightly higher than the $661,000 for the average Goldman employee in 2007, the paper says. Morgan Stanley (MS), "the only other huge U.S. securities firm left as an independent company," will likely fork out $11 billion to $14 billion in compensation and benefits, with average pay surpassing 2008's $262,000 per employee. In 2007, Morgan Stanley paid each employee an average of $340,000. "Whether the higher payouts occur will depend on whether Wall Street earnings continue to recover from last year's bruising losses on troubled assets and bad trading bets. If the market's resilience since early March fades or a new crisis erupts, then securities firms would likely set aside far less to pay their employees than they did in this year's first two quarters. Firms can set aside money for compensation and then decide not to pay it later," the Journal writes.

Finally, Reuters reports that the Treasury Department could announce as soon as today which firms have been tapped to run the Public-Private Investment Program. As many as nine firms could be chosen, and likely candidates include PIMCO, BlackRock (BLK), Wilbur Ross, and Angelo Gordon & Co. A "key part" of the Obama administration's plan to revive markets, PPIP will use federal funds and private capital to buy banks' toxic assets.

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The New York Times leads with and the Wall Street Journal banners with news that Bernard Madoff, architect of the largest-ever financial fraud, has been slapped with the maximum sentence of 150 years in prison six months after he confessed to his sons of running a massive Ponzi scheme. A thinner, more haggard-looking Madoff, the NYT notes, "stood impassively" as his sentence was read by U.S. District Court Judge Denny Chin. "The penalty sparked a burst of applause in a courtroom packed with victims of the fraud," the WSJ says. "The sentence far surpasses that of other recent high-profile white-collar crimes and took many noted criminal defense attorneys and former federal prosecutors by surprise," the Washington Post writes, adding: "In handing down the sentence, [Judge Chin] acknowledged that any term above 25 years would be symbolic, given Madoff's advanced age of 71. Nevertheless, the judge said, it was important that the severity of the sentence serve as a deterrent to future offenders." Madoff's lawyer had asked for 12 years, one year less than Madoff's life expectancy.

A criminal investigation is still ongoing, as prosecutors try to figure out who else was involved in the scheme. "So far, only Madoff's accountant has been arrested on criminal charges, but securities regulators have filed civil suits against several of his long-term investors, accusing them of knowingly steering other investors into the fraud scheme for their own gain," the NYT says.

In other fraud news, Allen Stanford spent last night in jail "after U.S. prosecutors told a federal judge that the accused swindler would likely flee the country," Reuters reports. Stanford faces 21 counts of criminal charges for a $7 billion Ponzi scheme. Last week, U.S. Magistrate Judge Frances Stacy said Stanford could leave federal custody as long as he came up with a $500,000 bond, a fifth of which would have to be in cash, and lived with his girlfriend in Houston. The U.S. Justice Department "opposed bail of any sort and sought to keep him in jail until his trial, now set for August," the article says. Stanford, who is 50 years old, faces life in prison.

Also topping the business news today is word that General Motors (GM), following in Chrysler's footsteps, will ask a bankruptcy judge today to allow for the sale of its assets to the Treasury-funded Vehicle Acquisition Holdings LLC—or as Reuters calls it, a "New GM." The request, according to Bloomberg, puts President Barack Obama's administration "almost a month ahead of schedule in its plan to reshape the U.S. auto industry." Despite 750 objections, which will likely be overruled, GM says Vehicle Acquisition Holding is the only potential purchaser. In a featured analysis by the WP, the paper expressed doubt over how much a new GM will repay of loans funded by taxpayers. Right now, the company is subsisting off of a $30 billion loan while it is in bankruptcy court, an amount that will balloon to $50 billion once GM emerges. "For the United States to fully recover its investment, the value of General Motors stock will have to reach levels it has never before attained," the WP writes. In fact, it will have to surpass its 2000 peak of $56 billion by an additional $12 billion. According to GM's internal projections, the company's equity value in 2012 will range from $59 billion to $77 billion, though experts say that will be difficult to attain.

Apple (APPL) founder Steve Jobs returned yesterday from medical leave, a move that was greeted by a muted reaction from investors. "Apple, up 67 percent since Jobs went on leave Jan. 14, fell 47 cents to $141.97 yesterday in Nasdaq Stock Market trading. That compares with gains in the Standard & Poor's 500 Index and the Nasdaq Composite Index," Bloomberg reports. "Investors have gotten comfortable with Apple's management team and its ability to run the company without Jobs's oversight," Ryan Jacob, head of the Jacob Internet Fund in Los Angeles, told the news service. As previously reported, Jobs underwent a liver transplant during his five-and-a-half-month leave. According to his doctors, Jobs, also a cancer survivor, is recovering well. But the company itself offered no update on his health and didn't say if his responsibilities would change, the WSJ says. Jobs' return, the paper says, will "fuel debate over the company's disclosure practices," which have drawn the attention of the Securities and Exchange Commission. The SEC opened an informal probe earlier this year and is continuing to look at the issue.

In another front-page story, the WSJ reports that Wall Street is poised to log its best quarter since the credit crisis began, with large firms citing basic operations, such as trading and underwriting, as the fuel that stoked performance. Equity offerings in the second quarter reached nearly $260 billion—"almost four times the amount recorded during the first quarter, and the highest since 2008's second quarter," the paper says. In addition, "the gap between bid and offer prices on fixed-income assets remained wide through most of the quarter, boosting profits from buying and selling these securities." Fixed-income trading drives much of Wall Street's profits. Bloomberg reports that Treasuries fell yesterday, "heading for their steepest first-half loss in three decades."  The plunge precedes a report expected to show that "U.S. consumer confidence is rebounding and as rising stocks sapped demand for the safety of fixed-income assets." The MSCI World Index rose 0.4 percent, making for an overall increase of 42 percent since its 2009 low in March. The yield on government notes has been rising, but recent confidence "shows there is demand for 10-year Treasuries at 4 percent," Christoph Rieger, a fixed-income strategist at Commerzbank AG in Frankfurt, told Bloomberg.

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