The news at a glance

Detroit: GM, Chrysler target dealerships

General Motors and Chrysler have revoked the franchises of nearly 2,000 of their dealers, opening a new phase in “the historic down­sizing of the American auto industry,” said Bill Vlasic and Nick Bunkley in The New York Times. Chrysler last week sent notices to 789 dealers—about a quarter of its network—informing them that they “will be cut off next month.” A day later, General Motors told 1,100 underperforming dealerships that they would be dropped when their contracts expired, in 2010.

The “unprecedented closures” put more than 100,000 jobs “at risk across the United States,” said Tim Higgins in the Detroit Free Press. The cutbacks highlight “the spreading economic pain from the restructuring of the two Detroit-based automakers.” They also reflect the growing consensus that U.S. car sales will not soon return to their pre-recession pace, when Detroit could expect to sell some 16 million every year. Going forward, sales are expected to level off at around 10 million vehicles a year.

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Autos: Porsche, VW merger on hold

Talks between Volkswagen and Porsche on the merger of the two car companies have been suspended, said Daniel Schäfer in the Financial Times. Porsche had borrowed $12.1 billion to buy 51 percent of VW, leaving it overextended and unable to complete the takeover. Last week the companies announced a tentative merger agreement, but those plans are now in doubt as the two sides squabble over responsibility for Porsche’s massive debt. It’s now more likely that VW, once Porsche’s takeover target, will end up taking over “the debt-ridden sports-car maker that is its biggest shareholder.”

Regulators: Insider trading at the SEC?

Federal prosecutors are investigating two Securities and Exchange Commission lawyers for possible insider trading, said Kara Scannell in The Wall Street Journal. The investigation raises the possibility of “scandal at an agency normally the pursuer in such cases.” Case documents indicate that the two targets, who were not publicly identified, “often discussed stocks and financial markets.” The lawyers reportedly traded some stocks that later became the subjects of SEC investigations.

Pensions: Carlyle pays $20 million to end inquiry

Private-equity firm Carlyle Group has paid $20 million to New York state to settle an investigation into the firm’s role in a widening pension-fund scandal, said Karen Freifeld in Bloomberg.com. New York Attorney General Andrew Cuomo accused Carlyle of paying $13 million to a brokerage firm connected with political consultant Hank Morris, in return for Morris’ help in steering more than $730 million in pension-fund investments to Carlyle. The firm says it will no longer pay third parties to lure pension-fund money.

Apparel: Abercrombie & Fitch reverses course

Stung by an unforeseen quarterly loss, “teen retailer” Abercrombie & Fitch has executed “an about-face from its previous strategy of keeping prices high through the recession,” said Nicholas Casey in The Wall Street Journal. Revenue fell 24 percent in the quarter ended May 2, to $612 million, and losses totaled almost $27 million. CEO Mike Jefferies vowed “meaningful” price cuts to counter what he called “a headwind where the consumer is reluctant to spend on premium brands.”