The news at a glance
Toyota settles as GM woes worsen; Quiznos files for bankruptcy; Walmart expands video game trade-ins; Lawyers probe high-speed trading; Fed ditches jobless target
Cars: Toyota settles as GM woes worsenToyota’s troubles may be coming to an end, said David S. Joachim and Matt Apuzzo in The New York Times. The Japanese carmaker has agreed to a $1.2 billion settlement with the Justice Department after a four-year investigation into whether the company “misled investigators and the public” about an acceleration defect that resulted in multiple injuries and deaths. Toyota was forced to recall 9.4 million vehicles starting in 2009 because “over-sticky accelerator pedals” had caused cars to suddenly accelerate. As part of the deal, Toyota also agreed to allow an independent monitor to oversee the company’s “public statements and regulatory reporting about safety issues.”
General Motors should take notice, said Chris Isidore in CNN.com. GM, which has been facing its own spate of safety problems lately, initiated “three new recalls involving another 1.5 million vehicles,” thanks to a wiring defect in seat-mounted side airbags. The new round of recalls is on top of an earlier revelation that some 1.6 million cars may experience ignition-switch problems that can cause sudden engine shutdowns and failed airbag deployments, defects linked to a dozen deaths. Altogether, the company expects to spend $300 million recalling the vehicles. Congress, federal regulators, and the Department of Justice have all initiated inquiries.
Food: Quiznos files for bankruptcyIs Quiznos toast? said Tanya Agrawal in Reuters.com. The sandwich chain, “known for pioneering the concept of toasted subs,” filed for bankruptcy protection last week “after struggling for years with high debt and rising competition.” The Denver-based company listed liabilities of between $500 million and $1 billion, and the restructuring plan aims to cut debt by more than $400 million. The nearly 2,100 independent franchises will not be affected, the company said, thanks to $15 million in emergency financing from its senior lenders.
Retail: Walmart expands video game trade-ins“Walmart’s got game,” said Bruce Horovitz in USA Today. The big box retailer said this week that it would expand its video game trade-in program into brick-and-mortar stores, offering customers store credit for used games. The move is part of an effort to drive “more customers into the store” and increase revenue. Retailers like Walmart have struggled to recover from the economic downturn, thanks to their lower-income customers not having “extra money to spend.”
Markets: Lawyers probe high-speed tradingNew York state regulators are cracking down on high-frequency trading, said Kara Scannell and Arash Massoudi in the Financial Times. In a speech this week, New York Attorney General Eric Schneiderman called for “tougher regulations and market reforms” of high-frequency trading firms, while launching a probe into whether American stock exchanges are giving such traders “an unfair advantage.” Schneiderman specifically “highlighted contracts that allow high-frequency trading firms to place computer servers inside trading venues,” which may unfairly give those traders and their clients faster access—if only by milliseconds—to potentially market-moving information.
Economy: Fed ditches jobless targetUnemployment is no longer a factor, said Annie Lowrey and Neil Irwin in NYTimes.com, at least for the Fed. The central bank announced this week that it would stop pegging interest rates to the nation’s jobless figures instead of waiting until unemployment dips below 6.5 percent. Rates have been held near zero since 2008, and the Fed will now use “labor market conditions” as a guide to rate hikes. New Fed Chair Janet Yellen said the policy change was triggered by more-rapid-than-expected improvements in the labor market.