The news at a glance

Goldman Sachs: Now, a criminal inquiry

Fresh from bruising hearings on Capitol Hill, Goldman Sachs’ woes deepened when officials confirmed that the Justice Department had opened a criminal investigation, said Alison Gendar in the New York Daily News. The investigation was reportedly triggered by a referral from the Securities and Exchange Commission, which recently sued Goldman for civil fraud. The referral suggests that the SEC found evidence of possible criminal fraud by the firm in connection to Goldman’s sale of mortgage-linked securities that it assembled for a client who was betting that mortgage securities would fall in value.

The SEC suit has “exposed the company to new legal attacks across a number of fronts,” said David Ellis in CNNmoney.com. Leading German and British politicians are calling for investigations in those countries. And in the U.S., some state regulators and law-enforcement officials, including Connecticut Attorney General Richard Blumenthal, “may join the Goldman Sachs pile-on, capitalizing on the public distaste for big banks and Wall Street in general.”

Subscribe to The Week

Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.

SUBSCRIBE & SAVE

Sign up for The Week's Free Newsletters

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

Sign up

Airlines: United and Continental join forces

Following a whirlwind, two-week courtship, United Airlines and Continental Airlines have agreed to merge, creating the world’s largest air carrier, said Julie Johnsson in ChicagoBreakingBusiness.com. The new airline will be known as United but will be headed by current Continental CEO Jeff Smisek. Executives of the two companies said they expect to save $200 million to $300 million annually by reducing overlapping administrative functions, but “the impact on front-line workers will be minimal,” with most job cuts coming through retirements and voluntary buyouts. The deal still must be cleared by federal regulators.

Smart phones: Hewlett-Packard springs for Palm

Two also-rans in the hotly competitive smart phone arena joined forces last week, said Nancy Gohring in InfoWorld.com, when Hewlett-Packard announced it would buy Palm for about $1.2 billion. Palm, maker of the once-popular Pilot, has lost ground to competitors including Apple and Research in Motion, maker of the BlackBerry. Hewlett-Packard currently offers a smart phone based on Microsoft’s Windows Mobile operating system. The Palm acquisition gives HP more control over the software that goes into its phones.

Pharmaceuticals: Children’s medicines recalled

McNeil Consumer Healthcare, a subsidiary of Johnson & Johnson, has recalled a wide range of over-the-counter children’s liquid medicines because of possible manufacturing defects, said Natasha Singer in The New York Times. Several versions of liquid Tylenol, Benadryl, and Zyrtec may contain too much of the active ingredient in each drug or be contaminated by tiny metal particles. Industry analysts say that “Johnson & Johnson will have to work to counter increasing consumer skepticism” about the superiority of its brand-name medicines.

Rental cars: A bidding war breaks out

Hertz can’t celebrate its recently announced acquisition of Dollar Thrifty just yet, said Matt Andrejczak in Marketwatch.com. Avis Budget Group CEO Ronald Nelson this week expressed interest in making a “substantially higher” offer for the company than Hertz’s $41-a-share bid. Nelson urged Dollar Thrifty to spurn Hertz’s offer because it requires Dollar Thrifty to pay Hertz an “unusually high” $45 million breakup fee if the deal collapses.