The news at a glance

GM: Bankruptcy looms as bondholders balk

Holders of $27 billion in General Motors bonds this week rejected the company’s offer to swap their debt for a 10 percent equity stake, “setting the stage for a bankruptcy filing by the troubled automaker,” said CNBC.com. GM had hoped to avoid Chapter 11 by persuading at least 90 percent of bondholders to accept the swap. But reports indicated that hardly any bondholders were willing to make that deal, and that rather than a 10 percent stake in the company, they were holding out for a 58 percent share. Some bondholders expressed anger that GM has proposed giving its unions a 39 percent equity stake, “an unfairly rich payout compared with other unsecured creditors.”

The biggest shareholder in a restructured GM will be the U.S. taxpayer, said Micheline Maynard in The New York Times. The Treasury has already advanced $19.4 billion to the automaker and will invest up to $50 billion to keep the company operating while it’s in bankruptcy proceedings. The U.S. “plans to create a new version of GM with its most attractive assets, like Chevrolet, Cadillac,” and some manufacturing operations. The remainder will be liquidated.

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Wall Street: Morgan Stanley revamps pay

Morgan Stanley will pay higher salaries and lower bonuses under a new compensation plan filed last week with the Securities and Exchange Commission, said Elizabeth Hester in Bloomberg.com. Most senior executives will see big increases in their base pay and will be granted shares based on long-term corporate results. Morgan Stanley also added “so-called clawback provisions that set aside portions of workers’ bonuses that can be recouped in later years” if the employee leaves or does something to harm the company. Morgan Stanley, which converted to a federally insured bank to qualify for bailout funding, made the compensation adjustments amid growing calls in Washington to limit pay at financial firms.

Web 2.0: Facebook’s Russian friend

A Russian Internet firm has plowed $200 million into Facebook, in a deal that values the entire social-networking website at $10 billion, said John Letzing and Dan Gallagher in Marketwatch.com. “Facebook has been shopping around for some time to raise additional funding” to finance the infrastructure, such as data centers, that it needs to service its fast-growing user base. Digital Sky Technologies, which owns pieces of several popular Russian websites, will receive an ownership stake of slightly less than 2 percent for its investment.

Banking: Year’s biggest bank failure

In the 34th and largest bank failure of the year, federal regulators last week shut down Florida’s BankUnited, said Tami Luhby in CNNmoney.com. The bank, with $12.8 billion in assets, $8.6 billion in deposits, and 85 branches, “was toppled by its mortgage portfolio,” which was heavily weighted toward adjustable-rate loans. The Federal Deposit Insurance Corp. estimates the failure will cost it $4.9 billion. A group of private investors will take over the bank and inject $900 million in new capital.

Air travel: Good news for frequent fliers

American Airlines will liberalize its frequent-flier program, in what may mark “a turning point in how the major carriers treat their best customers,” said Dean Foust in BusinessWeek. AAdvantage members can now “book a one-way trip for just 12,500 points, half the 25,000 points required for a round-trip ticket, which was the minimum redemption before the changes.” Many analysts say “other carriers may have no choice but to match American’s new offering.”