President Obama’s chief auto industry advisor, Steven Rattner, who won praise for his deft handling of the restructurings of Chrysler and General Motors, is leaving the post as controversy grows over allegations that his former investment firm, the Quadrangle Group, made payments to middlemen to help it win business from state pension funds. Rattner’s departure may not be linked to the probe into his former firm’s practices.

Rattner will be replaced in the position by Ron Bloom, a former Wall Street executive and labor restructuring expert who is already a senior member of the White House/Treasury joint auto industry task force. Though both automakers have passed the worse, much work remains to be done for Bloom, who will have to oversee the progress GM and Chrysler make towards recovery.

Source: New York Times, Reuters, BusinessWeek

CIT: Not Too Big to Fail

The diversified corporate lender is at risk of collapse and hoping for a government bailout. But Obama Administration officials appear to be steering CIT instead towards a more limited rescue that could include limited funding and a prepackaged bankruptcy. CIT shares rose in early European trading on July 14 after the company confirmed it was talking to regulators about getting help before $1 billion in bonds come due next month.

Source: BusinessWeek, Bloomberg

Rising Stakes in Battle for GM’s Opel

Canadian auto parts giant Magna International may have grabbed the inside track first, but now Belgian private equity group RHJ—the European affiliate of Ripplewood—is coming on strong with an alternate bid to acquire GM’s Opel and Vauxhall units in Europe. Magna still hopes to sign on the dotted line within days. A rival offer from China’s Beijing Automotive appears to be losing steam.

Source: Reuters, Times of London

Judge Agrees to Delay UBS Tax-Evasion Case

The Miami federal judge presiding over the high-stakes civil suit between the U.S. government and Swiss banking giant UBS agreed to delay the trial for three weeks while the two sides continue to attempt a settlement. The U.S. is seeking to force UBS to turn over the names of 52,000 American clients who may have evaded taxes by using Swiss bank accounts to hide assets. UBS has refused. The case represents the culmination of years of dogged investigation by IRS agents.

Source: Washington Post, Wall Street Journal

Airlines Brace for Even Tougher Times

The airline industry is in the midst of one of its most wrenching summers ever—and the fall and winter may be even worse unless people start to fly again. Business and international travel is down, fuel prices are volatile, and airlines must pay high interest rates on financing. Domestic capacity in the U.S. will fall to its lowest level since 1984.

Source: New York Times

Microsoft to Mount Free Software Assault on Google

Less than a week after Google said it plans to challenge Microsoft with a new operating system that could rival Windows, the battle between the two tech titans ratcheted up on July 13 when Microsoft said it will make a “light” version of its popular Office productivity suite available for free online next year—a direct riposte to Google’s free online Google Apps.

Source: Financial Times

Pipeline Project Emerges from Deep Freeze

Representatives of five nations met in Ankara on July 13 to sign a deal allowing the long-discussed Nabucco gas pipeline to transit their territories. The agreement gives new impetus to the 3,300-kilometer project, whose route is slated to run from Baku to Vienna via Turkey. The EU sees Nabucco as an important component in an effort to reduce its energy dependence on Russia.

Source: Wall Street Journal, BusinessWeek

Exxon to Invest Millions in Algae Biofuel

The oil giant achieved a certain notoriety when its CEO mocked alternative energy by calling ethanol “moonshine.” But now Exxon says it will invest $600 million into producing biofuels from algae, in partnership with a company started by genetics pioneer J. Craig Venter.

Source: New York Times

Philips Hopes for Upturn from Stimulus Plans

Reporting a surprise second-quarter profit (before interest, taxes, and amortization) of $164 million on July 13, Dutch electronics giant Philips said that some of its key markets are poised for a return to growth this year due primarily to government stimulus plans.

Source: Reuters