June 15, 2009 Issue Posted June 4, 2009, 10:48AM EST

Executive Summary

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At a GM dealer that closed in Easton, Md., all that remains is the sign Jim Watson/AFP/Getty Images

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Chapter 11 for GM

The cultural revolution that General Motors has long needed could be around the corner. The company filed for bankruptcy protection on June 1, seeking to ditch weak brands, some $27 billion in bond debt, and billions in retiree health-care costs. If the reorganization goes according to plan, the company will emerge with four core brands—Buick, Cadillac, Chevrolet, and GMC—and also with a cleaner balance sheet. The federal government will own 60% of the company, with the Canadian government, the UAW, and bondholders holding the rest. The company also reached a deal to sell its Hummer brand to China's Sichuan Tengzhong Heavy Industrial Machinery and sold a majority stake in its European Opel unit to parts maker Magna International (MGA). GM hopes to motor out of Chapter 11 within three months, but rival Chrysler's own bankruptcy exit is being delayed by dissident creditors who are appealing the in-court sale to Italy's Fiat (FIATY).

—Edited by Harry Maurer & Cristina Linblad

A Pivotal Patent Case

The U.S. Supreme Court is going to grapple with what might be called "the method mess." The Justices announced on June 1 that they would take up a key issue in intellectual-property law: What kind of "business methods" are entitled to patent protection? Over the past decade, many financial, consulting, and e-commerce firms have rushed to patent such processes as ways to structure financial products, manage organizations, or transact Web business. In agreeing to review what's known as the Bilski case—involving a method for hedging risk in commodities trading—the high court is venturing into a hot dispute. A ruling isn't likely until next year.

—Edited by Harry Maurer & Cristina Linblad

They Still Love T-Bills

Everyone, it seems, is fretting about the dollar, but few seem to be doing anything about it. Despite mounting anxiety about U.S. creditworthiness, the foreign appetite for Treasuries looks undiminished. The Fed's holdings of Treasuries on behalf of foreign banks and institutions grew $68.8 billion in May, or 3.3%. Brad Setser, an economist at the Council on Foreign Relations, crunched numbers and found that, Beijing's protestations aside, China continued to add to its stockpile of T-bills through the first quarter even as it shifted out of other types of dollar assets. Other members of the BRIC club of countries—Russia and India—also kept buying Uncle Sam's paper, though not on the same scale as China. Brazil, on the other hand, has scaled back a bit. Look for Setser's updates every quarter. (Council on Foreign Relations)

—Edited by Harry Maurer & Cristina Linblad

Home Buyer Help

Blamed for worsening the housing bubble, zero-down-payment loans largely vanished when the market crashed and Congress blocked seller financing for government-backed loans. But now, under a program announced May 29, the Federal Housing Administration will be the one forking over money at closing. The idea is to let first-time home buyers apply the $8,000 tax credit provided under the stimulus package directly to closing costs. That will cover most costs even for homes above the national median price of $169,000. Officials hope it will help revive the market, and the industry predicts 40,000 new sales from the move. Critics warn that defaults and foreclosures rise when buyers get down-payment help, likely because they have little at stake.

See "FHA Loans: Return to 0% Down"

—Edited by Harry Maurer & Cristina Linblad

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