Morning Money Memo…
The numbers are staggering. In the first six months of this year General Motors announced the recall of more than 29 million cars. That’s the largest number of recalls ever in one year by a single auto manufacturer. So far GM’s new car sales have not been hit hard by the dent to its reputation, but that might change when June sales are announced today by the auto industry. GM announced Monday the recall of 8.2 million more vehicles, most of them for faulty ignition switches. The company says it will take an additional $500 million charge against earnings to pay for the new recalls. So far GM has said it will spend $2.5 billion to fix safety problems. But this does not include the newly announced compensation fund for victims of crashes linked to flawed vehicles.
“So far these recalls haven’t impacted current sales and have had minimal impact on consumer perception, but we’re hitting unprecedented numbers and it’s reasonable for people to start asking, when and where will it end?” says Karl Brauer, senior analyst for Kelley Blue Book. “A quick look at GM’s sales records for the past 10 years, shows that the company has now officially recalled in the first six months of 2014 more cars that it has sold from 2007 to 2013,” says the Consumerist blog.
A federal watchdog warns retirement plans covering roughly 1.5 million American workers are severely underfunded, threatening benefit cuts for current and future retirees. The Pension Benefit Guaranty Corporation says multi-employer plans, collectively bargained retirement plans maintained by more than one employer, are most at risk, At the same time, the agency says single-employer pension plans — covering a little more than 30 million participants — are on firmer financial footing and are likely to remain so at least over the next 10 years.
The stock market ended the second quarter with solid gains. The S&P 500 is up 6 percent since the beginning of this year. Most of those gains came since April. Stock averages closed down slightly yesterday.
Samsung says dozens of its Chinese suppliers are committing labor violations. The world’s largest smartphone maker says an external audit covered 100 of the company’s Chinese suppliers in its annual social responsibility report. The violations included minors handling chemicals, failure to provide safety gear and excessive working hours. Samsung came under fire in 2012 over allegations of “inhumane” working conditions.
The Justice Department says France’s largest bank, BNP Paribas, has agreed to pay nearly $9 billion to resolve criminal allegations that it processed transactions for clients in Sudan and other blacklisted countries in violation of US trade sanctions. The bank pleaded guilty to state charges in New York and plans another guilty plea in federal court next month. After months of negotiations, BNP admitted to violating U.S. trade sanctions by processing billions of dollars in illegal transactions on behalf of clients in Sudan, Cuba and Iran.
Richard Davies Business Correspondent ABC News Radio abcnews.com Twitter: daviesnow