Wal-Mart surges ahead of Exxon Mobil to the top spot of the Fortune 500 The mega-retailer didn’t have a whole lot to complain about in fiscal 2010. Profits were up and, thanks to its sales, the company once again climbed to the top of the Fortune 500. Same-store sales were about flat for the year, but compared with Target’s 2.5% decline, flat is good.

Most remarkable was Wal-Mart’s image overhaul. It helped that former CEO Lee Scott beefed up health care coverage for employees, thought more about the environment and became a public presence. Certain critics will never be placated and fiscal first-quarter results weren’t the greatest. But there’s no denying Scott left new CEO Mike Duke a company in fighting form.

the Treasury Dept. issued its response to a blistering Dec. 10 report from the congressional panel established to oversee the agency’s actions.The 13-page Treasury report broke no new ground, strongly echoing recent comments and testimony from Treasury Secretary Henry Paulson and Neel Kashkari, his deputy managing the crisis response. At the same time, it sidestepped some of the most pointed questions and observations raised by the Congressional Oversight Panel in its initial report. In that report, the COP criticized the Treasury for failing to monitor what the banks and others actually did with billions of dollars in federal funds they had received, and questioned whether the Treasury had an overarching strategy or could show concrete results.

In its response, the Treasury effectively responded that it knows what it’s doing, things could have been a lot worse, its efforts should improve matters in time, and the programs are working even if results are difficult to measure.

Unclear Answers

Throughout its report, the Treasury offers summary for explanation, recapitulating the events of late September and early October to account for its abrupt changes of course—injecting capital instead of buying toxic assets, then abandoning toxic-asset purchases altogether; ignoring the automakers only to aid them later—and describing why its programs ought to work instead of providing the evidence of results the COP members clearly sought. (Or most of them, anyway: The lone Republican on the panel at the time, Texas Representative Jeb Hensarling, declined to sign the report.)

The report also left unclear how aggressively the Treasury is seeking to determine how banks are using federal funds—a central criticism of both congressional leaders and the COP’s initial report. In Dec. 10 testimony before the House Financial Services Committee, Kashkari said his team was “working with the banking regulators to develop appropriate measurements” to track the flow of federal funds through financial institutions, “and we are focused on determining the extent to which the [federal investment] is having its desired effect.” No further detail emerged in the Treasury’s report Wednesday, which echoed Kashkari’s testimony in nearly identical language.

Central to many of the agency’s answers in the report—and echoing Paulson and Kashkari in recent weeks—is the argument that, without Treasury’s actions, worse could have happened: “The most important evidence that our strategy is working is that Treasury’s actions, in combination with other actions, stemmed a series of financial institution failures,” the report says. In other words, Treasury seems to be saying, Citigroup (C) teetered on the brink even after receiving an initial $25 billion capital infusion from the Treasury; but after a second bailout, it survived.

It is not all rose petals and honey cake anymore, as reality sets in.  On the eve of Detroit’s latest date with fate in Washington, the United Auto Workers have surrendered the union’s version of corporate jets.

The union is suspending its most ridiculed perk, called the JOBS bank. That program, set up as part of a contract agreement reached between Detroit’s Big Three and the union decades ago, pays auto workers 85% of their pay while furloughed. Some workers reported for years to meeting rooms where they would sit and wait for an assignment or be sent to clean public parks. All the while, they would get paid most of their wages.

The union also agreed to defer payments that the Big Three will make to a union-led health-care trust that is to take responsibility to pay medical benefits to auto workers starting in 2010.

The JOBS bank was costly in more ways than one for General Motors (GM), Ford (F), and Chrysler. By making labor a fixed cost, it altered their manufacturing strategy. For most of the past 10 years, the car companies preferred to discount models with big rebates rather than cut production, because they had to pay workers no matter what.

so long, entitlements

The provision also became an emblem of union abuse and what industry outsiders call Detroit’s entitlement culture. “The JOBS bank became a sound bite that people used to beat us up,” said UAW President Ron Gettelfinger. “It became a lightning rod.”

The JOBS bank has become less of a financial burden since the union has accepted tens of thousands of job cuts over the past two years, though. In 2006, GM had as many as 7,000 workers in the bank. Today, the three carmakers combined have just half that number awaiting a new assignment.

On Dec. 4, the CEOs of Detroit’s Big Three and Gettelfinger will take another stab at convincing Congress that the government should lend the automakers big bucks to stay afloat. Their request has climbed to $34 billion from $25 billion (BusinessWeek.com, 12/2/08) since last month’s hearings, when the CEOs were turned away after being lambasted for not adequately explaining how the money would make their companies competitive with Japanese rivals. They didn’t help their case by flying in on company planes. Members of Congress derided the auto execs for failing to display proper willingness to sacrifice. The UAW came in for criticism of its own, some of it focused on the JOBS bank.

Big deficit looming in California forces the hand of  Arnie.  Add the Terminator to the long list of people seeking a handout from Henry Paulson. Late on Oct. 2, California Governor Arnold Schwarzenegger sent a letter to the U.S. Treasury Secretary saying he may need a $7 billion short-term loan from the federal government to help the state make its payroll at the end of the month.

The governor’s outstretched hand is just the latest sign of the severity of the financial vice squeezing the nation (BusinessWeek.com, 9/29/08). Everyone from small business people to homeowners to the largest state in the nation is finding it difficult to get a loan. “Right now this credit crunch impacts just about everyone who wants to borrow,” says Doug Charchenko, head of the fixed-income department at broker Wedbush Morgan Securities. “New issues have not been able to get into the market. Institutions aren’t buying bonds, they’re hoarding cash.”

Such a federal loan to a state would substantially broaden the federal government’s efforts to stem the credit crisis—and could well lead to similar requests from other strapped states. Jennifer Zuccarelli, director of public affairs at the Treasury, confirmed that California’s request had been received but would not comment further on whether it is under consideration or when a decision might be reached.

Lehman Brothers is swinging the ax. Lehman shares fell after CNBC reported the big investment bank will cut 5% of its workforce, or about 1,400 jobs. The news comes as Lehman prepares to report first-quarter results next Tuesday. Wall Street has been bracing for a round of bad news next week from banks including Lehman, Goldman Sachs (GS) and Bear Stearns (BSC), amid a sharp slowdown in dealmaking and a fearful turn in the credit markets. At Lehman, analysts expect first-quarter earnings to fall by more than half, to 91 cents a share from $1.96 a year ago. A particular area of concern at Lehman is the bank’s big commercial real estate loan book, which is expected to see a big writedown as property values decline. With revenue under pressure, Lehman is responding by cutting costs, in a painful process that will no doubt be repeated many times over on Wall Street in the next few months.  I think we should all be prepared for a lot more cost cutting measures in the next few months.

A global market meltdown and a decelerating economy could shake the steel nerves of the European Central Bank, analysts said Tuesday, as more observers are predicting it will cut borrowing costs as soon as the second quarter of this year.

The ECB has kept its benchmark interest rate on hold at 4 percent since last June _ before August’s credit crisis froze bank lending and threatened to stall major economies.

Its refusal to cut rates _ and encourage reluctant banks to give credit to each other, to companies and to homebuyers _ stood in stark contrast to the U.S. Federal Reserve which in a surprise move Tuesday reduced its rate for the fourth time since last September.

The Fed slashed its benchmark refinancing rate to 3.5 percent from 4.25 percent as stock markets dropped sharply Monday on investor skepticism that the U.S. government’s multibillion-dollar (-euro) tax relief plan could save the U.S. from a possible slide into recession.

But, until recently, ECB President Jean-Claude Trichet has talked instead about raising rates as the 15 nations that share the euro saw inflation spiral in the last two months to match an all-time high.

I was surfing the web today and came across some interesting news about the billions of dollars being saved each year by folks doing offshore banking. Around 20 years ago I was dating a lovely girl and her brother was quite successful and one the things that helped keep him that way was offshore banking. He helped blaze the trail for it by writing a book on the subject, back then it was mostly big business doing it but now it is quite common for many small and medium sized businesses to take advantage of offshore company formation and reap the financial benefits.

Here is a round-up of some of the most popular finance news items around the world.

-By keeping your car for 15 years, or 225,000 miles of driving, you could save nearly $31,000, according to Consumer Reports magazine. That’s compared to the cost of buying an identical model every five years, which is roughly the rate at which most car owners trade in their vehicles. A pretty good idea but the car manufacturers won’t like it.

-General Motors has quietly dropped a marketing strategy it announced in May where it would bring other automakers’ vehicles to its Chevrolet showrooms for customers to test against its redesigned 2008 Malibu. The company was already running a similar program for its new Saturn Aura sedan - where dealers were bringing Honda Accords and Toyota Camrys into the showroom and allowing customers to inspect and test those vehicles in comparison to the Aura.

-President Bush outlined his plan Friday for helping troubled subprime borrowers keep their homes. The proposals put forward by the president included increasing the help offered by the Federal Housing Authority to troubled borrowers. That may take the form of expanding the pool of borrowers who can apply to the FHA to refinance their loans.

-Christine Lagarde, the first woman finance minister for a G-8 nation, was rated the best minister in President Nicolas Sarkozy’s government last month by one of France’s top-selling newspapers. Great news, keep up the good work.