White House Quick to Address the Economy
After being sworn-in as the 44th president of the United States last week — at a time of severe economic downturn — President Barack Obama laid plain the challenges facing the nation while calling on Americans to take part in a "new era of responsibility."

Officials plan to move quickly to tighten the nation's financial regulatory system. According to the New York Times, officials of President Obama's administration "say they will make wide-ranging changes, including stricter federal rules for hedge funds, credit rating agencies and mortgage brokers, and greater oversight of the complex financial instruments that contributed to the economic crisis."

Moreover, the new president is expected to direct regulators to "move swiftly" on an application by 14 states to set strict automobile emissions and fuel efficiency standards. "Obama's presidential memorandum will order the Environmental Protection Agency (EPA) to reconsider the Bush administration's past rejection of the California application," according to another Times report. If the EPA orders the Bush decision reversed, "automobile manufacturers will quickly have to retool to begin producing and selling cars and trucks that get higher mileage than the national standard, and on a faster phase-in schedule." The auto companies have lobbied hard against the regulations and challenged them in court.

Also, Timothy Geithner's nomination to be Treasury secretary was approved by the Senate Finance Committee in an 18-5 vote on Thursday, and the full Senate will probably take up Geithner's nomination today. As part of his written responses to questions from the Senate Finance Committee, Geithner said that banks getting money from the government's $700 billion bailout fund will have to explain in detail what they are doing with the money.

Meanwhile, the White House is seeking to temper expectations regarding the national economy, as key administration officials yesterday took to the airways to caution about a slow economic recovery even if the measures sought by the president are put into effect. The Associated Press reports that Vice President Joe Biden, "taking the lead on a theme echoed by other Democratic officials on the Sunday talk shows," said, "We're off and running, but it's going to get worse before it gets better."

Another AP report adds that the stimulus plan's "success or failure could define the first years of Obama's term. On Sunday, Democrats sought to temper expectations, at least in the short term." Lawrence Summers, a top economic adviser to Obama, said, "These problems weren't made in a day or a week or a month or even a year, and they're not going to get solved that fast. ... So even as we move to be as rapid as we can in jolting the economy and giving it the push forward it needs, we also have to be mindful of having the right kind of plan that will carry us forward over time."

Chrysler Cutting Costs to Turn Itself Around
"Chrysler LLC has cut fixed costs by more than $3.4 billion as it works to turn around its ailing operations," the Wall Street Journal reports CEO Robert Nardelli as having said (subscription required).

Nardelli said that Chrysler, "which received $4 billion from the Treasury Department earlier this month, is 'working hard to meet all requirements' for an additional $3 billion promised by the federal government." The automaker "has cut production capacity by 30 percent and simplified its product line by cutting four models," according to the company's CEO. Moreover, the Associated Press reports that "Chrysler ... has eliminated — at least temporarily — the controversial 'jobs bank' program that gives union workers most of their pay and benefits while they are laid off," a union official said. "Workers will continue to be paid at least a portion of their wages while the company negotiates the program" with the union.

The Journal notes that "the company may have found a longer-term savior earlier this week, when Italian automaker Fiat SpA entered a nonbinding deal to take at least a 35 percent stake as part of a deal to share technology and bring small cars developed by Fiat to the U.S. However, Fiat won't put up any money in the initial deal."

Auto-Parts Suppliers Threatened By Bankruptcy
"Some of the nation's largest auto-parts makers are planning for potential bankruptcy filings, or are scrambling to avoid them, amid uncertainty about Washington's willingness to increase its $17.4 billion bailout plan for Detroit's Big Three automakers," the Wall Street Journal (subscription required) reports.

For instance, "Visteon Corp., one of Ford Motor Co.'s biggest parts suppliers, has hired legal and financial advisers to prepare for possible bankruptcy proceedings," sources say. Meanwhile, "parts makers with stronger finances, like Lear Corp., are working with restructuring specialists and stepping up lobbying in an effort to cushion the blow of a possible industry meltdown."

"The number of auto-parts makers has dwindled for years, but some now fear the industry, which accounts for hundreds of billions of dollars of revenue and hundreds of thousands of jobs, may be headed for mass liquidations as auto production shrinks amid the global economic slump," the Journal says.

Toyota Now the World's Largest Automaker
"For the first time in 77 years, General Motors Co. can no longer describe itself as the world's biggest carmaker," the Financial Times reports, as the Detroit automaker sold 8.35 million vehicles globally last year compared to Toyota Motor Corp.'s 8.97 million.

Last week's sales figures "ended GM's 77-year run as the top-selling automaker despite the American giant's record-setting sales performance in Latin America, Africa and Middle East and Asia Pacific regions," Agence France-Presse says, based on GM's figures.

Without a second installment of $5.4 billion in government loans, GM said last week it could run out of cash by the end of March.

In another announcement last week, the grandson of Toyota's founder was tapped as the Japanese automaker's new president. According to the Associated Press, Akio Toyoda's promotion "marks the first time a Toyoda family member takes the helm at the company in 14 years." Toyota is "forecasting a 150 billion yen ($1.69 billion) operating loss for the fiscal year ending March 31 — its first such red ink in 70 years."

European Manufacturing and Services Contract for Eighth Month
"Europe's manufacturing and service industries contracted for an eighth month in January as the global recession curbed demand for exports and damped spending," Bloomberg News reports. "A composite index of both industries was at 38.5 compared with 38.2 in December, which was the lowest reading since the survey began in 1998."

According to Bloomberg, "the 16-nation euro region is suffering the deepest recession since World War II as the credit shortage derails purchases of homes, cars and factory machinery. Gross domestic product will drop 1.9 percent this year after growth of 0.9 percent last year, the European Commission forecasts."

China's Economic Growth Slows
The Chinese economy grew by 9 percent last year, the slowest pace in seven years, the National Bureau of Statistics reported Thursday, underlying the widening global financial crisis.

"The 9 percent rate was the lowest since 2001, when an annual rate of 8.3 percent was recorded," according to state media Xinhua News Agency. "It was the first time China's GDP growth fell into the single-digit range since 2003."