The largest auto recall in history, a $5 billion settlement against five big banks and a class action suit against J.C. Penney top our roundup of the day's top business news stories.
Takata Inflates Number of Defective Air Bags
Takata Corp., under pressure from U.S. safety regulators, has agreed to declare 33.8 million air bags defective, a move that will double the number of cars and trucks included in what is now the largest auto recall in U.S. history, the Associated Press reports.The agreement adds more than 18 million air bags to existing recalls, covering both the passenger and driver's side. The chemical that inflates the air bags can explode with too much force, blowing apart a metal inflator and sending shrapnel into the passenger compartment. The faulty inflators are responsible for six deaths and more than 100 injuries worldwide.In ongoing discussions with safety regulators over the past year, Takata for the most part refused to declare the inflators defective and even questioned the agency's authority to order it to conduct a recall.
Banks Agree to $5 Billion Settlement in FX Cases
U.S. banks JPMorgan and Citigroup and Britain's Barclays and Royal Bank of Scotland are expected to be hit with a combined bill of more than $5 billion and criminal charges on Wednesday in a settlement with U.S. and British authorities over rigging of currency markets, Reuters reports. Swiss bank UBS is expected to avoid a criminal charge after getting immunity for alerting authorities to a possible problem, but it, too, faces a criminal charge over the rigging of benchmark (Libor) interest rates, two people familiar with the matter told Reuters. JPMorgan and Citigroup would be the first major U.S. banks to plead guilty to criminal charges in decades.
Japan’s Economy Grows 2.4 Percent in First Quarter
Japan's economy expanded at a faster-than-expected 2.4 percent annual rate
In January-March, the Associated Press reports. A rebound in housing construction and a rise in inventories drove the expansion, according to preliminary data reported Wednesday. Economists expect the pace of growth to slow in the second quarter due to anemic corporate investment and public spending.
L.A. to Boost Hourly Minimum Wage to $15
By a vote of 14-1, the Los Angeles City Council gave initial approval Tuesday to raising minimum pay in the nation's second-largest city to $15 an hour by 2020, the Associated Press reports. If enacted, Los Angeles would join Seattle and San Francisco as some of the largest cities in the nation with phased-in minimum wage laws that eventually require annual pay of about $31,200. Last year, Chicago passed a phased-in minimum wage increase to $13 an hour. The measure will go to the city attorney to prepare a wage ordinance that will go to a council committee and, should it pass, to the full council for a final vote and then to Mayor Eric Garcetti. Average hourly wages in the nation rose just 3 cents in April to $24.87. Wages have risen only 2.2 percent over the past 12 months, roughly the same sluggish pace of the past six years, according to Labor Department figures.
Bad Penney: Phantom Discount Lawsuit Gets Class Action Status
A federal judge certified a class-action lawsuit that accuses Plano-Texas-based J.C. Penney Company Inc. of marking up retail prices on apparel and accessories to trick shoppers into believing they were getting big discounts when the items were advertised on sale, Reuters reports. The complaint accused the company of running a "massive, years-long, pervasive campaign" to deceive shoppers about its pricing for private-label brands, and for outside brands such as Liz Claiborne, sold exclusively by the retailer. Lead plaintiff Cynthia Spann alleges that she bought three blouses for $17.99 each, a 40 percent discount from the "original" $30 price, but learned that the price was never above $17.99 in the prior three months.
The Colonel Lives!
In a surprising brand resurrection, Col Harland Sanders, as portrayed by former Saturday Night Live ensemble member Darrell Hammond, is appearing in new ads for Kentucky Fried Chicken that appeared Tuesday on Twitter and Facebook. “I've been gone for a while and boy howdy have things changed,” Hammond’s Colonel states. The real Colonel Harland Sanders died in 1980 at the age of 90. He became the face of the company and brand spokesperson at the age of 65. KFC now lags behind Chick-fil-A in market share.