#248 Warren Buffett's Hand Picked Successor?

In an interview that gives some interesting insight to his leadership style, Warren Buffett talks about the importance of being replaced by someone who shares his core values. He obviously feels technical competency in the financial analysis can be supplied by underlings, but his son has the right attitude to follow him at Berkshire Hathaway.

#247 So What Happened to That $1.2 Billion That's Missing From MF Global?

Click on the segment title to read the transcript or listen to the audio discussion of how forensic accounting can be used to detect whatever fraud may be involved in the $1.2 billion missing from Global Financial. Did I say there might be fraud involved? Ha!

#246 - Alec Baldwin Shows How Disgruntled Customers Stick It to Companies via Social Media

With the popularity of social media these days, bad PR travels fast and it's hard for companies to manage negative image problems such as the one created by Alec Baldwin when he was removed from his flight earlier this week. This situation creates another challenge as someone who thinks he is too special for the existing rules regarding electronic devices to apply to him. It doesn't matter that many contend that these FAA rules regarding electronic devices are overly strict. IMO, personal responsibility and accountability standards dictate that we should step up and own our mistakes, instead of trying to blame others by deflecting the negative attention. Alec has a history of this type of behavior though. Click on the title of this thread to read his apology/rant against American Airlines.

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#245 Prosecuting Wall Street

These two segments from 60 Minutes highlight the internal control requirements of the Sarbanes Oxley Act and management's responsibility for certifying that such controls are adequate. While that sounds good on paper, evidently it's not happening in actual practice as highlighted in the two segments which feature internal control failures at Countrywide and Citicorp with regard to the collapse of mortgage backed securities.

#244 Postal Service Cost Control Measures Announced

If you go deep in this blog to posts late in 2009, you'll see that the proposed changes to postal delivery were being discussed even then. The question is, will these cost control measures be enough to bring the postal service back to a break even (or better) position?

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#243 GM Offers to Buy Back Chevrolet Volts From Fearful Owners

From USA Today - Financial Accounting students may realize that this will be a big hit to GM's estimated warranty liability! Managerial Accounting students will recognize this as a sizable external failure cost.


General Motors will buy a Chevrolet Volt back from any owner who is afraid the plug-in extended-range electric car will catch fire, the company's CEO told the Associated Press today.

CEO Dan Akerson insisted that the cars are safe, but said the company will purchase the Volts because it wants to keep customers happy. That appears to go beyond the policy announced Monday in which GM offered loaner cars to any customers fearful of fires in their Volts.

Michelle Bunker, Chevy spokeswoman who handles Volt matters, disputed that today, calling it "wrong" -- period, no qualifiers -- to suggest that buy-backs are new.

"This is not 'new news.' This is one and the same" as the offer of loaner cars that GM made Monday, she says.

Bunker says that GM's Monday announcement included the promise that, "if something escalated so that the customer wanted us to buy back the car, we'd do it. It's just a part of owner satisfaction. It's not a new initiative" in response to reports that Volts crash-tested by the government later caught fire in post-crash storage while in government hands.

GM has said the feds didn't store the crashed Volts properly.

Bunker says "a handful" of Volt owners have asked for loaner cars. No one has yet asked GM to buy back a Volt, she says.

Reports Tom Krisher of the AP:

Akerson said that if necessary, GM will recall the more than 6,000 Volts now on the road in the U.S. and repair them once the company and federal safety regulators figure out what caused the fires.

"If we find that is the solution, we will retrofit every one of them," Akerson said. "We'll make it right."

The fires happened seven days to three weeks after tests performed by the National Highway Traffic Safety Administration. And GM has said there's no threat of fires immediately after crashes. GM also has said that no Volts involved in real-world crashes have caught fire.

Still, NHTSA has opened an investigation into the fires and has asked other companies that make electric cars for battery testing data. NHTSA said the safety testing hasn't raised concerns about electric vehicles other than the Volt.

"The fire broke out seven days later. Not seven minutes. Not seven seconds," Akerson said, adding that the company wants to fix the problem so people continue to have faith in Volts and other advanced-technology cars. The company is notified of any Volt crash through its OnStar safety system and dispatches a team within 48 hours to drain the battery, preventing fires, he said.

"I think in the interest of General Motors, the industry, the electrification of the car, it's best to get it right now than when you have — instead of 6,000 — 60,000 or 600,000 cars on the road," he said.

The NHTSA testing, Akerson said, intruded into the Volt's battery pack by four to five inches, beyond the normal testing standard of about two inches. Then the cars were rotated 360 degrees to simulate a rollover crash. He said anytime there's a new technology introduced like the Volt, problems will arise. GM is dedicated to fixing them.

He conceded that the fires may cause some potential buyers to shy away from the Volt.

But he added that GM is trying to get the message out that they happened only after extreme tests. Akerson also stressed that standard gas engine cars also have problems with fires after crashes.

The Volt can go about 35 miles on battery power before a small gasoline generator kicks in to keep the car running. The car can be recharged with a standard home electrical outlet.

The Nissan Leaf, a fully electric car and the Volt's main competitor, has not had any similar fires after crash tests or real-world crashes, Nissan said.

The Leaf battery is cooled by air rather than a liquid used to cool the Volt battery.

Akerson said investigators are looking at spilled coolant as one possible cause of the fires, although he said the coolant itself did not catch fire. Investigators are looking at everything from circuit boards to the way the battery cells are packaged into the Volt's larger T-shaped battery pack, he said.

Investigators have some promising leads but no conclusions yet, Akerson said.

GM doesn't expect many Volt owners to return their cars, given feedback from customers thus far, said spokesman Rob Peterson.

Earlier this week GM offered loaner cars to all Volt owners until the cause of the fires is found and fixed. So far, Akerson said 16 Volt owners have inquired and only two have taken the loaners.

TAGS: CHEVROLET VOLT