SACRAMENTO, July 11 (UPI) -- Four major banks, including Bank of America Corp., say they stopped accepting IOUs Saturday from the cash-strapped state of California.Bank of America, JPMorgan Chase & Co., Wells Fargo & Co., and Union Bank of California said they no longer would redeem the state IOUs for cash value, the Los Angeles Times reported.

The state expects to issue nearly $3 billion worth of interest-bearing IOUs this month as the Legislature struggles to close a $26 billion budget deficit.

NEW YORK (AP) - CIT Group Inc. is working with a premier bankruptcy firm as the troubled commercial lender awaits word on whether it will receive funds from a federal program designed to help banks, the company confirmed Saturday.

The New York-based company has engaged Skadden, Arps, Slate, Meagher & Flom LLP, which has a prominent bankruptcy practice. The hiring was first reported in The Wall Street Journal Saturday.

HATTIESBURG, Miss.—Thousands turned out in Tennessee to say goodbye to Steve McNair, and people in his native state were doing the same Sunday to give the ex-NFL quarterback one of the biggest funerals in recent Mississippi history. "We're going to have church this morning, and we're going to praise God for Steve's life," said gospel singer Dottie Peoples, a close friend of McNair's mother, Lucille.

WASHINGTON (Reuters) - U.S. Treasury Secretary Timothy Geithner said it was too soon to decide whether the U.S. economy would need the help of a second round of government stimulus to recover from recession.

"I don't think that's a judgment we need to make now, can't really make it now prudently, responsibly," Geithner said in a taped interview with CNN that will air on Sunday.

According to a transcript provided by CNN, Geithner said the "biggest thrust" of the $787 billion package of spending and tax cuts signed into law earlier this year would take effect in the second half of the year.

STUTTGART, Germany—Volkswagen AG has increased its offer to take a 49.9 percent stake in troubled sports car maker Porsche to more than euro4 billion ($5.56 billion), according to a media report Saturday.

German weekly Der Spiegel reported the latest VW offer reflected an increase of roughly euro1 billion ($1.39 billion), as compared to a previous bid that was rejected by Stuttgart-based Porsche.

Toyota Motor Corp. said it is considering closing a vehicle-assembly plant in California that it jointly operates with General Motors Corp., after the U.S. automaker decided to pull out.

"We need to determine whether it can be economically feasible to contract with NUMMI without GM," Toyota said in a statement referring to the plant called, New United Motor Manufacturing Inc. "Under the current business circumstances, Toyota regrettably must also consider taking necessary ...

July 11 (Bloomberg) -- CIT Group Inc. hired Skadden, Arps,Slate, Meagher & Flom LLP as an adviser as it prepares for apossible bankruptcy filing after so far failing to win access togovernment guarantees for its borrowing, the Wall Street Journalreported, citing people familiar with the matter.

The hiring of the prominent bankruptcy law firm doesn’tmean a company will actually make a bankruptcy filing, thereport said. “The government has not said absolutely no toanything,” the newspaper cited a person familiar with thematter as saying.

Dow, S&P 500 in fourth weekly fall as economy weighs

NEW YORK (Reuters) - The Dow industrials and the S&P 500 fell on Friday, dropping for the fourth straight week, after Chevron Corp <CVX.N> warned about its quarterly results and consumer confidence fell to it lowest level since March. But the technology-heavy Nasdaq eked out a gain in light volume after Goldman Sachs upgraded the U.S. hardware and software sectors.

FRANKFURT (Reuters) - Volkswagen (VOWG.DE) has improved an offer to buy almost half of Porsche, a magazine reported on Saturday, a deal that would reverse an ambitious bid by the luxury carmaker for VW that unraveled in the crisis.

Porsche (PSHG_p.DE) racked up about 9 billion euros ($12.6 billion) of net debt trying to swallow its much bigger rival Volkswagen before the financial crisis turned the tables on the would-be predator.

SACRAMENTO, Calif. -- Gov. Arnold Schwarzenegger and legislative leaders were scheduled to resume work Saturday on bridging California's $26 billion budget shortfall following an unexpected resumption of negotiations the day before.

Late Friday, lawmakers from both parties expressed optimism about the direction of the talks but cautioned that a lot of work remains. That is particularly true in meeting the demands for government reform by Gov. Arnold Schwarzenegger and Republican lawmakers.

WASHINGTON (Reuters) - President Barack Obama said on Saturday more time was needed for his $787 billion (485 billion pound) stimulus package to work, predicting the spending would have a bigger impact on the economy later this year.

In an advanced text of his weekly radio speech, Obama said the stimulus plan approved by Congress and signed into law in mid-February "was not designed to work in four months - it was designed to work over two years."

HONOLULU (AP) - Despite a dour economy and a Hawaii tourism industry that is in its roughest patch ever, four dozen employees of the iconic Ilikai hotel won their jobs back Friday when their labor union and the property's new owner inked a surprise deal.

The Y-shaped, 30-story Ilikai was considered Hawaii's first luxury high-rise when it opened in 1964, and it gained more prominence when it was featured in the opening sequence of the hit TV series "Hawaii Five-0."

PHILADELPHIA – Shares of commercial lender CIT Group Inc. plunged Friday as uncertainty mounts over whether it can get federal backing for its bonds.

The New York-based financier to small and mid-sized businesses faces a liquidity crisis absent help from the government, according to analysts.

CIT is still awaiting word on whether it will receive funds from the Federal Deposit Insurance Corp.'s Temporary Liquidity Guarantee Program, which lets cash-squeezed companies issue government-backed bonds to raise capital at a lower cost. As of June 8, the program has backed $335.4 billion of debt.

WASHINGTON ? The Treasury Department is selling its financial stakes in bailed-out banks for one-third less than they're worth, potentially shorting taxpayers up to $2.7 billion, a bipartisan congressional watchdog said Friday.

Treasury countered by noting that banks, including JPMorgan Chase & Co., think the department's asking prices are too high. Unable to agree on a price, some institutions are letting the department sell the warrants in public auctions.

July 11 (Bloomberg) -- European stocks dropped for a fourthstraight week, the longest stretch of losses since March, asconcern mounted earnings reports will show the economic slump isfar from over and oil retreated.

Royal Dutch Shell Plc, BP Plc and Total SA slid more than 3percent as crude posted the biggest weekly fall since January.Aviva Plc led insurers lower on speculation it will cut itsdividend.

You gotta love it.

The newest new car company, General Motors Co.

The latest new Chrysler Group LLC, and fully independent Ford Motor Co. all getting big positive press and great buyerinterest in good old (All American!?) muscle cars!!!

The Mustang, Camaro and Challenger are beautiful and badder than ever, and exactly the kind of cars the new Government Automotive Selector (GAS) despises and tells us we don't want. Oh, really?

The Obama administration is developing an initiative to take money from the $700 billion rescue program for the banking system and make it available to millions of small businesses, which officials say are essential to any economic recovery because they employ so many people, according to sources familiar with the plan.

The effort would represent a striking shift from the rescue program's original mandate, since it would direct billions of bailout dollars toward a plan that aims more at saving jobs than at righting the financial system. Some economists estimate that small businesses, defined as firms with fewer than 500 workers, employ most of the country's workforce.

AIG is working with the Obama administration's compensation czar, Kenneth R. Feinberg, to ensure that the government and the insurer are on the same page before it pays out remaining bonuses due to employees tied to 2008 contracts, according to the person, who requested anonymity because of the sensitive nature of the talks.

Separately, Bloomberg News said yesterday that Pennsylvania and New York were examining claims by rival insurers that AIG was charging too little for coverage, the interim head of the New York insurance office said.

WASHINGTON - The Obama administration is developing an initiative to take money from the $700 billion rescue program for the banking system and make it available to millions of small businesses, which officials say are essential to any economic recovery because they employ so many people, according to sources familiar with the plan.

The effort would represent a striking shift from the rescue program's original mandate, since it would direct billions of bailout dollars toward a plan that aims more at saving jobs than at righting the financial system.

General Motors emerged from bankruptcy yesterday, with chief executive Fritz Henderson promising that the fallen corporate giant will be revived and that "business as usual is over."

The announcement signaled the substantial completion of one of the largest bankruptcies in U.S. history and the next step in what has become a landmark government bailout.

The new GM will have fewer brands, fewer plants and fewer workers. The number of U.S. executives will be cut by 35 percent. But as important as this shrinking, Henderson said, is the need to transform the automaker's culture, long criticized as insular and sluggish. Once the world's largest automaker, GM has been losing market share for decades.