WASHINGTON (AP) -- After a group of investors reduced its cash offer for Sallie Mae by 17 percent on Tuesday, the nation's largest student lender insisted that the buyers honor their original $25 billion deal.

The investor group, which is led by private equity firm J.C. Flowers & Co. and includes Bank of America and JPMorgan Chase, said the student-loan legislation signed into law by President Bush, and weaker economic conditions, made the $60-a-share price negotiated in April unacceptable.

The group sent its revised offer to the board of the company, formally called SLM Corp., saying that $50 a share now "appropriately and fairly reflects the new economic and legislative environment that faces the company."

Under the new offer, which is worth about $21 billion in cash, Sallie Mae has the potential to receive an additional payment of more than $7 a share if the company performs on track with its own projections. It could receive an extra $10 a share if the company exceeds those expectations.

In a terse statement, Sallie Mae said it expects Bank of America Corp. and JPMorgan Chase & Co. "to

NEW YORK (AP) -- Morgan Stanley said Tuesday it is cutting about 600 jobs and slimming down its mortgage business, after a credit crisis upended the home loan industry this summer and forced other investment banks into similar moves.

Two weeks after the Wall Street investment bank missed analysts' expectations for the fiscal third quarter and took a writedown of $940 million for corporate loans stuck on its books, Morgan Stanley said it will eliminate about 1 percent of its work force.

"It is the direction everybody is going," said Sanford C. Bernstein & Co. analyst Brad Hintz. "This is Wall Street voting with their feet about how rapidly the mortgage market is coming back. They are saying it is not coming back quickly."

As part of a plan to fuse its three mortgage businesses into one subsidiary based in Irving, Texas, Morgan Stanley will close certain offices and cut 500 jobs in the U.S. and 100 in Europe.

Morgan Stanley said reshuffling these businesses will make the company more efficient and provide the opportunity to profit once the industry recovers.

DETROIT (AP) -- Weakness in the housing market and flagging consumer confidence made September another tough month for the auto industry, although General Motors, Honda and Nissan bucked the trend with hot-selling new vehicles, according to U.S. sales figures released Tuesday.

Ford Motor Co.'s U.S. sales plummeted 21 percent for the month, largely due to a 62 percent reduction in sales to rental car companies. Toyota Motor Corp. posted a 4 percent decline but still outpaced Ford for the month and for the January-September period, continuing its drive to replace Ford as the nation's No. 2 automaker in sales after GM. Toyota had sold 28,654 more vehicles than Ford as of the end of September. Chrysler LLC also was down 5 percent for the month.

Overall U.S. sales were down 3 percent from last September, according to Autodata Corp.

General Motors Corp. said sales were flat compared with last September, despite a month of difficult labor negotiations and a two-day strike by the United Auto Workers union. GM produced 30,000 fewer vehicles because of the strike, but the walkout had no impact on sales and GM's production schedule is unchanged,