CRIMINAL CAPITALI$M
Credit Suisse to pay $495 mn in US to settle securities case

Issued on: 17/10/2022

Subprime mortages were at the heart of the 2008 financial crisis

Zurich (AFP) – Credit Suisse said Monday it would pay $495 million to settle a row over mortgage-backed securities dating back to the 2008 financial crisis.

Switzerland's second-biggest bank said it had agreed with New Jersey authorities to make the "one-time payment... to fully resolve claims" for compensation, and said it had already provisioned the amount.

In the claim filed in 2013, Credit Suisse was criticised for not having provided sufficient information on the risks relating to $10 billion of mortgage-backed securities.

Subprime mortgages, credit granted to borrowers often with poor credit histories or insufficient income, were packaged into financial products and sold to investors.

But as borrowers defaulted on many of those mortgages, investors had no way of telling what portion of the loans in the derivatives were bad.

Those products were at the heart of the 2008 financial crisis, which sparked a global recession and brought the international financial system to the brink of collapse.

Credit Suisse said the final settlement with the New Jersey Attorney General allowed it "to resolve the only remaining RMBS (residential mortgage-backed securities) matter involving claims by a regulator and the largest of its remaining exposures on its legacy RMBS docket".

Shares rose after the statement on the SMI, the flagship index of the Swiss Stock Exchange.

Speculation has been growing ahead of an update scheduled by the new chief executive for later this month.

According to the Financial Times, the bank is considering not only disposals in its investment bank but also the sale of some of its domestic activities in Switzerland.
Financial crisis fines

In January 2017, US authorities forced Credit Suisse to pay out $5.28 billion over its role in the subprime crisis -- three years after it was fined $2.6 billion for helping Americans avoid taxes.

Last year, Credit Suisse also paid $600 million to financial guarantee insurer MIBA to settle other long-running litigation connected to the US subprime mortgage crisis.

The bank said last January it was increasing the provisions set aside for the MBIA case and others involving mortgage backed securities by $850 million.

Some of the world's biggest banks have also faced legal claims after the 2008 financial crash.

German banking giant Deutsche Bank agreed in December 2016 to pay $7.2 billion to settle a case with the US Department of Justice.

And British banking giant Barclays reached a deal in 2018 to pay a US fine of $2 billion over a fraud case involving subprime mortgage derivatives.

The Bank of America meanwhile agreed to a $17 billion deal with US authorities in 2014 to settle claims it sold risky mortgage securities as safe investments ahead of the 2008 financial crisis.

© 2022 AFP

Black Gold

Happy New Year. 2008 the year of the great recession, it's only a matter of time. Oil and Gold have hit their 1980 values.

Oil hits record US$100 a barrel on supply concerns

Gold price breaks 28-year record to hit new peak

And if you have forgotten the eighties began with an oil boom but saw global recession, the crash of the oil and gas markets and the largest crash on wall street, 1987, since 1929.

If this trend continues, stagflation could rear its ugly head, again

Oh yes and Reagan was President of the Free World. And like Reagan the Bush regime has spent America into recession. Analysts: Bush was big spender in early years in office

America now is officially for sale and the only folks able to bail out Wall Street are the Sheiks of Arabia and the Chinese.



SEE:

U.S. Economy Entering Twilight Zone

Purdy Crawford Rescues the Market

Sub Prime Exploitation

Canadian Banks and The Great Depression

Wall Street Deja Vu

Housing Crash the New S&L Crisis

US Housing Market Crash

Tags
asset-backed commercial paper ,, gold
homes, mortgages, housing, bubble, US, economy, oil prices, sub-prime mortgage, Wall Street, crash, recession,

US Home Prices Now Posting Biggest Monthly Drops Since 2009

(Bloomberg) -- Home prices in the US have taken a turn and are now posting the biggest monthly declines since 2009.

Median home prices fell 0.98% in August from a month earlier, following a 1.05% drop in July, Black Knight Inc. said in a report Monday. The two periods mark the largest monthly declines since January 2009.

“Together they represent two straight months of significant pullbacks after more than two years of record-breaking growth,” said Ben Graboske, Black Knight Data and Analytics president.

The housing market is losing steam fast with skyrocketing mortgage rates driving affordability to the lowest level since the 1980s. The Federal Reserve has sought to curb inflation, which has thrown cold water on the US real estate boom.

While prices are falling on a month-over-month basis, they’re still significantly higher than a year earlier when the buying frenzy was going strong. Values were up 12.1% from a year earlier in August.

The sharpest correction in August was in San Jose, California, down 13% from its 2022 peak, followed by San Francisco at almost 11% and Seattle at 9.9%, the company said.

IT BEGAN EARLIER THAN 2009

LA REVUE GAUCHE - Left Comment: Search results for HOME CRASH 2007 

LA REVUE GAUCHE - Left Comment: Search results for CRASH 2008 

LA REVUE GAUCHE - Left Comment: Search results for HOUSING CRASH 

LA REVUE GAUCHE - Left Comment: Super Bubble Burst 

LA REVUE GAUCHE - Left Comment: Forward to the Past 

U$A

Zero-down mortgages are back sparking fears of being the new subprime loans which caused the 2008 market crash

Story by Mike Bedigan •  THE INDEPENDENT UK

A new “zero-down” mortgage program has sparked concern of fueling another housing bubble given its similarities to the disastrous subprime loans that contributed to the 2008 housing market crash.

The programs, announced two weeks ago and offered by United Wholesale Mortgage, allow qualified borrowers to receive up to $15,000 in down payment assistance.

The interest-free loan program does not require monthly payments and aims to “help more borrowers become homeowners without an upfront down payment,” the company said.

However, experts have warned that the programs – which, according to company, have already proved incredibly popular – could backfire on homeowners should the US housing market begin to cool, and prices begin to drop.

To qualify for the loans, borrowers must be at or below 80 percent of the Area Median Income for the property they are buying, or one borrower must be a first-time homebuyer.

The assistance loan, given as a second lien, offers flexibility in repayment and must be paid in full by the end of the loan term or when the first lien loan is paid off - for many homeowners, that would be at the end of 30 years of paying their mortgage.

“UWM’s 0% Down Purchase program is going to change the game this purchase season,” UWM chief executive Mat Ishbia said.

“No other wholesale lender in the country is offering this, meaning independent mortgage brokers now have a significant advantage with consumers and real estate agents. Thousands of borrowers are sitting on the sidelines because they don’t have a downpayment – this program removes that barrier.”

However, one of the risks of prospective homeowners paying no down payment, is that they will begin with no home equity – i.e the current market value of a home, minus any liens such as a mortgage.

Should house prices begin to drop, borrowers could find themselves owing more than the home is worth on repayments. This could lead to a failure to comply with the mortgage terms, known as being in “default.”

Further problems could arise if the homeowner needs to sell the property quickly, but are unable to repay the second mortgage.

Patricia McCoy, a professor at Boston College Law School and former mortgage regulator, told CNN that scenario is “exactly what happened” during the subprime crisis, when millions of homeowners were unable to make payments and went into default.

The housing bubble that popped around 2006 was fueled in part by a boom on the amount of subprime mortgages, and adjustable rate mortgages being offered.

A subprime mortgage is generally a loan that is meant to be offered to prospective borrowers with impaired credit records. The higher interest rate is intended to compensate the lender for accepting the greater risk in lending to such borrowers.



A new “zero-down” mortgage purchase program has sparked concern within the industry, due to similarities with the disastrous subprime loans that contributed to the 2008 housing market crash (AP)© Provided by The Independent

Jonathan Adams, an assistant professor at Saint Joseph’s University teaching real estate finance, said the zero-down loan program has “all the features that made subprime bad,” noting that those who qualified for the program are likely to suffer when home prices are falling.

“One of the lessons of the subprime crisis was that you are not doing any favors to borrowers by making it too easy to borrow,” Adams told CNN.

The company rejected the concerns over potential fallout from its programs, saying that borrowers must still go through strict underwriting guidelines.

“People who make these claims are uneducated about the current state of the industry,” Alex Elezaj, the company’s chief strategy officer, told CNN. “In today’s environment, UWM is responsible for underwriting the loan, which gives us confidence that these are high quality loans.

“This is a huge positive. It’s helping consumers and is a great win across the board.

“Think about all the people who are renting and would love to buy a house, but they face this roadblock of coming up with $10,000 or $15,000 for a down payment. This eliminates that.”

Did Big Bang Create Crash???

Since the economists and advocates for the free market seem to be at a loss as to why the current international financial system collapsed, perhaps they should look at the coincidence between the start of the Big Bang experiment in Europe and the fact that perhaps this is a quantum economic meltdown, the result of the firing of the Hadron Collider in France.

After all the marketplace that manipulates capital in the money markets and theshadow economy; hedge funds, dirivitives, etc. is the result of the use of computer technology and in particular the access that the internet allows computers. The internet which was created by CERN in order to facilitate the international scientific coordination of the Hadron Collider project.

And remember those folks who worried that the start up of the collider would create a black hole? They were laughed at. Yet within days of the collider start up and failure, the international financial market blew up in a big bang not seen since the Great Depression.

Coincidence? In a quantum universe I think not. After all what is a bigger black hole than the collapse of international capitalism?


Cern CIO talks about the credit crunch and black holes

CERN's Large Hadron Collider, the biggest and most complex machine ever built, will study the smallest building blocks of matter, sub-atomic
particles.
CERN scientists launched the experiment on September 10, firing
beams of proton particles around the 27-km (17-mile) tunnel outside Geneva 100
meters (330 feet) underground.
But nine days later they had to shut it down
because of a helium leak caused by a faulty electrical connection between two of
the accelerator's huge magnets
When it works again, the collider will recreate conditions just after the
Big Bang believed by most cosmologists to be at the origin of our expanding
universe 13.7 billion years ago.
It will send beams of sub-atomic particles
around the tunnel to smash into each other at close to the speed of
light.
These collisions will explode in a burst of intensely hot energy and
of new and previously unseen particles.
CERN, which invented the Worldwide
Web nearly 20 years ago, has set up a high-power computer network linking 7,000
scientists in 33 countries to crunch the data flow, enough to create a tower of
CDs more than twice as high as Mount Everest.

CERN Unveils Global Grid For Particle Physics Research
The network can pull in the IT power of more than 140 computer centers in 33 countries to
crunch an expected 15 million GB of data every year.
By Antone Gonsalves
InformationWeek October 3, 2008 04:57 PM

CERN, the world's largest particle physics lab and creator of the World Wide Web, on Friday launched a
global computer network that links the IT power of data centers in 33 countries
to provide the data-crunching muscle needed in conducting experiments on the
nature of matter.

The Cern nuclear-physics laboratory in Geneva, Switzerland, is helping
the technology industry refine the multicore processors and fat gigabit networks
destined for the datacentres of tomorrow through the Openlab
initiative.

Through the project, the IT department at the lab behind the
Large Hadron Collider pushes cutting-edge kit to breaking point to perfect it
for its own use, and the consumer and business markets.
The lab has
partnerships with companies including HP ProCurve, Intel and Oracle, who provide
the backbone of its IT infrastructure, its 8,000-server computer centre and its
links to the Worldwide LHC Computing Grid, consisting of more than 100,000
processors spread over 33 countries.
Cern's chief information officer,
Wolfgang von Rueden, told ZDNet.co.uk sister site silicon.com: "We wait for
industry to develop the technology, then we take it and see how far we can push
it and feed back to them."


CERN Orchestrates Thousands of Business Services with ActiveVOS
Visual Orchestration System Integrates Diverse Systems
for More Effective Mobile Workforce
Last update: 9:00 a.m. EDT Oct. 21,
2008
WALTHAM, Mass., Oct 21, 2008 (BUSINESS WIRE) -- Active Endpoints, Inc. ( http://www.activevos.com/), the inventor of visual orchestration
systems (VOS), today announced that CERN, the European Organization for Nuclear
Research, of Geneva, Switzerland, has successfully deployed ActiveVOS(TM) to
orchestrate and manage its core technical and administrative business services.
As one of the world's largest and most respected centers for scientific
research, CERN is the nucleus of an extensive community that includes over 2,500
on-site staff, and nearly 9,000 visiting scientists. These scientists
principally work at their universities and laboratories in over 80 countries
around the world. Using ActiveVOS, CERN has now integrated and automated all its
core processes as well as integrated those processes with the many external
systems required by this dispersed workforce.
"Automating all of the
essential business processes such as arranging travel, ordering materials,
authorizing access to controlled areas for our 11,500 users from all over the
world was a complex challenge," said Derek Mathieson, section leader, CERN.
"Using ActiveVOS's capabilities including process versioning, retry policies,
error and exception handling, integrated debugging and support for open
standards, we now have completed over 1,200,000 process instances. We add, on
average, approximately 12,000 new BPEL processes every day. ActiveVOS has also
automated internal administrative processes, such as annual performance reviews
and safety alarm activation. We are now able to support our large community of
scientists and our staff, ensuring they spend their time on research and not
administrative tasks."

SEE:
No Austrians In Foxholes
CRASH
Black Gold
The Return Of Hawley—Smoot
Canadian Banks and The Great Depression
Bank Run
U.S. Economy Entering Twilight Zone


Tags
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The plumbing behind world's financial markets is creaking. Loudly

Tommy Wilkes


LONDON (Reuters) - The coronavirus panic is jolting stock markets, with steep drops in major indexes grabbing the public’s attention. But behind the scenes, there is less understood and potentially more worrying evidence that stress is building to dangerous levels in crucial arteries of the financial system.

Bankers, companies and individual investors are dashing to stock up on cash and other assets considered safe in a downturn to ride out the chaos. This sudden flight to safety is causing havoc in markets for bonds, currency and loans to a degree that hasn’t been seen since the financial crisis of a dozen years ago.

The key concern now, as in 2008, is liquidity: the ready availability of cash and other easily traded financial instruments - and of buyers and sellers who feel secure enough to do deals.

Investors are having trouble buying and selling U.S. Treasuries, considered the safest of all assets. It’s a highly unusual occurrence for one of the world’s most readily tradable financial instruments. Funding in U.S. dollars, the world’s most traded currency, is getting harder to obtain outside the United States.

The cost of funding for money that companies use to make payrolls and other essential short-term needs is rising for weaker-rated firms in the United States. The premium investors pay to buy insurance on junk bonds is increasing. Banks are charging each other more for overnight loans, and companies are drawing down their lines of credit, in case they dry up later.

Taken together, warn some bankers, regulators and investors, these red flags are starting to paint a troubling picture for markets and the global economy: If banks, companies and consumers panic, they can set off a chain of retrenchment that spirals into a bigger funding crunch - and ultimately a deep recession.

Francesco Papadia, who oversaw the European Central Bank’s market operations during the region’s debt crisis a decade ago, said his biggest fear is that the “illiquidity of markets, generated by extreme uncertainty and panic reaction” could “lead to markets freezing, which is an economic life-threatening event.”

“It does not seem to me we are there already, but we could get there quickly,” Papadia said.

A sign of the times is a hashtag now trending on Twitter: #GFC2 - a reference to the possibility of a second global financial crisis.

The warning signals so far are nowhere near as loud as they were in the 2008-2009 financial crisis, or the 2011-2012 euro zone debt crisis, to be sure. And policymakers are acutely aware of the weaknesses in the financial-market plumbing. In recent days, they have ramped up their response.

Central banks have cut interest rates and pumped trillions of dollars of liquidity into the banking system. On Sunday, the U.S. Federal Reserve slashed rates back to near zero, restarted bond buying and joined with other central banks to ensure liquidity in dollar lending to help shore up the economy.

“The one thing central banks know how to do following the experience of 2008 is to prevent a funding crisis from happening,” said Ajay Rajadhyaksha, head of macro research at Barclays Plc and member of a committee that advises the U.S. Treasury on debt management and the economy.

TODAY VS 2008

While the panic sweeping markets is reminiscent of the 2008 financial crisis, comparisons only go so far. Central bankers have last decade’s shocks fresh in their memories. Another key difference: Banks are in better shape today.

In 2008, banks had far less capital and far less liquidity than they have now, said Rodgin Cohen, senior chairman of Wall Street law firm Sullivan & Cromwell LLP and a top advisor to major U.S. financial firms.

Instead, investors and analysts said, the risk this time comes from the pandemic’s impact on the real economy: shuttered shops, travel bans and sections of the labor force sick or quarantined. The freeze means a severe blow for corporate revenues and earnings and overall economic growth, and for now, there is no end in sight.

Countrywide quarantines to block the virus, such as Italy’s, mean “businesses are going to be hit really hard when it comes to receipts, to revenue,” said Stuart Oakley, who oversees forex trading for clients at Nomura Holdings Inc. “However, liabilities are still the same: If you own a restaurant and you borrow money for the rent, you’ve still got to make that monthly payment.”

JPMorgan Chase & Co economists expect first-half contractions in growth across the globe. And this is as the U.S. response to the coronavirus is only getting started.

GRAPHIC: Coronavirus hits financial markets - here

RED FLAGS

Investors and regulators have been alarmed, in particular, by liquidity problems in the $17 trillion U.S. Treasuries market.

There are several signs that something is off. Interest rates, or yields, on Treasuries and other bonds move in inverse relation to their prices: If prices fall, the yields rise. Changes are measured in basis points, or hundredths of a percent.

Typically, yields move a few basis points a day. Now, large and unusually quick swings in yields are making it hard for investors to execute orders. Traders said dealers on Wednesday and Thursday significantly widened the spread in price at which they were willing to buy and sell Treasury bonds - a sign of reduced liquidity.

“The tremors in the Treasury market are the most ominous sign,” said Papadia, the ex-ECB official.

Another alarming signal is the premium non-U.S. borrowers are willing to pay to access dollars, a widely watched gauge of a potential cash crunch. The three-month euro-dollar EURCBS3M=ICAP and dollar-yen JPYCBS3M=ICAP swap spreads surged to their widest since 2017, before dropping on Friday after central banks pumped in more cash.

A measure of the health of the banking system is flashing yellow. The Libor-OIS spread USDL-O0X3=R, which indicates the risk banks are attaching to lending money to one another, has jumped. The spread is now 76 basis points, up from about 13 basis point on Feb. 21, before the coronavirus crunch began in the West. In 2008, it peaked at around 365 basis points.

GRAPHIC: Dollar funding - here

WEAK CORPORATE LINK

As funding markets creak, heavily indebted companies are feeling the heat.

Credit ratings firm Moody’s warns that defaults on lower-rated corporate bonds could spike to 9.7% of outstanding debt in a “pessimistic scenario,” compared with a historical average of 4.1%. The default rate reached 13.4% during the financial crisis.

The cost of insuring against junk debt defaults jumped on Thursday to its highest level in the United States since 2011 and the loftiest in Europe since 2012.

Some companies are now paying more for short-term borrowing. The premium that investors demand to hold riskier commercial paper versus the safer equivalent rose to its highest level this week since March 2009.

Several companies are drawing down on their credit lines with banks or increasing the size of their facilities to ensure they have liquidity when they need it. Bankers said companies fear lenders may not fund agreed credit lines should the market turmoil intensify.

An official at a major central bank said the situation is “pretty bad, as all stars are aligned in a negative way.””Cracks will start to emerge soon,” the official said, “but whether they will develop into something systemic is still hard to say.”

Additional reporting by Sujata Rao and Yoruk Bahceli in London, Tom Westbrook in Singapore and Lawrence Delevingne and Matt Scuffham in New York.; Editing by Paritosh Bansal, Mike Williams and Edward Tobin



A woman a wearing protective face mask, following an outbreak of the coronavirus disease (COVID-19), is reflected in a screen displaying NASDAQ movements outside a brokerage in Tokyo, Japan March 16, 2020. REUTERS/Edgard Garrido

Stocks dive as rescue bids by Fed, peers fail to calm panicky markets

Wayne Cole, Kane Wu

SYDNEY/HONG KONG (Reuters) - Stock markets were routed and the dollar stumbled on Monday after the Federal Reserve slashed interest rates in an emergency move and its major peers offered cheap U.S. dollars to ease a ruinous logjam in global lending markets.

European markets were also poised to open sharply lower, with EUROSTOXX 50 futures down 3.4% and FTSE futures down down 2.7%. E-mini futures for the S&P 500 index hit their downlimit in the first quarter-hour of Asian trade as investors rushed for safety.

The Fed’s emergency 100 basis point cut on Sunday was followed on Monday by the Bank of Japan easing policy further with a pledge to ramp up purchases of exchange-traded funds and other risky assets.

New Zealand’s central bank also shocked by cutting rates 75 basis points to 0.25%, while the Reserve Bank of Australia (RBA) pumped more money into a strained financial system.

Japanese Prime Minister Shinzo Abe said G7 leaders would hold a teleconference at 1400 GMT to discuss the crisis.

The drastic maneuvers were aimed at cushioning the economic impact as the breakneck spread of the coronavirus all but shut down more countries, though they had only limited success in calming panicky investors.

MSCI’s index of Asia-Pacific shares outside Japan tumbled 4% to lows not seen since early 2017, while the Nikkei fell 2% as the Bank of Japan’s easing steps failed to stabilize market confidence.

Data out of China also underscored just how much economic damage the disease had already done to the world’s second-largest economy, with official numbers showing the worst drops in activity on record. Industrial output plunged 13.5% and retail sales 20.5%.

“By any historical standard, the scale and scope of these actions was extraordinary,” said Nathan Sheets, chief economist at PGIM Fixed Income, who helps manage $1.3 trillion in assets. “This is dramatic action and truly does represent a bazooka.”

“Even so, markets were expecting extraordinary action, so it remains to be seen whether the announcement will meaningfully shift market sentiment.”

He emphasized investors wanted to see a lot more U.S. fiscal stimulus put to work and evidence the Trump administration was responding vigorously and effectively to the public health challenges posed by the crisis.

“The performance of the economy and the markets will be mainly determined by the severity and duration of the virus’ outbreak.”

Shanghai blue chips fell 3% even as China’s central bank surprised with a fresh round of liquidity injections into the financial system. Hong Kong’s Hang Seng index tumbled 3.4%.

Australia’s S&P/ASX 200 plunged, finishing down 9.7% for its steepest fall since the 1987 crash.

UNDER STRAIN

Markets have been severely strained as bankers, companies and individual investors stampeded into cash and safe-haven assets, while selling profitable positions to raise money to cover losses in savaged equities.

Such is the dislocation the Fed cut interest rates by 100 basis points on Sunday to a target range of 0% to 0.25%, and promised to expand its balance sheet by at least $700 billion in coming weeks.

Five of its peers also joined up to offer cheap U.S. dollar funding for financial institutions facing stress in credit markets.

U.S. President Donald Trump, who has been haranguing the Fed to ease policy, called the move “terrific” and “very good news.”

“It may be a shot in the arm for risk assets and help to address liquidity concerns...however, it also raises the question of whether the Fed has anything left in the tank should the spread of the virus not be contained,” said Kerry Craig, global market Strategist at J.P. Morgan Asset Management.

“We really need to see the fiscal side...to prevent a longer than needed economic slowdown.”

The Fed’s rate cut combined with the promise of more bond buying pushed U.S. 10-year Treasury yields down sharply to 0.68%, from 0.95% late on Friday.

That pressured the U.S. dollar at first, though it regained some ground as the Asian session wore on. The dollar was last down 1.4% on the Japanese yen at 106.37. The euro was flat at $1.1123.

The commodity-exposed Australian dollar fell 0.3% to $0.6166 while the New Zealand dollar slipped 0.2% to $0.6044.

Oil prices fell on concerns about global demand. Brent crude was last off $1.31 at $32.54 per barrel while U.S. crude slipped 78 cents to $30.94 a barrel.

Gold rallied 0.8% to $1,541.34.

Boeing’s financial woes continue, while families of crash victims urge US to prosecute the company


BY DAVID KOENIG
 April 24, 2024

Boeing said Wednesday that it lost $355 million on falling revenue in the first quarter, another sign of the crisis gripping the aircraft manufacturer as it faces increasing scrutiny over the safety of its planes and accusations of shoddy work from a growing number of whistleblowers.

CEO David Calhoun said the company is in “a tough moment,” and its focus is on fixing its manufacturing issues, not the financial results.

Company executives have been forced to talk more about safety and less about finances since a door plug blew out of a Boeing 737 Max during an Alaska Airlines flight in January, leaving a gaping hole in the plane.

The accident halted progress that Boeing seemed to be making while recovering from two deadly crashes of Max jets in 2018 and 2019. Those crashes in Indonesia and Ethiopia, which killed 346 people, are now back in the spotlight, too.

About a dozen relatives of passengers who died in the second crash met with government officials for several hours Wednesday in Washington. They asked the officials to revive a criminal fraud charge against the company by determining that Boeing violated terms of a 2021 settlement, but left disappointed.


READ MORE


Boeing put under Senate scrutiny during back-to-back hearings on aircraft maker’s safety culture


United Airlines reports $124 million loss in a quarter marred by grounding of some Boeing planes


Boeing pushes back on whistleblower’s allegations and details how airframes are put together


Boeing officials made no mention of the meeting, but talked repeatedly while discussing the quarterly earnings of a renewed focus on safety.

“Although we report first-quarter financial results today, our focus remains on the sweeping actions we are taking following the Alaska Airlines Flight 1282 accident,” Calhoun told employees in a memo Wednesday.

Calhoun ticked off a series of actions the company is taking and reported “significant progress” in improving manufacturing quality, much of it by slowing down production, which means fewer planes for its airline customers. Calhoun told CNBC that closer inspections were resulting in 80% fewer flaws in the fuselages coming from key supplier Spirit AeroSystems.

“Near term, yes, we are in a tough moment,” he wrote to employees. “Lower deliveries can be difficult for our customers and for our financials. But safety and quality must and will come above all else.”

Calhoun, who will step down at the end of the year, said again he is fully confident the company will recover.

Calhoun became CEO in early 2020 as Boeing struggled to recover from the Max crashes, which led regulators to ground the planes worldwide for nearly two years. The company thought it had sidestepped any risk of criminal prosecution when the Justice Department agreed not to try the company for fraud if it complied with U.S. anti-fraud laws for three years — a period that ended in January.

Boeing has been reaching confidential settlements with the families of passengers who died, but the relatives of those killed in the Ethiopia crash are continuing to press the Justice Department to prosecute the company in federal district court in Texas, where the settlement was filed. On Wednesday, department officials told relatives that the agency is still considering the matter.

Leaving the meeting, Paul Cassell, a lawyer for the families, called it “all for show.” He said the Justice Department appears determined to defend the agreement it brokered in secret with Boeing.

“We simply want that case to move forward and let the jury decide if Boeing is a criminal or not,” he said.

It was an emotional meeting, according to Nadia Milleron, whose daughter Samya Stumo died in the 2019 crash.

“People are angry. People are shouting. People are starting to talk over other people,” said Milleron, who watched online from her home in Massachusetts while her husband attended in person. Relatives believe the Justice Department is “overlooking a mountain of evidence against Boeing. It’s mystifying,” she said.

According to Milleron, the head of the fraud section of the Justice Department’s criminal division, Glenn Leon, said his agency could extend its review beyond this summer, seek a trial against Boeing on the charge of defrauding regulators who approved the Max, or ask a judge to dismiss the charge. She said Leon made no commitments.

The Justice Department declined to comment.

A federal judge and an appeals court ruled last year that they had no power to overturn the Boeing settlement. Families of the crash victims hoped the government would reconsider prosecuting Boeing after the Jan. 5 door-plug blowout on the Alaska Airlines jetliner as the plane flew above Oregon.

Investigators looking into the Alaska flight say bolts that help keep the door plug in place were missing after repair work at a Boeing factory. The FBI told passengers that they might be crime victims.

Boeing stock has plunged by about one-third since the blowout. The Federal Aviation Administration has stepped up its oversight and given Boeing until late May to produce a plan to fix problems in manufacturing 737 Max jets. Airline customers are unhappy about not getting all the new planes that they had ordered because of delivery disruptions.

The company said it paid $443 million in compensation to airlines for the grounding of Max 9 jets after the Alaska accident.

Several former and one current manager have reported various problems in manufacturing of Boeing 737 and 787 jetliners. The most recent, a quality engineer, told Congress last week that Boeing is taking manufacturing shortcuts that could eventually cause 787 Dreamliners to break apart. Boeing pushed back aggressively against his claims.

Boeing, however, has a couple things in its favor.

Along with Airbus, Boeing forms one-half of a duopoly that dominates the manufacturing of large passenger planes. Both companies have yearslong backlogs of orders from airlines eager for new, more fuel-efficient planes. And Boeing is a major defense contractor for the Pentagon and governments around the world.

Richard Aboulafia, a longtime industry analyst and consultant at AeroDynamic Advisory, said despite all the setbacks Boeing still has a powerful mix of products in high demand, technology and people.

“Even if they are No. 2 and have major issues, they are still in a very strong market and an industry that has very high barriers to entry,” he said.

And despite massive losses — about $24 billion in the last five years — the company is not at risk of failing, Aboulafia said.

“This isn’t General Motors in 2008 or Lockheed in 1971,” Aboulafia said, referring to two iconic corporations that needed massive government bailouts or loan guarantees to survive.

All of those factors help explain why 20 analysts in a FactSet survey rate Boeing shares as “Buy” or “Overweight” and only two have “Sell” ratings. (Five have “Hold” ratings.)

Boeing said the first-quarter loss, excluding special items came to $1.13 per share, which was better than the loss of $1.63 per share that analysts had forecast, according to a FactSet survey.

Revenue fell 7.5%, to $16.57 billion.

Moody’s downgraded Boeing’s unsecured debt one notch to Baa3, the lowest investment-grade rating, citing the weak performance of the commercial-airplanes business.

Boeing Co. shares closed down 3%. They have dropped 34% since the Alaska blowout.

Richard D. Wolff Interview: The End Of Capitalism Near? New Stimulus Package. Oil Prices Below 0.

Apr 22, 2020

act.tv

9.26K subscribers

Follow on Twitch: https://www.twitch.tv/actdottv Julianna welcomes Marxian Economist Professor Richard D. Wolff to the show again, to discuss how Congress and the Trump administration came to another deal yesterday to boost the economy, and how the price of oil unprecedentedly dipped below 0 yesterday. But the real discussion is what does this all mean... and are we in for long lasting ramifications that might finally topple capitalism? Wolff is an American Marxian economist, known for his work on economic methodology and class analysis. He is Professor Emeritus of Economics at the University of Massachusetts Amherst, and currently a Visiting Professor in the Graduate Program in International Affairs of the New School University in New York. Wolff has also taught economics at Yale University, City University of New York, University of Utah, University of Paris I (Sorbonne), and The Brecht Forum in New York City. For info on Richard Wolff go to: https://www.rdwolff.com/ And make sure to follow him on Twitter at: https://twitter.com/profwolff For more Julianna, follow her on Twitter at https://twitter.com/juliannaforlano and @juliannaforlano on Instagram and Facebook! ——— act.tv is a progressive media company specializing in next generation live streaming and digital strategy. Our YouTube channel focuses on animated explainers, livestreams from protests around the country, and original political commentary. Main site: http://act.tv Facebook: http://facebook.com/actdottv Twitter: http://www.twitter.com/actdottv Instagram: http://www.instagram.com/actdottv YouTube: https://www.youtube.com/actdottv

Economic Update: Virus Triggers Capitalist Crash

Apr 20, 2020

Democracy At Work

[S10 E16] Virus Triggers Capitalist Crash **We make it a point to provide the show free of ads. Please consider supporting our work. Become an EU patron on Patreon: https://www.patreon.com/economicupdate Today’s episode features an analysis (part 1) of how, why capitalism - especially in US - failed to prepare for or cope with a virus thereby enabling it to trigger another crash of capitalism (third this century: dot.com in 2000, sub-prime mortgage in 2008). In part 2, Prof. Wolff provides an analysis of how to respond to crash better than the US govt by emphasizing re-employment in millions of new jobs rather than unemployment, emphasizing worker-coops, etc. Read the full transcript: https://www.democracyatwork.info/eu_v... ____________________________________________________________________ Prof. Wolff's latest book "Understanding Socialism" http://www.lulu.com/spotlight/democra... Want to help us translate and transcribe our videos? Learn about joining our translation team: http://bit.ly/2J2uIHH Jump right in: http://bit.ly/2J3bEZR __________________________________________________________________________________________ Follow us ONLINE: Patreon: https://www.patreon.com/economicupdate Websites: http://www.democracyatwork.info/econo... http://www.rdwolff.com Facebook: http://www.facebook.com/EconomicUpdate http://www.facebook.com/RichardDWolff http://www.facebook.com/DemocracyatWrk Twitter: http://twitter.com/profwolff http://twitter.com/democracyatwrk Instagram: http://instagram.com/democracyatwrk Subscribe to our podcast: http://economicupdate.libsyn.com Shop our Store: http://bit.ly/2JkxIfy