FAA proposes new fines against American Airlines

News that federal airline regulators had proposed a new round of fines against American Airlines for maintenance violations raises troubling questions about the safety of air travel in an era of employee and service cutbacks. Friday's announcement by the Federal Aviation Administration that it wanted to impose $787,500 in fines against the airline for three violations, of which two involved ignoring agency directives, according to Cable News Network (CNN). The airline said it was committed to safety and would discuss the proposed fines with the FAA, apparently with the goal of getting them reduced or eliminated. "American Airlines is very proud of our safety record and our employees' commitment to safety every day," the company said in a prepared statement. "Safety is fundamental to the American Airlines culture and to our success." But the airline's protestations do not explain why it failed to adequately inspect rudders on four Boeing 757s that flew in 2008 after the FAA ordered the inspections, why it allowed one of its planes to fly passengers 10 times despite knowledge of a malfunctioning computer and why is allowed an MD-82 to fly twice even though its may not have gone through proper safety checks. American Airlines said it stood by its FAA-certificated mechanics, which it said "have met and passed all FAA experience requirements, written tests, and practical examinations." But rhetoric does not take the place of action and, if airline cutbacks are starting to affect maintenance the way they have already affected service, government regulators are going to have to get more serious about what the companies are allowed to do. Then again, maybe they are. American is the fourth major airline to face fines in the past year for failing to follow FAA repair orders. The FAA proposed fines of $5.4 million against US Airways and $3.8 million against United Airlines for maintenance violations, and Southwest Airlines paid $7.5 million in March to settle another agency safety complaint, CNN said.

Credibility deficit could doom Bernanke renomination

It might be funny, if the economic crisis wasn't so painful to so many, to hear U.S. Federal Reserve chairman Ben Bernanke complain about efforts in Congress to overhaul the government's financial regulatory system. Bernanke was sharply critical of a Senate proposal to transfer much of the Fed's authority to regulate banks to a new consumer protection agency, according to the New York Times. Bernanke wrote an opinion column on the Washington Post Web site warning Congress and taxpayers unhappy about the nearly trillion-dollar bailout of the financial sector to leave the Federal Reserve system alone. "Now more than ever, America needs a strong, nonpolitical and independent central bank with the tools to promote financial stability and to help steer our economy to recovery without inflation," Bernanke wrote. But Bernanke, appointed by former U.S. President George W. Bush in 2006 and nominated by U.S. President Barack Obama to a new 14-year term beginning next year, has a lot of explaining to do. Particularly, he needs to explain why the Federal Reserve and executive branch regulators were seemingly asleep at the controls when the financial system tanked. It was fairly obvious even to lay people that the overheated housing market, where financial institutions were allowed to make thousands of bad home loans and then sell those bad loans to other institutions as securities to back even more bad loans, was headed for a crash. So, why didn't regulators -- and Bernanke, the lead expert -- stop such practices before it was too late?

Madoff conviction might only be the beginning

If the Western economic system is ever to regain respect from the everyday people it was supposed to benefit, today's conviction of Wall Street financier Bernard Madoff is only the first in a long line of similar cases -- most still to be filed. The former Nasdaq chairman pleaded guilty on Thursday to running a $65 billion investment fraud thought to be the largest in Wall Street history, according to the Reuters international news service. The 70-year-old is expected to be sentenced to prison for the rest of his life. At a federal court hearing in Manhattan, Madoff admitted to setting up a worldwide Ponzi scheme from the beginning, but said he expected to be able to get himself and his clients out of it quickly, Reuters said. "I am painfully aware that I have deeply hurt many, many people," he told U.S. Judge Denny Chin in his first public acknowledgment of the fraud. "When I began my Ponzi scheme I believed it would end shortly and I would be able to extricate myself and my clients from the scheme." Madoff, who read from a prepared statement, said he was unable to shut down the scheme, which used money from new investors to pay earlier investors for 20 years. "As the years went by, I realized that my arrest and this day would inevitably come," Madoff said. The scandal has increased scrutiny of Wall Street and government regulators who were supposed to be monitoring investments and preventing wrongdoing. The scam was first brought to the attention of the U.S. Securities and Exchange Commission in 1999, Reuters said. Investors -- some of whom attended today's court hearing, included hedge funds, banks, Jewish charities, the wealthy, and small individual investors in North and South America and Europe. Madoff could get a sentence as long as 150 years for the 11 charges against him, which include securities fraud, money laundering and perjury, Reuters said. Sentencing is scheduled for June 16.