%1

In what will likely prove to be a warm-up to a potentially more raucous hearing in the House of Representatives set for today, a panel of six Wall Street chief executive officers took heat yesterday from the Senate Banking Committee, Bloomberg News reported. As Democrats tried to extract pledges to help struggling Americans and the environment, lawmakers from the other side of the aisle warned executives not to withdraw support for industries such as fossil fuels and firearms. One of the tensest exchanges was between Massachusetts Democratic Senator Warren and JPMorgan CEO Jamie Dimon, who’ve clashed in the past. Sen. Warren blasted banks for not automatically eliminating overdraft fees during the pandemic. The two spoke over each other at times, as she repeatedly asked Dimon how much JPMorgan collected, and he said the fees were waived upon request for stressed customers. Banks thrived through the pandemic, with the industry generating a record $76.8 billion in profits during the first quarter, a Federal Deposit Insurance Corp. report released during the hearing showed. Democrats wanted to know why more of that money isn’t going to middle class and low-income families. They hammered CEOs on their own pay and questioned their decisions to buy back company stock rather than lend more.

Airbus SE laid out a long-term plan to return aircraft production to pre-pandemic levels, putting its suppliers and customers on notice that it is betting air travel, and jet demand, will bounce back quicker than others expect, the Wall Street Journal reported. Airbus said that it plans to lift production of its bestselling A320 narrow-body to 64 a month by the second quarter of 2023—topping its 2019 average monthly output of 60. It set out a longer-term ambition of reaching 70 a month at the beginning of 2024. That could rise to 75 in 2025, the company said. At the start of the crisis, Airbus cut rates across its programs by roughly 40% and reduced its A320 output to 40 a month. The new rate plan for the A320neo is “markedly higher” than previous expectations, according to Sandy Morris, an aerospace analyst at Jefferies in London. Jefferies had forecast an average production rate of around 52 a month in 2023 and 57 a month in 2024. Airbus shares were up almost 6% in midday European trading. Industry executives have repeatedly said that they expect travel demand to stay below pre-COVID levels for years. While Airbus has penciled in two full years before its factories are back where they were before the crisis, it is essentially telling its globe-spanning supply chain that the plane maker is sticking to what has been for months a more optimistic forecast for air travel recovery than many in the industry. Amid severe supply-chain constraints in many other industries—jolted as economies and demand snap back in many places—Airbus Chief Executive Guillaume Faury told his suppliers Thursday he expects them to make the investment now needed to deliver parts and services for a significantly ramped-up production schedule down the line.

Western Community Energy, a local government agency that sells electricity to six small towns in Southern California, has filed for bankruptcy, blaming its financial woes in part on an inability to shut off service to customers who quit paying during the pandemic, Bloomberg News reported. Western Community owed creditors as much as $100 million, but had less than $50 million of available assets, according to court papers filed on Monday in the U.S. Bankruptcy Court in Riverside, Calif.. The agency buys power wholesale and resells it to residents of Eastvale, Hemet, Jurupa Valley, Norco, Perris and Wildomar, which are cities in Riverside County on the edge of the desert. “The ongoing impacts of COVID-19 severely limited the organization’s options moving forward and forced today’s action,” said Todd Rigby, chair of Western Community and a city council member for Eastvale, a former dairy farm turned suburb. The agency said that it has been unable to shut off customers for not paying their bills under an emergency order issued by California Gov. Gavin Newsom. Late bills have averaged ten times higher than before the pandemic and have cost the agency millions of dollars, Western Community said in an emailed statement.

Authentic Brands Group LLC, the owner of brands such as Brooks Brothers, Juicy Couture and Forever 21, is exploring going public as soon as this year, Bloomberg News reported. The New York-based company has held discussions with potential advisers about an initial public offering. The company could seek a valuation of about $10 billion when it goes public. Its plans aren’t final, and the size and valuation of the deal could still change. The company was valued at more than $4 billion, including debt, in an $875 million investment by BlackRock Inc. in 2019. Founded and run by Jamie Salter, Authentic Brands acquired more than 30 brands over the years, including bankrupt Barneys New York. Salter started Authentic in 2010 with $250 million, scooping up niche and celebrity brands, including licenses for Elvis Presley and Marilyn Monroe. By the time the pandemic hit, the company had almost $15 billion in revenue and owned well-known names including Sports Illustrated and Nine West. In an interview in August, Salter said he won’t look at deals under $1 billion these days. For years, Salter eschewed operating retailers, opting to buy only the intellectual property of bankrupt merchants. That changed in 2016, when Salter teamed up with the two largest U.S. mall landlords to buy bankrupt fashion retailer Aeropostale. With a raft of retail bankruptcies, that led to other transactions, including the purchase of bankrupt Forever 21 last year.

Fashion-brands owner the Collected Group won court approval for a bankruptcy exit plan that will keep its largest shareholder, KKR & Co., in charge after a deal with unsecured creditors, WSJ Pro Bankruptcy reported. Chino, Calif.-based Collected Group is the design and distribution force behind the Joie, Current/Elliott and Equipment apparel labels, which are sold through department stores and, before the pandemic, in some of its own retail stores and online. Online sales once accounted for roughly 19% of the group’s sales, but in 2020, with shoppers in quarantine, some 50% of Collected Group’s sales were sold online, court papers say. Private-equity giant KKR, which is Collected Group’s largest equity stakeholder and secured lender, will swap secured debt for equity in a reorganization that will leave the company with $155 million less in secured debt. Junior creditors will get a chance to share between $1 million to $2 million under the plan confirmed yesterday by Judge Laurie Selber Silverstein. Junior creditors also won other concessions as part of a settlement that enlisted their support for a restructuring that will keep Collected Group in operation. 

California Attorney General Rob Bonta today announced that the nine defendants involved in an advance-fee mortgage-relief scam in Southern California have pleaded guilty to multiple counts including theft from an elder, identity theft and grand theft, according to a press release. The scheme, which the defendants claimed would prevent the foreclosure of properties, impacted multiple victims, resulted in a loss of approximately $6 million, and affected over 200 properties; including properties with loans insured by the Federal Housing Administration, as well as loan servicers Freddie Mac and Fannie Mae. The final defendant pleaded guilty today. On May 24, 2021, the lead defendant in the case was sentenced to seven years and four months in state prison after pleading guilty in Los Angeles County Superior Court to 16 felony counts. In addition to the lead defendant, four defendants have been sentenced, and four will be sentenced at a later date.

Wall Street bank chiefs will tout the role their institutions have played in getting the pandemic-hit U.S. economy back on track when they appear before Congress this week, but they are likely to face tough questions on hot-button social and economic issues, Reuters reported. The Senate Banking and House of Representatives Financial Services committees will hear from the chief executives of JPMorgan Chase & Co., Bank of America Corp., Citigroup Inc., Wells Fargo & Co., Goldman Sachs Group and Morgan Stanley tomorrow and Thursday, respectively. Tommorow's hearing is the first time the CEOs of the nation's largest banks have testified before the Senate Banking Committee since the aftermath of the 2008 financial crisis. Democratic gains in the 2020 election handed control of that panel to Sen. Sherrod Brown, a fierce Wall Street critic. While the hearings are unlikely to result in policy proposals, they are politically risky for the CEOs as scrutiny of their industry grows in Washington, D.C., under Democratic leadership. They are likely to be grilled on a raft of issues including economic inequality, fair lending, diversity, racial justice, climate change, cryptocurrencies and tax policies. The banking industry's image has improved in Washington since the financial crisis a decade ago, and big banks believe they have a good story to tell after getting $69 billion of COVID-19 aid into the hands of 850,000 struggling small businesses.