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Thursday, Jan 17, 2013 10:45 PM UTC

Business Highlights

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Boeing: 787 production continues as planned

Boeing said 787s will keep rolling off the assembly line while it works to get the planes that were grounded by regulators flying again.

Boeing’s newest, flashiest jet was grounded worldwide on Thursday after one plane suffered a battery fire and another had an emergency landing because pilots noticed a burning smell. The two incidents prompted airlines and regulators around the world to ground the planes until a fix for the battery problem is found that satisfies the U.S. Federal Aviation Administration.

It’s not clear how long the investigation — or the fix — will take, but it won’t be cheap for Boeing. Meanwhile, airlines that had sought the prestige of flying the world’s most sophisticated plane are instead stuck with one they can’t use.

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Lithium batteries central to Boeing’s 787 woes

WASHINGTON (AP) — Lithium batteries that can leak corrosive fluid and start fires have emerged as the chief safety concern involving Boeing’s 787 Dreamliner, a problem that apparently is far more serious than government or company officials acknowledged less than a week ago.

The Federal Aviation Administration late Wednesday grounded Boeing’s newest and most technologically advanced jetliner until the risk of battery fires is resolved. That order applies only to the six Dreamliners operated by United Airlines, the lone U.S. carrier with 787s. Other airlines and civil aviation authorities in other countries quickly followed suit.

Japan’s two largest air carriers voluntarily grounded their 787s on Wednesday, ahead of the FAA order, following an emergency landing by a 787 in Japan. On Thursday the European Aviation Safety Agency ordered all European carriers to ground the jetliner. The Indian government ordered Air India to ground its six Boeing 787s, and Ethiopian Airlines grounded its four 787s “for precautionary inspection.”

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Taxpayers will ease banks’ costs in mortgage deal

WASHINGTON (AP) — Consumer advocates have complained that U.S. mortgage lenders are getting off easy in a deal to settle charges that they wrongfully foreclosed on many homeowners.

Now it turns out the deal is even sweeter for the lenders than it appears: Taxpayers will subsidize them for the money they’re ponying up.

The Internal Revenue Service regards the lenders’ compensation to homeowners as a cost incurred in the course of doing business. Result: It’s fully tax-deductible.

Critics argue that big banks that were bailed out by taxpayers during the financial crisis are again being favored over the victims of mortgage abuses.

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Poll: Most see damage if US debt limit not raised

WASHINGTON (AP) — Most Americans think jarring economic problems will erupt if lawmakers fail to increase the government’s borrowing limit. Yet they’re torn over how or even whether to raise it, leaning toward Republican demands that any boost be accompanied by spending cuts.

According to an Associated Press-GfK poll, 53 percent say that if the debt limit is not extended and the U.S. defaults, the country will face a major economic crisis. An additional 27 percent say such a crisis would be somewhat likely, while just 17 percent largely dismiss the prospects of such damage.

Separately Republican officials said that GOP lawmakers may seek a short-term extension of the debt limit, thus avoiding a default as early as next month by the U.S. Treasury while they try to negotiate spending cuts with President Barack Obama over the next few months.

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US home construction in 2012 highest in 4 years

WASHINGTON (AP) — U.S. builders started work on homes in December at the fastest pace in 4 ½ years and finished 2012 as their best year for residential construction since the early stages of the housing crisis.

The Commerce Department said Thursday that builders broke ground on houses and apartments last month at a seasonally adjusted annual rate of 954,000. That’s 12.1 percent higher than November’s annual rate. And it is nearly double the recession low reached in April 2009.

Construction increased last month for both single-family homes and apartments. And the pace in which builders requested permits to start more homes ticked up to a 4 ½ year high.

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Subway ‘crisis’: Is footlong sub really 11 inches?

NEW YORK (AP) — What’s in an inch? Apparently, enough missing meat, cheese and tomatoes to cause an uproar.

Subway, the world’s largest fast food chain with 38,000 locations, is facing widespread criticism after a photo was posted on the company’s Facebook page of one of its footlong sandwiches next to a tape measure that shows the sub is just 11 inches long.

More than 100,000 people have “liked” or commented on the photo, which had the caption “Subway pls respond.” Lookalike pictures popped up elsewhere on Facebook. And The New York Post conducted its own investigation that found that four out of seven footlong sandwiches that it measured were shy of the 12 inches that makes a foot.

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US jobless aid applications fall to 5-year low

WASHINGTON (AP) — The number of Americans seeking unemployment aid plummeted to a five-year low last week, a hopeful sign the job market may be improving. But much of the decline reflects seasonal volatility in the data.

Weekly unemployment benefit applications fell 37,000 to a seasonally adjusted 335,000, the Labor Department said Thursday. That’s the lowest level since January 2008, just after the recession began.

The four-week average, a less volatile measure, fell to 359,250.

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US rate on 30-year mortgage dips to 3.38 percent

WASHINGTON (AP) — The average U.S. rate on the 30-year fixed mortgage inched closer to its record low this week, helping to keep home buying more affordable.

Mortgage buyer Freddie Mac says the rate on the 30-year loan dipped to 3.38 percent. That’s down from 3.40 percent last week. It hit 3.31 percent in November, the lowest on records dating to 1971.

The average on the 15-year fixed mortgage was unchanged at 2.66 percent. The record low is 2.63 percent.

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Lessons learned, BofA makes a new mortgage push

NEW YORK (AP) — Bank of America wants a bigger slice of the mortgage market. This time, the bank is being more careful about how to get it.

On Thursday the bank sketched out plans for regaining some of the ground it lost in home lending. That’s a change from the strategy of the last few years, when it concentrated on shedding parts of its mortgage business.

Under the new approach the bank is targeting people who are already customers. It also wants to focus on making loans directly to borrowers, rather than buying mortgages from other lenders.

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Legal expenses drag down Citigroup 4Q earnings

Citigroup’s fourth quarter earnings fell short of Wall Street’s expectations as the bank’s legal expenses rose and it released less money from its loan-loss reserves.

The bank, based in New York, said a big chunk of the legal expenses came from a settlement reached last week over illegal foreclosure practices in the aftermath of the housing bust.

It was Citigroup’s first quarter under the leadership of CEO Michael Corbat, who took the helm after former CEO Vikram Pandit resigned abruptly in October.

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By The Associated Press(equals)

The Dow Jones industrial average rose to 84.79 points higher at 13,596.02. The Nasdaq composite climbed 18.46 points to 3,136. The S&P 500 gained 8.31 points to close at 1,480.94.

Benchmark oil gained $1.25 to finish at $95.49 a barrel. Brent crude, used to price international varieties of oil, rose $1.42 to end at $111.10 per barrel on the ICE Futures exchange in London.

Wholesale gasoline rose 5 cents to finish at $2.77 a gallon. Natural gas rose 6 cents to end at $3.49 per 1,000 cubic feet. Heating oil added 2 cents to finish at $3.02 a gallon.

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