Business briefs for Jan. 9, 2004

Friday, Jan. 9, 2004 | 11:15 a.m.

Banks now probed in scandal

NEW YORK -- The New York State attorney general and the Securities and Exchange Commission are investigating whether some banks financed improper mutual fund trades by hedge funds.

The financings, which involved total return swaps, are reminiscent of the sort of transactions done by bankers on behalf of the Enron Corp. to conceal debt and artificially inflate its earnings, regulators said. In both cases, the banks appear to have been "knowingly aiding and abetting a securities violation," said Stephen Cutler, director of enforcement at the SEC.

Among the banks whose transactions are being studied are Bank of America and the Canadian Imperial Bank of Commerce, people briefed on the investigation told the New York Times.

Carrier looks at asset sales

ARLINGTON, Va. -- US Airways has hired Morgan Stanley to explore asset sales so it won't default on a federally guaranteed loan, Chairman David Bronner said Thursday.

This year, US Airways must make debt payments and hit specific financial targets tied to a $900 million federal loan guarantee that helped it emerge from Chapter 11 bankruptcy in March. But the airline is still unable to compete profitably against lower-cost discount carriers like Southwest that are invading more of its routes.

"We will not default on that loan, and we'll do whatever is necessary to keep stockholder value," Bronner said in an interview.

Bronner confirmed a report in Thursday's New York Times that the airline hired Morgan Stanley to seek possible buyers for its shuttle serving Boston, New York and Washington; assets associated with hubs in Pittsburgh, Philadelphia and Charlotte; and its regional airline, US Airways Express.