Friday morning headlines

Stocks fluctuate: Mixed earnings news and continued concerns about Greece set the tone in early trading. Dow is up about 16 points.

Countrywide deal? A $600 million settlement in a federal shareholder class action has been struck, the Daily Journal reports. Former CEO Angelo Mozilo remains the target an SEC civil fraud suit, and a criminal grand jury is investigating the lender's disclosures to shareholders.

Both the SEC suit and the shareholder class action allege that beginning around 2004, Countrywide - once the largest mortgage lender in the nation - furtively shifted its loan portfolio away from traditional fixed-rate mortgages toward riskier loans that required less documentation. Eventually the housing market declined, and analysts speculated in 2008 that defaults in its loan portfolio could drag the company into bankruptcy. Ultimately, Bank of America purchased Countrywide in 2008 in an acquisition valued at $4 billion.

The problem with pensions: Consultant Girard Miller told the Little Hoover Commission that state and local governments have $325 billion in unfunded pension liabilities. That amounts to $22,000 for every working adult in the Golden State. From the LAT:

If the problem is not addressed, the burden for funding government employee pensions would fall to the state's taxpayers. Many elected officials are advocating a reduction in benefits mostly for new hires to stave off tax hikes -- setting up a collision course with the state's powerful public employee unions.

What about derivatives reform?: The shady practice of Wall Street betting on financial products might be forced to get played in the open under the financial reform package being considered. From NYT columnist Floyd Norris:

Customers will have to put up money to take positions, and provide more money if the market moves against them. The prices being paid will be clear for all to see. If that happens, it will damage Wall Street profit margins. Some corporate customers have been persuaded that such transparency will hurt them, but that is not likely to be true. Their apparent costs may rise as they are forced to put up cash, which they may have to borrow. But that is a cost they would eventually pay anyway, and they will be compensated by better pricing from a transparent and competitive market.

Mayor's budget blasted: City Attorney Carmen Trutanich calls it a "fundamental failure of management." His office is being asked to take an 18 percent cut, far more than any other city department. The mayor's spokesman says that Trutanich doesn't understand the budget proposal. (Daily News)

MTA endorses "30-10" idea: That's the mayor's plan to accelerate the construction of major transit projects, including the Westside subway extension, from 30 years to 10. Great line from Villaraigosa, who sits on the MTA board: "This has never been done and I'm not sure we can say with a straight face that it will be done." (LAT)

Banks in the clear: California Treasurer Bill Lockyer hasn't found any irregularities in the way Wall Street houses trade in credit default swaps on the state's municipal bonds. From the LAT:

Credit default swap contracts are a way for investors and traders to buy insurance against a default by a bond issuer. The cost of that insurance on California's general obligation bonds had surged early this year, which indicated one of two things, or both: Some owners of the state's debt were growing more fearful of a default, or speculators were pushing up swap insurance prices and thereby fomenting worries about the state -- which, in turn, could make the insurance more valuable.

LAX backlog clearing: The airport's regular schedule of 17 daily flights to the U.K and Europe should resume today. But there are still about 3,000 passengers who need to be rebooked from cancelled flights. (KPCC)

Boeing fined 500K: The ruling by regional water quality regulators covers stormwater violations at the Santa Susana Field Laboratory in eastern Ventura County. Company was also ordered to pay $75,000 for days when contaminants exceeded permitted limits. (AP)