KeNo's Housing and Economic Portal: Tuesday August 3 Housing and Economic stories

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Seven More U.S. Banks Closed, Pushing Year’s Failures Past 100 - (www.bloomberg.com) Seven banks were seized in seven U.S. states, marking the second year in a row in which at least 100 lenders have collapsed. Banks with total deposits of about $2 billion were shut down yesterday, according to statements on the Federal Deposit Insurance Corp. website. The failures cost the FDIC’s deposit- insurance fund $431 million. The U.S. bank-failure count this year rose to 103. Iberiabank Corp., based in Lafayette, Louisiana, acquired Lantana, Florida-based Sterling Bank in its fifth FDIC-assisted transaction. Iberiabank picks up six branches and about $372 million in deposits. “This acquisition is an excellent fit for our company, providing a nice complement to our current franchise in Broward and Palm Beach counties,” Iberiabank Chief Executive Officer Daryl G. Byrd said in a statement. “We anticipate a smooth transition.”

Goldman threatened with audit by US panel - (www.ft.com) Goldman Sachs is facing a threat by the Financial Crisis Inquiry Commission to bring in outside accountants to comb through the bank’s systems for data on its derivatives business, the panel’s chairman has said. The commission will not back down from demands for information Goldman’s executives have maintained they do not track, Phil Angelides told the Financial Times. “We have a deep level of questioning about whether we’re getting the straight scoop here and whether Goldman is working with us on information that they surely have,” Mr Angelides, chairman of the US Congress-appointed commission. His comments mark the latest episode in the dispute between Goldman and the commission, which has scolded the bank for its “abysmal” response to the inquiry. The frustration of FCIC members was evident several weeks ago when two of Goldman’s executives, Gary Cohn, president, and David Viniar, chief financial officer, told the panel the bank’s accounting systems did not break out trading revenue generated strictly from derivatives.

Trader’s Cocoa Binge Wraps Up Chocolate Market - (www.nytimes.com) To some, he is a real-life Willy Wonka. To others, he is a Bond-style villain bent on taking over the world’s supply of chocolate. In a stroke, a hedge fund manager here named Anthony Ward has all but cornered the market in cocoa. By one estimate, he has bought enough to make more than five billion chocolate bars. Chocolate lovers here are crying into their Cadbury wrappers — and rival traders are crying foul, saying Mr. Ward is stockpiling cocoa in a bid to drive up already high prices so he can sell later at a big profit. His activities have helped drive cocoa prices on the London market to a 30-year high. Mr. Ward, 50, is not some rabid chocoholic, former employees say. He simply has a head for cocoa. And, through his private investment firm, Armajaro, he now controls a cache equal to 7 percent of annual cocoa production worldwide, a big enough chunk to sway prices.

Apollo exploits loophole to create new bank - (www.ft.com) Private equity group Apollo Management will establish a new bank under an obscure provision buried in the US financial regulations signed into law last week. Apollo is to take advantage of a change that allows banks to operate in multiple US states without a national charter, lawyers say. The company, which has about $55bn under management, has hired a team from Countrywide Financial to run the bank, and is awaiting regulatory approval. Apollo plans to get round ownership restrictions which can force a private equity group to be considered a bank holding company by asking its investors to put money alongside it in the new bank, to be called Ares. The bank will have a separate board and operate independently of Apollo. However, it is not currently clear how ambitious Apollo’s plans for the bank will prove, people familiar with the matter say.

An A.I.G. Failure Would Have Cost Goldman Sachs, Documents Show - (www.nytimes.com) Since the United States government stepped in to rescue the American International Group in the fall of 2008, Goldman Sachs has maintained that it would have faced few if any losses had the insurer failed. Though it was the insurer’s biggest trading partner, Goldman contended that it had bought credit insurance from financial institutions that would have protected it, but it declined to identify the institutions. A Congressional document released late Friday lists those institutions and shows that Goldman was exposed to losses in an A.I.G. default because some of the investment bank’s trading partners, such as Citibank and Lehman Brothers, were financially unstable and might have been unable to make good on large claims from Goldman. The document details every institution that had sold credit insurance on A.I.G. to Goldman as of Sept. 15, 2008, the day before the New York Fed arranged the insurer’s rescue with an $85 billion backstop. The document, supplied by Goldman Sachs, was released by Charles E. Grassley of Iowa, the ranking Republican on the Senate Finance Committee.