FDIC Friday - 2 more banks fail

California, Georgia banks are latest to be seized
By John Letzing, MarketWatch
Last update: 8:14 p.m. EST Feb. 6, 2009

SAN FRANCISCO (MarketWatch) -- Federal regulators shut down a bank in Southern California and another in the Atlanta area on Friday, bringing the number of U.S. failures this year to eight, while marking the 33rd collapse since the recession began.

McDonough, Ga.-based FirstBank Financial Services and Culver City, Calif.-based Alliance Bank were seized, according to the Federal Deposit Insurance Corp.

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Still want to keep money in the banks?

Still want to keep money in the banks?

Banks Sitting On An Inventory Time Bomb
Posted By: Diana Olick | CNBC Real Estate Reporter
cnbc.com
| 28 Jan 2009 | 04:01 PM ET

An interesting little factoid from RealtyTrac, the online foreclosure sale site that tracks all kinds of foreclosure data.

Apparently about 70 percent of foreclosures in its database have not yet been listed on the MLS. I'm wondering why? Why are the banks sitting on all these properties instead of listing them for sale?

Okay, a couple of posibilities:
# The inventory of foreclosed properties has just exploded so rapidly and in such high volumes that the banks can't process it all as fast as they would like to.
# In a lot of cases it's taking longer to process the foreclosures themselves and the homes are getting trashed. Before the bank puts the house up for sale it has to do all the repair work, and now more repair work is needed.

Now here's a possibility that is a bit more disturbing. Rick Sharga of RealtyTrac says he can't get anyone to confirm it but he can't get anyone to deny it either:

"The lenders are simply trying to defer the losses to a later date, because having to recognize the losses short term might pose severe risks to the banks in question."

What does that mean? Well, when the properties are taken back by the bank at auction, they are often taken back for the value of the mortgage on the property. The bank puts in the bid for the value of the current mortgage and essentially pays itself back what it lost on the loan, and of course gets the house for all its trouble. In good times, the bank could profit by selling that house for more than the value of the loan, but not these days. The trouble now is just the opposite. On so many of these foreclosed homes, the property is actually worth far less than the mortgage on it. So the bank is taking it back at the mortgage value and not writing it down.

"Untold numbers of these properties sitting on banks accounting ledgers where the imputed value is considerably higher than the market value," says Sharga. And unfortunately nobody knows what that market number is.

Questions? Comments? RealtyCheck@cnbc.com
© 2009 CNBC, Inc. All Rights Reserved

URL: http://www.cnbc.com/id/28898377/

Devaluation - a Global Fad...

and a recipe for Global Inflation...

Kazakhstan devalues currency amid banking crisis
By Polya Lesova, MarketWatch
Last update: 1:33 p.m. EST Feb. 4, 2009

NEW YORK (MarketWatch) -- Kazakhstan devalued its currency by about 18% Wednesday, as the mineral-rich, central Asian country struggles to contain a banking crisis and deal with the impact of tumbling oil prices.

The National Bank of Kazakhstan decided to allow the country's currency, the tenge, to fall by around 18%. The central bank set a new target rate for the tenge at 150 versus the U.S. dollar, allowing the currency to fluctuate within 3%, up or down, from that level.

The devaluation comes only days after the Kazakh government vastly expanded its role in the financial sector by nationalizing two of the four largest banks and taking 25% stakes in two other lenders. The move also follows currency devaluations in Russia, Ukraine and Belarus.

Read more.

U.S. dollar devaluation on its way

U.S. dollar devaluation on its way
Posted: February 02, 2009, 4:01 PM by Diane Francis
Greed, Canadian Politics, U.S. Politics, economy

In 1992, I was given what became my favorite hotel bill keepsake when I stayed in Mexico City and was charged one million for a brief business stay.

It wasn’t a mistake. That was one million pesos and the Mexican peso was becoming worthless. By 1993, then-President Carlos Salinas de Gortari stripped three zeros from the currency and renamed it the Nuevo (or New) Peso.

The transition from worthless to one Nuevo Peso to one U.S. dollar was done in three years from January 1, 1993 to January 1, 1996. The word "nuevo" was removed from the currency and it returned to be called "peso".

Now it is 2009 and what appears to be looming, according to one authoritative press report this weekend, is a massive pre-emptive devaluation of the U.S. dollar as Team Obama readies itself to announce the “Big Bang” – a gigantic bailout of the frozen U.S. economy involving trillions of dollars.

So far, Washington has allocated US$750 billion for banking rescues and another US$825 billion for job creation projects. But that’s nothing.

Full Story

AUDIT AFTER GOLD DEALER'S SUICIDE SUGGESTS CUSTOMERS LOST MILLIONS

This happened in 1983 - it can and will happen again - make sure you take physical possession of your precious metals!

AUDIT AFTER GOLD DEALER'S SUICIDE SUGGESTS CUSTOMERS LOST MILLIONS
By ROBERT J. COLE
October 5, 1983

Some $60 million worth of gold, silver and platinum sold to thousands of individuals and then supposedly stored in Rocky Mountain vaults may never have existed, an investigation suggested yesterday.

The possibility emerged in an audit conducted by the accounting firm of Touche Ross & Company in connection with the suicide last Wednesday of Alan David Saxon, 39-year-old chairman of Bullion Reserve of North America, a gold dealer with offices in Los Angeles, Dallas and Hong Kong.

Bullion Reserve has 30,000 to 35,000 customers. If the missing assets cannot be found, most of their investments may be lost.

Vaults Near Salt Lake City

Lawyers for the company said the audit showed that a depository, owned by Perpetual Storage Inc. of Salt Lake City and buried 200 feet in a nearby mountain range, contained only about $900,000 in bullion and coins. Another $140,000 to $150,000 worth of coins were found at Brinks Inc. of Los Angeles, another Bullion Reserve storage center.

The discovery, made over the weekend, prompted Bullion Reserve to file a bankruptcy petition Monday in Los Angeles, seeking court protection from its creditors.

Patrick Lynch, president of the Salt Lake City company, said that in the three years he had stored bullion for Mr. Saxon, the most he had ever seen in the vaults was about $3 million. He said it was standard practice for his company to register the bars by their serial numbers.

A Brinks executive in Los Angeles said he had been advised by his lawyers not to comment.

Where the millions of dollars in customers' money went is unclear.

Robert Abrams, Attorney General of New York, said his office had been flooded with calls about the company. His office has been investigating Bullion Reserve, which advertised heavily in the New York area, for several weeks, and the investigation is continuing.

There were reports from Mr. Abrams's office that Mr. Saxon, his wife and others closely identified with the gold dealer had received $41 million in loans from the company. And the auditors' report said ''millions of dollars'' in loans had been made to Mr. Saxon. But a laywer retained by the company said he had no such informa tion.Lawsuits have been filed seeking to recover $23 million in cash, jewelry and other assets from the company. The largest seeks to seize $16.4 million in assets, including three luxury cars and two condominiums owned by Mr. Saxon's wife and his estate.

One of the lawsuits named Arnold Kopelson and Michael Miller, officers of the now-defunct California Commercial Bank. Mr. Saxon had served briefly on the bank's board last year. The defendants were charged with receiving unauthorized transfers from Bullion Reserve of $1.7 million. The bank, closed by state regulators in May, is the subject of an investigation by the Federal Bureau of Investigation.

As related by Mr. Abrams in an interview, the events leading to Mr. Saxon's suicide and the subsequent bankruptcy of his company began a few weeks ago when the Attorney General heard a radio commercial for Bullion Reserve.

Parallels With Earlier Case

''What they were saying,'' Mr. Abrams said, ''was exactly analagous to International Gold Bullion Exchange in Florida.''

A New York State grand jury last summer indicted International Gold's two top executives, William and James Alderdice, on charges of securities fraud and grand larceny; investors in the now-defunct company lost between $20 million and $40 million.

The gist of the ads, Mr. Abrams said, was that customers could ''come and buy gold and silver bullion, have a safe and secure investment, capitalize on the appreciation of these precious metals and store them safely and securely in our own vaults in Utah.'' Although his office had not received any complaints, he said, he asked his staff to investigate.

By last Wednesday, a company lawyer had met in New York with Mr. Abrams' staff and had agreed to furnish within 24 hours financial data about the company and detailed records of its sales in New York.

Death Ruled a Suicide

That same morning, however, Mr. Saxon's body was discovered in the sauna of his $680,000 beach-front condominium in Venice, Calif. A rubber hose connected to a motorcyle's exhaust had been run inside the small enclosure and a tape had been found nearby. The Los Angeles coroner's office did not disclose the tape's contents but called the death a suicide.

Bullion Reserve named a prominent Beverly Hills law firm, Finley Kumble Wagner Heine Underberg Manley & Casey, to conduct its own investigation. The law firm, in turn, appointed Touche Ross to undertake the audit.

Mr. Abrams said he understood that Mr. Saxon's taped message said he was going to commit suicide because of financial reverses and his inability to cover recent losses.

News of the suicide touched off a brief drop in gold prices last week because traders reasoned that vast amounts of gold might be dumped on the market.

Offices Closed

All offices of Bullion Reserve have been closed since Thursday, but tape recordings promise customers that the office will open today. The firm's lawyers, however, said operations would not be resumed soon.

The events left many questions unanswered. For one, how could companies like Bullion Reserve operate so long without detection?

Attorney General Abrams criticized two Government agencies - the Securities and Exchange Commission and the Commodity Futures Trading Commission - for ''timidity and lack of enforcement'' of such companies.

Responding to Mr. Abrams, a commodities commission spokesman said in Washington that the commission had not received any complaints from Bullion Reserve's customers, that the firm was not registered with the agency and that it did not believe the firm was subject to its regulations.

Response by S.E.C.

An S.E.C. spokesman said that when the securities commission found a fraud within its jurisdiction, it pursued it. But, the spokesman added, ''not every fraud is a securities matter'' and states ''also have an important law enforcement role.''

But the central question is where Bullion Reserve's $60 million in assets went, and what Mr. Saxon's role was in its apparent disappearance.

Interviews with several suppliers and others with whom Mr. Saxon did business suggest that he was bright, charming, reserved and fairly prompt in paying his bills.

An official of Conti Commodities Inc. of Chicago said Mr. Saxon's account with that trading firm was handled ''in a businesslike manner.'' Johnson Matthey & Company of Toronto, a gold bullion supplier, dealt with Mr. Saxon regularly through its Los Angeles office.

Perpetual Storage said it had investigated Mr. Saxon's background before storing his gold and took his business ''because he didn't have anything in his file to show he was ever connected with a fraud.''

Neighbors of Mr. Saxon in Venice said that he drove a Maserati and a Porsche, but showed no other signs of affluence. He kept to himself, often walking a dog in the neighborhood, wearing cowboy boots.

Mr. Saxon moved to the condominium a few months ago, from one nearby that he had shared with his wife. He told acquaintances that he was separated from his wife and that they were getting a divorce.

Zimbabwe knocks 12 zeroes off inflation-hit dollar

Zimbabwe knocks 12 zeroes off inflation-hit dollar
Mon Feb 2, 2009 7:33am EST

By Nelson Banya

HARARE (Reuters) - Zimbabwe's central bank revalued its dollar again on Monday, lopping another 12 zeros off its battered currency to try to tame hyperinflation and avert total economic collapse.

The crisis has been worsened by political stalemate between President Robert Mugabe and his rival Morgan Tsvangirai, but the opposition last week agreed to join a coalition government, raising prospects the economy could be saved from further ruin.

The southern African country is battling the world's highest inflation rate, officially put at 231 million percent, and acute shortages of food and foreign exchange.

Reserve Bank of Zimbabwe Governor Gideon Gono announced the new currency moves on Monday, adding that some foreign exchange controls will be relaxed and gold producers now can sell bullion directly and not to the central bank as in the past.

"This Monetary Policy Statement unveils yet another necessary program of revaluing our local currency, through the removal of 12 zeroes, with immediate effect," Gono said in his MPC statement.

Late last month the country allowed businesses to charge in foreign currencies in a bid to tackle inflation and Gono said those businesses could pay their workers in foreign currency.

The country's stock exchange, which has not traded for two months, would also be licensed to trade in foreign currency once listed firms and the exchange provide evaluation criteria.

Gono gave no updated inflation figures but said broad money supply growth rose from 81,000 percent in January to 658 billion percent in December.

"His statement does contain some positive measures but it does not go far enough. It would appear he is trying to restore the Zimbabwean dollar, but given the choice of multiple currencies, who would want to trade in Zimbabwe dollars?" John Robertson, a leading Harare-based economist said.

Tsvangirai, who had been under heavy pressure from southern African leaders to implement a September 15 power-sharing pact with Mugabe, is now set to become prime minister.

The unity government may be a step toward saving a once prosperous country where over half of the people now need food aid and a cholera epidemic has killed 3,229 people and infected 62,909 others -- Africa's deadliest outbreak in 15 years.

Gono said production in every major economic sector had taken a plunge.

Output of gold, the country's single major foreign currency earner, plunged by 50 percent in 2008 as companies grappled with rising costs and electricity shortages.

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Gold ends at six-month high on safe-haven buying

Holdings in the largest gold ETF have leaped 8% in one month to record high

By Moming Zhou, MarketWatch

Last update: 2:32 p.m. EST Jan. 30, 2009

NEW YORK (MarketWatch) -- Gold futures rose Friday, ending the week at their highest level in six months as investors sought the safety of the metal following government data that showed the U.S. economy contracted the most in 27 years during the fourth quarter.

Rising demand for the metal has pushed holdings in the SPDR Gold Trust, the biggest exchange-traded fund backed by gold, to a new record level.

Gold for February delivery closed up $22.20, or 2.4%, at $927.30 an ounce on the Comex division of the New York Mercantile Exchange, the loftiest closing level for a front-month contract since July.

The benchmark contract has risen 3.5% this week and 4.9% this month.

"Demand remains very high internationally for ETFs, gold certificates and bullion coins and bars," said Mark O'Byrne, executive director at Gold and Silver Investments. We've seen "continuing safe haven demand for gold" due to "sharp deterioration in the global economy."

Spurring the safe-haven moves into gold, the government reported that the nation's gross domestic product contracted at a 3.8% annualized rate in the fourth quarter. That shrinkage is the largest on record since the first quarter of 1982.

Most economists expected that GDP would shrink at a 5.5% annual rate.

However, the decline would have been worse except that the government counts an unwanted buildup of goods on store shelves as growth. Excluding the inventory buildup, GDP contracted at a 5.1% pace. See Economic Report on GDP data.

In spot trading, the London afternoon gold-fixing price -- a benchmark for gold traded directly between big institutions -- stood at $919.50 an ounce Friday, up $27.25 from the previous day.

SPDR holdings

On Thursday alone, holdings in the SPDR gold fund rose 10.49 tons, or 1.3%, to reach the new high of 843.59 tons, according to latest data from the fund. SPDR gold holdings have jumped 63 tons, or 8%, in January.

The fund's gold holdings are now nearly 80 tons higher than official gold holdings in Japan, the world's seventh-largest official gold holder.

The SPDR Gold Trust .

In other economic news, U.S. employment costs rose at the slowest pace in at least 26 years in 2008, the Labor Department reported, a sign that rising unemployment has been keeping a lid on wages and benefits. See Economic Report on unemployment.

Also on the Nymex Friday, March copper rose 0.8% to $1.4685 a pound, while March silver rose 3.5% to $12.565 an ounce. March palladium gained 1.3% to $193.30 an ounce, while April platinum gained 1.7% to $991.30 an ounce.

Among gold miners, shares of Barrick Gold Corp. , the world's largest gold mining company, fell 1.8% to $37.88. Goldcorp Inc. gained 0.8% to $29.73, and South Africa's Gold Fields Ltd. lost 0.8% to $10.56.

In other equities, the Amex Gold Bugs Index , which tracks the share prices of major gold companies, rose 2.4% to 309.15.

The iShares Gold Trust ETF added 1.8% to $91.18, while the iShares Silver Trust ETF gained 1.5% to $12.44.

The Market Vectors-Gold Miners ETF rose 2% to $35.10.

Moming Zhou is a MarketWatch reporter based in New York.