Business Briefs: Saturday, Sept. 6, 2008

Published: September 6, 2008

WASHINGTON — Bank of America Corp. said Friday it is ready to settle federal and state investigations into sales of risky auction-rate securities, joining eight other big investment banks that have agreed to buy back a total of more than $50 billion of the securities.

Charlotte, N.C.-based Bank of America, the second-largest U.S. bank by assets, said it has been in negotiations for nearly a month with the Securities and Exchange Commission and authorities in New York and Massachusetts on a possible settlement to buy back the bond-like securities from investors.

HOUSTON — The number of rigs actively exploring for oil and natural gas in the United States fell by 18 this week to 2,013.

Of the rigs running nationwide, 1,586 were exploring for natural gas and 416 for oil, Houston-based Baker Hughes Inc. reported Friday. Eleven were listed as miscellaneous.

A year ago, the rig count stood at 1,814.

Of the major oil- and gas-producing states, Oklahoma gained four rigs, Colorado added three and Alaska, North Dakota and Wyoming added one each. Texas lost 20 rigs, New Mexico lost five and California lost one. Arkansas and Louisiana were unchanged.

Baker Hughes has tracked rig counts since 1944. The tally peaked at 4,530 in 1981, during the height of the oil boom. The industry posted several record lows in 1999, bottoming out at 488.

WASHINGTON — A record 9 percent of American homeowners with a mortgage were either behind on their payments or in foreclosure at the end of June, as damage from the housing crisis continues to mount, the Mortgage Bankers Association said Friday.

But the source of trouble in the mortgage market has shifted from subprime loans made to borrowers with poor credit to homeowners who had solid credit but took out exotic loans with ballooning monthly payments.

The problem is also concentrated in a handful of states, the worst being California and Florida.

New foreclosures were concentrated in eight states: Nevada, Florida, California, Arizona, Michigan, Rhode Island, Indiana and Ohio.

But for the first time since the mortgage crisis started, delinquencies on subprime adjustable-rate loans declined.

NEW HAVEN, Conn. — Federal prosecutors in Connecticut say a scheme to manipulate the financial statements of the world's largest insurance company, American International Group Inc., resulted in a loss of more than $1 billion to investors.

Four former executives of General Re Corp. and a former executive of American International Group were convicted in February of conspiracy, securities fraud, mail fraud and making false statements to the Securities and Exchange Commission. They await sentencing.

One of the defendants, Christopher Garand, said in court papers filed Sept. 2 that the government contends the loss from the scheme exceeded $1 billion.

CERNOBBIO, Italy — Oil prices are down, the dollar is up, and U.S. growth and exports have perked up a little. So is the global financial crisis winding down anytime soon? Top economists and business leaders meeting Friday at an Italian lakeside resort found plenty to discuss but little to agree on.

Peter Sutherland, chairman of British oil company BP PLC, predicted global economic conditions will remain difficult for some time — but will eventually recover due to growth in China and the rest of Asia.

Sutherland, who is also chairman of London-based Goldman Sachs International, said equity markets would regain strength over time, but acknowledged it was impossible to tell exactly when that would occur.

Few were willing to make predictions on the record, but in private conversations there was a clear sense of optimism that by end of 2009 the bad debt traced largely to the U.S. subprime crisis will have worked its way out of the system and that global financial markets will have stabilized.

MOSCOW — Russia's number one cell operator MTS said Friday it has signed a deal with Apple Inc. to sell the iPhone in Russia.

MTS, which becomes the last of the country's "big three” providers to announce a distribution agreement for the device, did not provide immediate details of the deal.

The announcement was made less than a week after MTS's major rivals VimpelCom and MegaFon said they have reached similar deals with Apple.

iPhones have not gone on sale officially in Russia, but are available on the "gray market” for about $1,000.

From Wire Reports

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