captioning sponsored by wp >> paul: youbank deposits are safe. that's theord from sheila ir. but the he of the fdic says the fund protecting those deposits has droppedharply, hit with almost $4 billion in losses. susie: up and down wall street, folks are wonding why so many bankare failing when e economy is improving. coming up, a look at the disconnect betweenank health and threcovery. >> paul: call it theenmosche effect. i.g. shares surge 27% on hop new ceo robert benmosc can turn around the troubled insurer. >>usie: then, we talk with robert tl, c.e.o. of toll brothers. e luxury home builder's loss widens in its late quarter.

but says orders are starting to pick up. >> paul: i'maul kangas. >> sie: and i'm susie gharib. this is "nightly busess report" for ursday, august 27. "nightly business report" is made possib by:

this program was me possible byontributions to your pbs station fr viewers like you. thank you. 7//& >> susie: good evening eveone. there are now more tn 400 american bks on the government's so-call "problem list". that's t biggest number in 15 years. but don't worry, your money still safe. the federal deposit inrance corporatiosaid today the fund that insures your money ca still cover any sses. that fund is sinking: down 20%. as darren rsh reports many alysts areoncerned taxpayers could evenally be called ofor yet another ilout. >> reporr: even though its deposit insurance funds dwindling,hairman sheila bair says the f.d.i.c. can mana its way through the fincial crisis. >> a decline in the nd balance es not diminish our ability protect insured positors.

the f.d.i.c. was created specifically for timesuch as these. ouresources are strong, your insured deposits areafe. >> reporr: of the $42 billion in the deposit insuranceund, the f.d.i.c. expects $32illion will be used f losses regulato already see coming. that leaves little more than $10 billion to cover the unexpected. and th 416 banks on the f.d.i.c.'s problem list hoing assets of $300illion, there is enty of room for unexpected. >> there going to need more money. >> reporter: doug elliot studies the finaial crisis for thbrookings institution. if needed, the fdic can borr om the treasury to shore up it's depos insurance fund, but elliott thin taxpayers won't ve to any losses. >> my best gss is that taxpays won't have to put up anything. that the pmiums they can charge to the nks over the ne, say ten years, can cover this crisis. but we don't know. >> reporter: jam chessen, chief onomist, for the

american bkers association says bks are doing their part to help the fdic. they are alreadyaying higher premiums for deposit insurce and the industry setside $67 billioin the second quarter to cover their growing lo losses. >> it's a maer of trying to be prudent having income a litt ss because they want to have the resources set asidto handle the loan loes they expect isuch a deep recession. >> reporter: but tt may not be enou. the f.d.i.c. says its likely to hikdeposit inrance premiums obanks yet again. while bank profits areising, georgetownusiness professor phillip swagel says chargi banks shore up the f.d.i.c. comes with a price. every time you do that, of course, you're draing the lifeblooout of the banking system. you're taking the capital e banks need to make loansnd you are using it treplenish the fd fund. now that'sppropriate. this fd is there to backstop the banks and banks shou be pang for it, but there's a balance. >> reporter:hairman sheila

bair says she s no plans at this time to tap the.d.i.c.'s half trillion dollar credit line at the u.s. treasury. but bair alsadded she never ys never. daen gersh, "nightly business report", washingto >> many of the econoc reports we're eing show signs of improvement. so if the econy is doing better, whare the banks still in trouble? as stt gurvey explains, it's a matter of timing. >> reporter: it willake months before the gen shoots appearing in the economyhow up at your nehborhood bank. that's because the job ls comes first, tn the missed mortge payments, then the foreclosures. d with home foreclosures com trouble for retaers and others dendent on consumer spending. morningstar banknalyst jamie pete, says that's why banks are just beginning to el the pain from mmercial mortgage failures. >> you have almostalf a year between e time when the first mortgageayment was missed to the bank'srobably charging off

the loan. d so what you have is half a year and sometimesn commercial credit it's almost as longs two yearof lagging charge-offs the banks are having. so the combinati of that the facthat these problems have ju been accumulating throughout the recession is at some banks have ju reached that breing point right now. they just can't take a more loses. >> rorter: on top of that, some banks may have troue paying special assessments chard by the fdic to make whole sured depositors of failed banks. analysts say for sombanks, the new es may be the difference between making and losg money. to de, investors have been buying big bank stks since the hoing market showed signs of stabilizing earlier is summer. experts say there are bargai to be found amg the stocks of all banks. but you musto your homework to find out how strg their balance sheets a before you inve. >> the bigger players we'r talking abou bank of america,

cigroup, jp morgan, they've raised a lot of capitain the markets in order to she up their balancsheets. your loc community bank doesn't have that opportity. as a result,hey're still playing with t same amount of catal they had at the beginning and theye taking the sameype of loses as e big banks but ey don't have the capita new capital, to absorb the loses. >> reporter: themall banks now shing up on the f.d.i.c.'s trouble list arelso often new bas. they were founded dung the housing bubble, taki on risky invements in a bid to get established quickly. scott gurvey, "nigly business repo", new york. >> susie: richmondederal reserve bank president jfrey laer says the u.s. economy appears to be stabiling. and he sees flation more like to rise than fall. lacker's comments me after news thimorning that second quarter g.d.p. fell 1% a smaer than expecd slide. speaki to a business group in virginia, laer said while many industries a towns remain diressed he sees the economy head for better times lacker also weighein on a judge's ruling mony, ordering

the fed to disclosthe borrowers usg its emergency nding program. he sd he's not sure what good it would d the fed has argued t release of namesould hurt the invidual firms. >> paul: aft seven consecutive sessions of ins, wall street's blue chips were targed by profit takerin the early going today. better than pected readings on new weekly jobless claims d second quarter gdp we overdden by investor concerns that stocks ha become overpric. at 11:00 a. the dow was off 75 points and the nasdaq down9 points. a very successful 7-ar-t-note auion helped the market bounce back this afternooto end with mode gains.

>> susie: e of the nation's biggest homebuilde said today it's seeing sis of stabilizatioin the housing maet. to brothers is optimistic even though it reported quarterly loss bigger than a year ag excluding charges toll los $2.93 in its fiscal thir quarter the luxury home builder al said orders in t current quarter are up 26% from ar ago levels. a short ile ago i talked with c.e.o. robert toll and aed him when he expects thcompany to returno profitability. >> it could be in a couple of quarters. oress. or it could take lonr dependinupon the market demand.

right now demand has been increasing pretty strgly. and that wouldindicate that we shoulbe in pretty good shape? the not too dista future. but if i say more than that, my o and general counsel willill me. so i'll have to le it go at that. >> mr. toll, you said today th you're seeing sign that the housing maet is stabilizing. cayou aborate on the trends that you're seeing. about six months ago we would sethe average buy about 8 to 10 times. and probab the only question tt was being ked was can you give me a few more dollars in incentives. can you knock five or $10,000 more off the pri of this home. otherwise, i d't think i'll be ab to buy. ereas now we see the client buyingfter five or six visits and bei concerned after the rst uple to establish the price with can i get the garden room. can iet -- can i put an add-on for a musk room

can i have a mother-in-law suite developedn conntion with the home. so wre nowback to primary interest of the home itself as opposed to bng concerned only witthe price. >> nowou also mentioned day that you'r seeing pele are realizing tha this is a buyer's market is that translati into new orde and actual contracts? i mean what is, can y expect for toll brothe this fall? >> where i see it the fa is oy to extrapolate as wouldou sanay if things continue than the demand will continue to increase. buit seems to me as thoh we're more likelto be going up in terms of demand and upn terms of pric than we are to be goin down. d i think the public is starting to sense that. >> so are ctract ncellations less of a problem nowor toll brothers? >> oh, very much so. our cancellati rate n is down tobout 8.5%.

a normized rate is about 7%. so we're almost back to the normalized rate that we' enjoyed nce 1986 as opposed to the lt four years when the cancellation rate went up as high as -- i'm t exactly certainut itas something like 25%. >> now you mentioned on the analyst conference cl today at you're seeing a pickup in dand for high-enduxury homes. what aboutrices on the highnd. are they als holding up? >> we' increased prices, i believe on abo 40% of o counities in the last month, month and a half. so they're not only holding up, there going up which is a vy welcome sn because that was a rarity over the past four years unti about the last four or five months. >> now we've hea from some economists that there are chances for a double dip

recession. how are you adjusting your business plans for that possibility? >> well, we'reot adjusting our buness plans for tt possibility. we'rnot adjusting our business pla for the v recovery or for t you recovery. we're anxious to buy land but we are anxious to buy it on a criteria, on a basis that uses the criteria of what exist today, not what wi exist wh inflation and home price. and inflatn and demand. so if we continueo use the threshold of our current experience, we feel comfortable in quiring land but we're notet willinto makean asmption that things are going to get better en it mes to actually putting out the money for land acquisition. >> allight. well we'llcheck in wi you again in the next uplef months. thank yoso much for coming on t program tonht. >> y're welcome. 's my pleasure. thanks.

>> pau while home sales appear to be picking up mortge rates are too. rates on conventnal home loans heed higher last month with borrowers paying oaverage 5.31% on a 30-year loa the data from the federal housing financing ency covers loanup to $417,000. 15ear fixed rate loans averaged 4.89% last month. >> paul: an upbeat olook from de computer late today, despita 23% drop in second quarter earnings. de earned 24-cents a share in the quarter, beati analysts estimas by a penny.

revenues were downrom last year, but al beat the street. coming in at $12.8 billion. c.e.o. mhael dell says the p.c. maker has slashed operang costand is ready for turnaround in i. spending. sees sales in the second ha of the yeacoming in far stnger than the first half. >> susie: boeing doesn'txpect any more fght delays when it comes to getting the 7 dreamliner off t ground. the plane isow expected to make its first flight by thend of this yearith the first delivery slated fothe fourth quarter next year. productionroblems have forced boeing to revi its schede 5 times. the dreamler's initial flight was originally set for theall of 2007. eing has high hopes for the plane. it expected to save about 20% on fuel and carbonmissions. boeing has sd about 800 dreamliners anexpects to build ten a month by late 13. >> pau susie, boeing shares jump four dollars ev or 8%

to cse at $51.82. now let's ke a look at some stocks in the news tonight. z-z4h5z-54zz--z4h5j5j5u65-z4h5-

and those are the stks in the news tight, susie. >> susie: accused poi schemer allen anford was taken to a texas hospital. he's being treated for an irregular heart be and a high puls but the chiefinancial officer of stanford financial group

of stanford finaial group did apar in court today. james vis pleaded guilty in connection wh that alleged poi scheme. heow faces up to 30 years in prison for conspiracand fraud. before being aested, stanford plied that davis was responsible for the fraud. both men and other executiveof the now-defuncstanford financial group e accused of advising clients tbuy $7 billion in bogus certicates of depot, then creating false records to inflatehe firm's assets >> paul: tota is pulling the plugn a plant it once shared with general motors. thautomaker announced today thatt in march it will shut do production at the new united motor manufacturi facility. the fremont california pla employees 4700 wkers. it's toyota's only pnt where workers are emoyees of the united auto workerunion. in je, general motors cut its operational ties there as rt of its restrucring. >> susie: mewhile, ford seems to be firing on all cylinder the tomaker said today it's adding shifts at two pnts to beef up production for t rest of the yea

ford is also on track to po its first monthly, year-over year salesncrease for f-series trucks in august. it would be the first me in almost thr years that has happened hped along by the vernment's cash for clunkers program. >> pau tomorrow our friday market monitor guest is jo dorfman, chairmaof thunderstorm cital. >> sie: are americans getting a fair deal from the cell phone provers? that's a question the federa commications commission hopes tonswer as it launches formal inquirieinto the wireless industry. the vestigation will focus on whether carriers are competive d innovative enough to keep prices low for conmers. the coission also is looking into whether exclusivity agreements between criers and handsemakers should be allowed like at&t and apple's phone. >> paul: if you've ever anered the phe and a pre-recorded robo-call was on the otr end, you knowow frustrating they can be. now, those aomated calls are

ming to an end. the federal trade commison ys telemarketers are banned from making thoscalls as of septber 1. the exception? when telemarketers get writt permission from nsumers. >> susie: here's a look at what's happening torrow:

>> susie: goldman sas is takingeat for giving trading tips to its biggest custers. tonight's two wayso play looks at whether this is the proverbial le hill of which mountains a made. here's kevin depew of minyanville and minyanvie's kevin depew. >> oe again people are furious at goldman sachs, th time about the rm's practice of holding weekly meetings whe ading tips are shared with some of its biggest ients. these tips usually involve expectations for srt-term moves intocks. and, you better sit down for this, sometimes,hese stock tips are different from e official ratin on the stocks. naturally,oldmans smaller clients are upset byhis; the appearances that the firm is saving the top slf research for its big clients and ging everyone else e cheap stuff. >> okay, outrage at ldman sachs, whaelse is new. but these sht-term-trading eas are not contrary to longer-term stock opinns issued by thfirm, and so they're nodoing anything wrg.

think out it like this. if you go to vegas and spenden thousanducks gambling, you're gonna get a free room. spend a hundred cks, well, good lk with that. don't get me wrong, there e plenty of reons to be outraged at goldman sachs. start with the ten billion ty got from the government ght before reportingheir richest quarrly profit in history. just don blame them for doing what allusinesses do, providg extra services to their best clients. >> the blue chip index rose 37 points while theasdaq addethree points. to lrn to learn more about thstories in tonig's broadcast, to watch our streaming video and take part in oudaily blog, go to "nightly business report" on pbs.org. you can also email us at nbr@pbs.org. susie: and finally there we 10 million vicms of identity tht last year. the tion's chief banker was one of them.

ben bernanke a his wife were viims of an elaborate identityraud ring that stole more tha$2 million from people around the country. the crime ring was me up of pickpocks, mail thieves and purse snatchers. one them, allegedly stole mrs. bernanke's purse. a few days later, someone shed checks on e bernanke family bank account. because thbank had been alerteabout the theft, no money was withdrawn. so paul, if ere's a lesson here, it's that en the powerful c fall victim to phisticated thieves. >> good thought, vy good thought. >> susie: that "nightly busine report" for thursday, august 27. i'susie gharib goodght everyone. angood night to you paul. >> paul: goodnight sus. i'm paul kangawishing all of yothe best of good buys. "nightly busess report" is made possible by:

this program was made poible by contrutions to your pbs station from viewers like yo thank you. ptioning sponsored by wpbt captioned media access group at wgbh access.wgbh.org