IndyMac: Another Banking Bankruptcy
See my list of Bankrupt global financial institutions for past news on IndyMac and other bankrupt financial institutions.
This is a very big deal. It seems that the financial crisis has reached fever pitch now. Given the week we just went through, I would not be surprised to see some more volatility on Monday.
IndyMac Bancorp Inc., a prolific mortgage specialist that helped fuel the housing boom, was seized Friday by federal regulators in one of the largest bank failures in U.S. history.
The Pasadena, Calif. thrift was one of the largest savings and loans in the country with about $32 billion in assets. It now joins an infamous list of collapsed banks, topped by Continental Illinois National Bank and Trust Co., which failed in 1984 with $40 billion of assets.
Calculated Risk posted the FDIC bank failure watch report just a while ago and IndyMac was not on the list. This is obviously very breaking news.
The Federal Deposit Insurance Corp. will run a successor institution, IndyMac Federal Bank, starting next week, the Office of Thrift Supervision said in an e-mail today. Customers will have access to funds this weekend via automated teller machines.
–IndyMac Seized by U.S. Regulators Amid Cash Crunch, Bloomberg News
The Bloomberg story points out that IndyMac is very exposed to Alt-A, a mortgage class due for much greater losses. In addition, IndyMac was heavily exposed to the California mortgage market.
The Pasadena, California-based bank specialized in so-called Alt-A mortgages, which didn’t require borrowers to provide documentation on their incomes. Its home state has been among the hardest hit by foreclosures.
It had been obvious for some time based on recent statements, share price and the FDIC’s notice to IndyMac that it wasn’t ‘well-capitalized‘. However, the speed of the events is truly remarkable. The well-capitalized remark was just three days ago. Perhaps the turmoil surrounding Fannie and Freddie has claimed its first ‘victim’ as it was liquidity concerns that ended this; IndyMac was destined to hit the wall at some point regardless.
Related posts
Credit Crisis Timeline (most comprehensive set of links on the web to articles on the credit crisis)
Update: Related Post: Some people may get stiffed by the FDIC: check your bank
Those with multiple accounts under $100,000 are probably screwed. During the S & L mess I had a friend with three accounts each under $100,000 that totaled $230,000. She was reimbursed a total of $100,000. Those at the S & L assured her all the money was insured. There was another S & L across the street. She lobbied Congress to no avail.
John,
I hear you about getting screwed. I checked into the rules and posted them in a new blog entry. Everyone needs to know this stuff. Many banks will go bust.
https://pro.creditwritedowns.com/2008/07/some-people-may-get-stiffed-by-fdic.html
Edward