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Banking regulators close IndyMac

FDIC Information for IndyMac Bank, F.S.B., Pasadena, CA

"On July 11, 2008, IndyMac Bank, F.S.B., Pasadena, CA was closed by the Office of Thrift Supervision (OTS) and the Federal Deposit Insurance Corporation (FDIC) was named Receiver. All non-brokered insured deposit accounts have been transferred to IndyMac Federal Bank, F.S.B., Pasadena, CA ("assuming institution") a new FDIC-insured Federal Mutual Savings Bank. No advance notice is given to the public when a financial institution is closed".

Due to an irreversable run on the bank and a resulting liquidity crisis, Indymac's operation was transferred to the Federal Deposit Insurance Corporation because it did not think the lender could meet its depositors' demands.

It had to happen - Indymac was bound to fail. For the last year Indymac had been aggressively marketing new loans to exisiting borrowers. What I found most absurd was that Indymac was offering loans to property owners who had 100% finance, so that for all their marketing efforts, there was no way Indymac would be able to refinance those borrowers they were pitching to.

I kept wondering whether anyone in management actually thought about what they were doing .....

Posted by Stewart Penn - West Hollywood Condo Specialist on 07/11/2008 07:40 PM

Comments (11)

indymac, fdic, los angeles real estate, west hollywood, weho, condos

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11 Comments on Banking regulators close IndyMac

Hi Stewart,

Unfortunately, desperation leads to bad decisions.

All the best!

07/11/2008 08:00 PM

by Kevin O'Shea, White Plains, NY Real Estate (Homes of Westchester, Inc.)

thanks for the post Stewart.

Wow...I did not know that, this is the first I've heard of this.

Probably a lot more of this to come.

07/11/2008 08:08 PM

by Eric Egeland (Chicagoland Realtor / Broker) (Re/Max United)

The first nail in the Indymac coffin was hammered in when they picked up all those offices and loan officers from American Home Funding.

What were they thinking??

07/11/2008 08:10 PM

by Lenn Harley, Homefinders.com, MD & VA Real Estate

To answer Lenn's question... I think the answer is that they weren't thinking at all!

07/11/2008 08:16 PM

by Steve Shatsky - Dallas Real Estate & Short Sale Specialist (Keller Williams-Dallas City Center)

Oh, management knew what they were doing in the last year. They'd already made the bad decisions and like a gambler that just went into the whole decided to double down. Lots of banks are operating on the same strategy.

By leveraging the fact deposits are FDIC insured they were able to attract huge numbers of brokered accounts in the past year to fund operations, I believe their deposit base grew over 60% in the last year. Personally I consider it blatently taking advantage of the system by putting depositors and FDIC funds at risk, and I think the regulators should have taken action long ago.

07/11/2008 08:28 PM

by Matt Heaton (ActiveRain Corp.)

"If OTS (Office of Thrift Supervision) had done its job as regulator and not let IndyMac's poor and loose lending practices continue, we wouldn't be where we are today," said Schumer, a Democrat from New York. "OTS should start doing its job to prevent future IndyMacs." - CNN Money

07/11/2008 08:32 PM

by Stewart Penn - West Hollywood Condo Specialist (Penn Properties)

Matt - that's an excellent point. They were allowed to take advantage of the system.

07/11/2008 08:34 PM

by Stewart Penn - West Hollywood Condo Specialist (Penn Properties)

If someone or some institution takes advantage of the system within the rules that the system runs by are the people taking advantage at fault or is the system that allows them to do so at fault?

I know my anger is directed at both (from an ethical perspective especially), but my mind keeps wondering if anyone got desperate enough and there were system weaknesses that could be exploited, is it really beyond the realm of expected behavior that someone would choose to take advantage?

07/11/2008 09:33 PM

by Steve Shatsky - Dallas Real Estate & Short Sale Specialist (Keller Williams-Dallas City Center)

Everyone keep their fingers crossed on Freddy and Fannie. They have been getting hammered on wall street. The implications are grim.

07/11/2008 09:51 PM

by Pete Jalbert R(S) (Jim Sanders Realty, Inc. )

Wow!!! What are people thinking, yes this was the problem!

"The first nail in the Indymac coffin was hammered in when they picked up all those offices and loan officers from American Home Funding.

What were they thinking??"

07/11/2008 11:49 PM

Ended up writing a pretty good rant on this a few minutes ago...

http://activerain.com/blogsview/590265/IndyMac-Fight-Schumer-vs

07/12/2008 04:15 PM

by Matt Heaton (ActiveRain Corp.)

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