* * * * HARD CORE REAL ESTATE TALK * * * *
Lenn Harley, Muckraker
Our esteemed ActiveRain reporters Bill Archambault and Stewart Pennenlighten ActiveRain members on the failing of IndyMac. Their timely reportage is helpful, but there are additional interesting FACTS related to the failure of that financial institution.
FACT: OTS and FDIC close IndyMac, July 11, 2008.
FACT: IndyMac was founded in 1985 to collateralize Countrywide loans originated in amounts too large to be sold to Fannie Mae and Freddie Mac. In 1997, IndyMac was spun off by Countrywide as an independent company.
FACT: IndyMac was the largest maker of "Alt-A" loans, loans made to borrowers with good credit but didn't qualify for fully documented loans, i.e., self employed borrowers, etc.
FACT: The closure was caused by a classic "run on the bank". Beginning on or about June 26, 2008, letters sent by Senator Charles Schumer, D-N.Y., to federal bank regulators voicing concerns about the thrift's "financial deterioration" were made public. "Indymac's financial deterioration poses significant risks to both taxpayers and borrowers."
* * * * Office of Thrift Supervision, July 11, 2008. "The OTS has determined that the current institution, IndyMac Bank, is unlikely to be able to meet continued depositors' demands in the normal course of business and is therefore in an unsafe and unsound condition. The immediate cause of the closing was a deposit run that began and continued after the public release of a June 26 letter to the OTS and the FDIC from Senator Charles Schumer of New York. The letter expressed concerns about IndyMac's viability. In the following 11 business days, depositors withdrew more than $1.3 billion from their accounts. * * * *" OTS News Release.
FACT: Following publication of the Sen. Schumer's letter, depositors began to withdraw about $100,000,000 a day for a total of about $1,300,000,000.
FACT: On or about June 30, 2008, the Center for Responsible Lendingissued a report based on interviews with former IndyMac employees citing examples where IndyMac:
- made loans based on inflated appraisals and income data that exaggerated borrowers' finances;
- IndyMac employees worked hand-in-hand with mortgage brokers who misled borrowers about their rates and other loan terms and stuck them with unwarranted fees; and
- employees treated many elderly and minority consumers unfairly.
FACT: IndyMac was a Federal Savings Bank, IndyMac, F.S.B., and held deposits insured by the F.C.I.C. The F.D.I.C insures deposits up to $100,000. It is estimated that approximately 10,000 depositors of IndyMac F.S.B. had accounts exceeding $100,000. Uninsured amounts, over $100,000, will be reimbursed based on a distribution of recovered assets:
- This certificate entitles you to share proportionately in any funds recovered through the disposal of the assets of IndyMac Bank, F.S.B. This means that you will eventually recover some of your uninsured funds. The FDIC declared a 50% advance dividend for uninsured deposits.
FACT: IndyMac is the largest OTS-regulated thrift ever to fail and, according to FDIC data, the second largest financial institution to close in U.S. history.
FACT: Stanford Kurland, former president of Countrywide, forms company buying distressed mortgages.
"Kurland left his job as president and chief operating officer of Countrywide in September 2006, just as the housing market began its descent. The previous year, in 2005, he was paid $19.2 million and made an additional $13.7 million by exercising stock options, according to Reuters". More . . .
FOLLOW THE MONEY - SENATOR SCHUMER'S POLITICAL CONTRIBUTIONS FOR THE 2008 ELECTION CYCLE.
WHO IS MISSING????
| Citigroup Inc | $80,800 |
| UBS Americas | $74,250 |
| Paul, Weiss et al | $67,000 |
| Kasowitz, Benson et al | $64,250 |
| Metropolitan Life | $59,000 |
| Goldman Sachs | $58,040 |
| Morgan Stanley | $57,000 |
| Guardsmark Inc | $54,000 |
| Lehman Brothers | $53,750 |
| Merrill Lynch | $50,250 |
| JPMorgan Chase & Co | $47,800 |
| Cantor Fitzgerald | $46,250 |
| Milberg, Weiss et al | $46,250 |
| News Corp | $46,250 |
| Time Warner | $43,500 |
| Newmark & Co Real Estate | $43,450 |
| Cassidy & Assoc/Interpublic Group | $40,171 |
| Deloitte Touche Tohmatsu | $39,999 |
| Tudor Investment Corp | $39,250 |
| Lazard Freres & Co | $39,000 |
Senator Schumer chairs the Senate Committee on Banking, Housing and Urban Affairs; Finance and two Senate Subcommittees, one being Economic Policy (Banking).
Since the bulk of his political contributors are in the industries, financial houses in investment banking and mortgage banking, one wonders is Sen. Schumer's letter of inquiry to the OTS/FDIC would have been made public if IndyMac's name were on his list of political contributions?????
The more things change, the more they stay the same.
Courtesy, Lenn Harley, Broker, Homefinders.com, 800-711-7988.
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