IndyMac halts lending, cuts staff in half
July 7th, 2008, 2:53 pm · 19 Comments · posted by Mathew Padilla, Reporter
Pasadena-based IndyMac Bancorp, which has operations in Irvine, said Monday that it will no longer accept home loan applications and is slashing its staff by more than half to 3,400 over the next couple of months. In a letter on its Web site, it said it failed to raise money and has been unable to sell loans at a profit.
It declined to comment beyond the letter or say how many workers in Orange County will be let go.
Once the largest lender to borrowers with nearly perfect credit, Indymac said it expects to post a loss for the second quarter that exceeds its Q1 loss of $184.2 million.
It will halt nearly all loans at retail offices and via mortgage brokers. It will still make reverse mortgages to seniors. That unit is based in Irvine and will retain 800 workers there and in Sacramento and Atlanta. IndyMac also will continue to refinance customers whose loans are currently serviced by IndyMac — and will retain 350 workers in that department, including some in Irvine.
IndyMac said it’s working on a plan with regulators:
(B)ased on information we have provided to our regulators, they have advised us that we are no longer “well capitalized,” which we stated on May 12 was a possible scenario. Our regulators have also asked us to submit to them a new business plan for their review and approval, something on which we have been working with them for some time. We have agreed on the basic elements of the plan, and the regulators have directed us to begin executing on it.
Late last month, IndyMac experienced a mini run on the bank after Sen. Charles Schumer (D-New York) made public letters he sent to regulators, saying he is concerned about the financial health of IndyMac and that an insolvency situation could pose significant financial risks to its borrowers and depositors. Schumer said regulators may not be ready to intervene to protect consumers.
Related links:
- IndyMac CFO leaves, no accounting disputes here, company says
- Sen. Schumer raises concerns over IndyMac’s solvency
- How bad are things at WaMu?
- IndyMac expects to lose money for all of 2008
- Downey, WaMu, Indymac plummet in thrift industry rankings
July 7th, 2008 at 3:38 pm
man this is getting worse by the month….
July 7th, 2008 at 4:42 pm
Just to play devil’s advocate: this “run on the bank” caused by the senator’s public speculation about the “health” of a financial institution would of course result in a crisis for that company.
What do people think would happen if that same senator made those same comments about Wells Fargo? Maybe somebody should take a look at Wells Fargo’s reserves and debt to asset ratio just to see if there “may” be a problem. Would Wells Fargo run out of business if 40% of its depositors suddenly picked up and cashed out?
In this day of banking scares it doesn’t take much for people to close out their accounts. We might as well keep money in our mattresses until all of this blows over.
July 7th, 2008 at 5:08 pm
Why does this seem so much like the savings and loan crises from 20 years ago?
July 7th, 2008 at 5:29 pm
I interviewed there last summer. Man…. Glad I didn’t hired there.
July 7th, 2008 at 6:24 pm
I bank with Wells Fargo, and have for 13 years. Mom banks with Farmers & Merchants, and I’m signed on to some of her accounts there. I’ve been wondering when the scenario of good old fashioned bank runs would start developing in this Real Estate crash that is spreading quickly throughout the economy.
I find it fascinating that Farmers & Merchants is running those TV commercials that talk about your money being safe in a prudent, well run bank. Increasingly I find the old-fashioned conservative banks like F&M attractive, just to be on the safe side. I’m no millionaire, but I would hate to have my accounts caught up in a bank run and/or collapse of Wells Fargo.
I also appreciate that F&M has the guts to put up ads every December that say “Merry Christmas and Happy New Year!” instead of the wimpy PC wording “Happy Holidays”.
Anyone know more about Farmers & Merchants? Are they really on better footing than Wells Fargo in this new world of shaky finance?
July 7th, 2008 at 9:15 pm
Troy - GET YOUR MONEY OUT NOW!!! F&M is going down next!!!
July 7th, 2008 at 9:40 pm
So who is next? Must be Downey Savings, they were a huge Alt A pool. Lehman SBF in Lake Forest closed. What about Wamu?
July 7th, 2008 at 10:57 pm
Mr. Perry seems to have a firm grasp on reality. Maybe they can rename themselves Phoenix Mortgage.
July 8th, 2008 at 6:30 am
Schools first credit union, or F&M - they refused to do any subprime and are very solvent. Put your cash there.
July 8th, 2008 at 8:50 am
Troy,
The FDIC insures your accounts up to $100,000 each, so you really don’t have much to worry about. Just divide your cash into separate accounts of no more than $100,000 and you have no risk of loss.
July 8th, 2008 at 8:55 am
Matt-
paul is correct that Lehman is closing it’s Small Business Finance division in Lake Forest. They announced it to the staff last week. Since they started that division up not much more than a year ago, I think it shows just how weak Lehman is at the moment. This could easily end like Bear Sterns.
July 8th, 2008 at 10:36 am
Best place for banking these days is not Banks…….check out your local Credit Union, where you become a “member” not a customer. As a member you will have have a voice as a shareholder in the credit union…..and the service, wow!. I’m never going back to a Bank again.
July 8th, 2008 at 12:40 pm
Banks in bad shape “may” include WF and WAMU depending on your measure, but do your own due diligence and go onto the FDIC website to see how their debt to asset ratios are going.
July 8th, 2008 at 2:40 pm
poor Irvine: more layoffs on top of the thousands already executed. Come visit the Irvine towers (former home of New Century) and look at their new office tower, no tenants, just a lot of emptiness. For comic relief, look out the windows at the wasteland of the adjacent “Central Park West” development. Hundreds of condos all dressed up with nowhere to go but bankruptcy.
July 8th, 2008 at 4:05 pm
LMG-
Thanks for the clarification. The separate accounts would need to be at different banks for him to be fully protected up to $100,000 for each account.
July 9th, 2008 at 3:23 pm
man i have 1,000,000. what am i supposed to do????
July 10th, 2008 at 7:01 am
Guess I shouldn’t have pulled my CD from them two months ago (my own little run on the bank). I got spooked that they’d go under and didn’t want to go through the whole process of getting my money back whether it was insured or not.
They should’ve played by the rules and lended money more responsibly. It isn’t the depositors fault. They put themselves in that position.
July 11th, 2008 at 7:15 pm
their site is down. what’s going to happen to my money? how can I get my money back?