Regulators shut down IndyMac

July 11th, 2008, 4:10 pm · 12 Comments · posted by Diana McCabe

Federal regulators said they closed Pasadena-based thrift IndyMac Bancorp, which has operations in Irvine, making it the biggest retail bank to fail amid the credit crunch, reports Bloomberg.

The shutdown occurred after IndyMac said earlier in the week that if failed to raise cash and would no longer accept applications on most home loans. It also previously announced plans to slash its staff by more than half to 3,400 over the next couple of months.

More from Bloomberg:

The Office of Thrift Supervision said the Federal Deposit Insurance Corp. will run a successor institution, dubbed IndyMac Federal Bank, starting next week.
Customers will have access to funds this weekend via automated teller machines.

IndyMac once dominated home loans to people with pretty good credit but special circumstances, known as alt-A, including those who state their income without proving it.

“Given their focus on Alt-A and a heavy concentration in California, they would have suffered meaningful losses in almost any scenario,” Brian Horey, president of Aurelian Management LLC in New York, said before the seizure was announced. Aurelian is short-selling IndyMac shares to gain from declines. Had IndyMac “applied some common sense and changed their approach to underwriting as the housing market peaked, they might have lived to see the next cycle,” Horey said.

IndyMac racked up almost $900 million in losses as home prices tumbled and foreclosures climbed to a record. California ranked second among U.S. states, with one foreclosure filing for every 192 households in June, 2.6 times the national average.

After peaking at $50.11 on May 8, 2006, IndyMac shares lost 87 percent of their value in 2007 and another 95 percent this year. The stock fell 3 cents to 28 cents at 4 p.m. New York time today.

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not buying it says:

July 11, 2008 at 5:37 pm

I didn’t think Alt-A was that badly affected by the turn around.

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don'thavetopaymysecond? says:

July 11, 2008 at 5:46 pm

Does that mean that we don’t have to make our payment on our second now???Yippeee!!!

meltdown says:

July 11, 2008 at 6:53 pm

not good.

Anonermous says:

July 12, 2008 at 1:18 pm

Great. I just took out a purchase loan with them 3 weeks ago. Hopefully they don’t screw up my escrow account.

republicans are TRAITORS says:

July 13, 2008 at 1:28 am

Iceberg dead-ahead.

John back pain Austin says:

July 13, 2008 at 6:30 am

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.

sipote pavoni says:

July 14, 2008 at 8:56 am

This screw up my escrow. Sad how bad real estate has gotten.

Liar Loan says:

July 14, 2008 at 10:09 am

I’ve always wanted a federal job…

Petes2cents says:

July 14, 2008 at 2:36 pm

Now that IndyMac is the first of many banks to fail, I think we’re going to see a lot more banks, not only close for the weekend, but close for good and go bankrupt. Rumors talk about 90+ banks, I think that’s a little exaggerated, but very well possible. I would guesstimate around 30+ banks will close shop.

I’m an investor in the stock market and have started to build a position in Bank of America. One of the few 500 lb. gorillas left in the room. Every dip, I pick up more shares. I don’t think there going anywhere, but you never know. Investments are all risky.

I never thought I would see this happen here in the USA, but here we are….let’s all cross our fingers.

petes2cents.com

mortgagemaker says:

July 15, 2008 at 7:10 am

B or A will fail - they are the worst run bank in America.

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