Chief
07-14-2008, 06:22 AM
http://seattletimes.nwsource.com/html/nationworld/2008050120_indymac14.html
A new era for the U.S. government's takeover of failed banks is about to begin. IndyMac Bancorp became the biggest casualty of the subprime...
McClatchy News Service
SAN FRANCISCO — A new era for the U.S. government's takeover of failed banks is about to begin.
IndyMac Bancorp became the biggest casualty of the subprime mortgage crisis over the weekend, as federal regulators shut down the troubled Pasadena, Calif.-based savings bank in one of the largest U.S. bank failures ever.
The Federal Deposit Insurance Corp. (FDIC) said in a statement that it will take over operations of IndyMac, which will open for business today as IndyMac Federal Bank. The thrift — the fifth U.S. bank to fail so far this year — had total assets of $32 billion as of March 31.
In a televised statement Sunday afternoon, FDIC Chief Operating Officer John Bovenzi said that "come Monday morning, it will be business as usual," and urged customers to "view this as a change in ownership."
Bovenzi described the FDIC takeover as "orderly."
Much of IndyMac's business was built on so-called Alt-A single-family mortgages, which were often made to borrowers with poor credit. As the secondary market for these loans collapsed, IndyMac's financial condition turned precarious.
IndyMac is the third-largest financial institution to fail in U.S. history, according to the Office of Thrift Supervision (OTS), which had regulated IndyMac.
Regulators said the "immediate cause" of IndyMac's failure was a deposit run in recent days that began after a June 26 letter to the OTS and the FDIC from New York Sen. Charles Schumer was made public. The letter voiced concerns about IndyMac's soundness.
By July 10, depositors had pulled more than $1.3 billion from their accounts, the OTS said in a statement.
"The institution failed today due to a liquidity crisis," said OTS Director John Reich. "Although this institution was already in distress, I am troubled by any interference in the regulatory process."
But Schumer wasn't having it; he told The Wall Street Journal that if OTS "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."
Instead of "pointing false fingers of blame, OTS should start doing its job to prevent future IndyMacs," he said.
**SCHNIPP**
The worst thing about Indymac is that its failure came completely out of left field. There is a list floating around of the top 20 or so banks that are most likely to fail over this mortgage mess, and Indymac Bank wasn't on it.
That leads to the question: How many more Indymac Banks are out there?
I also hear that there are 8-9 major banks in the US that are expected to fail over this, and the FDIC is making plans right now about what to do whan they do fail.
This is far from over...
cewl
A new era for the U.S. government's takeover of failed banks is about to begin. IndyMac Bancorp became the biggest casualty of the subprime...
McClatchy News Service
SAN FRANCISCO — A new era for the U.S. government's takeover of failed banks is about to begin.
IndyMac Bancorp became the biggest casualty of the subprime mortgage crisis over the weekend, as federal regulators shut down the troubled Pasadena, Calif.-based savings bank in one of the largest U.S. bank failures ever.
The Federal Deposit Insurance Corp. (FDIC) said in a statement that it will take over operations of IndyMac, which will open for business today as IndyMac Federal Bank. The thrift — the fifth U.S. bank to fail so far this year — had total assets of $32 billion as of March 31.
In a televised statement Sunday afternoon, FDIC Chief Operating Officer John Bovenzi said that "come Monday morning, it will be business as usual," and urged customers to "view this as a change in ownership."
Bovenzi described the FDIC takeover as "orderly."
Much of IndyMac's business was built on so-called Alt-A single-family mortgages, which were often made to borrowers with poor credit. As the secondary market for these loans collapsed, IndyMac's financial condition turned precarious.
IndyMac is the third-largest financial institution to fail in U.S. history, according to the Office of Thrift Supervision (OTS), which had regulated IndyMac.
Regulators said the "immediate cause" of IndyMac's failure was a deposit run in recent days that began after a June 26 letter to the OTS and the FDIC from New York Sen. Charles Schumer was made public. The letter voiced concerns about IndyMac's soundness.
By July 10, depositors had pulled more than $1.3 billion from their accounts, the OTS said in a statement.
"The institution failed today due to a liquidity crisis," said OTS Director John Reich. "Although this institution was already in distress, I am troubled by any interference in the regulatory process."
But Schumer wasn't having it; he told The Wall Street Journal that if OTS "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."
Instead of "pointing false fingers of blame, OTS should start doing its job to prevent future IndyMacs," he said.
**SCHNIPP**
The worst thing about Indymac is that its failure came completely out of left field. There is a list floating around of the top 20 or so banks that are most likely to fail over this mortgage mess, and Indymac Bank wasn't on it.
That leads to the question: How many more Indymac Banks are out there?
I also hear that there are 8-9 major banks in the US that are expected to fail over this, and the FDIC is making plans right now about what to do whan they do fail.
This is far from over...
cewl