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Friday, July 11, 2008

IndyMac Siezed By FDIC

Wow. Friend just tipped me to this. IndyMac Bank is toast. According to Bloomberg:
IndyMac Bancorp Inc. became the second-biggest federally insured financial company to be seized by U.S. regulators after a run by depositors left the California mortgage lender short on cash.

The Federal Deposit Insurance Corp. will run a successor institution, IndyMac Federal Bank, starting next week, the Office of Thrift Supervision said in an e-mailed statement today. Customers will have access to funds this weekend via automated teller machines. Regulators intend to eventually sell the company....

....IndyMac becomes the largest OTS-regulated savings and loan to fail and second-biggest financial institution to close behind Continental Illinois in 1984, according to the FDIC. Lehman Brothers Holdings Inc. advised the regulator in the transaction....

...The lender 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.

IndyMac's shutdown may mean regulators will have to raise more money to support the federal deposit insurance program that repays customers when a bank fails, Reich said during a press conference. The failure will cost the fund about $4 billion to $8 billion, the FDIC said in a statement.
Unfortunately, we will probably see more of this in the coming months.

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