On Friday 7/11/08, federal regulators took over IndyMac, once one of the nation's leading home lenders.
It was a Pasadena California based thrift with $32 billion in assets. It is the first bank failure in California since 2003. At 3pm yesterday, the Office of Thrift Supervision shut down the bank and transferred it to the FDIC. The bank will reopen on Monday of next week as IndyMac Federal Bank.
IndyMac specialized in Alt-A loans which allowed buyers to borrow with little documentation required.
According to the FDIC, 10,000 IndyMac customers could lose up to $500 million in uninsured deposits. The FDIC said it could cost the Deposit Insurance Fund between $4-8 billion. IndyMac is the fifth bank to fail this year. In the past 15 years the FDIC has taken over 127 banks. It is the largest bank collapse since 1984, when Continental Illinois failed, according to the FDIC. The two most expensive failures were both in 1988 when American Savings and Loan Association in California failed (costing $5.4 billion) and First Republic Bank in Texas (costing $4 billion).
The FDIC will try to sell IndyMac as a complete entity within the next 90 days.
Depositors are insured up to $100,000 on traditional bank accounts. Annuities and mutual funds are not insured at all. Individual Retirement Accounts are insured up to $250,000. Customers with uninsured deposits will get at least half their money back, according to the FDIC.
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