Indymac Bank, one of the largest independent mortgage lenders in the U.S., was shut down by the feds today.
No, I’m not jumping on the “sky is falling” bandwagon here. But this is still big stuff, folks.
- It’s the fifth FDIC-insured failure of the year,
- the biggest bank failure of the housing downturn to date, and
- the second-largest bank failure in U.S. history.
Here are three interesting, well-written articles you might want to check out about it:
The FDIC said it will transfer insured deposits and “substantially all the assets” of IndyMac Bank, to a newly created successor, IndyMac Federal Bank, which will be operated by the FDIC.
Insured depositors and borrowers will automatically become customers of IndyMac Federal, FSB and will continue to have uninterrupted customer service and access to their funds by ATM, debit cards and writing checks. Depositors of IndyMac Federal Bank FSB will have no access to online and phone banking services this weekend, but will regain access to them on Monday.
IndyMac, which once employed 10,000, fell prey to a classic run on the bank, and regulators singled out Sen. Charles E. Schumer (D-N.Y.) for helping to fuel massive withdrawals. On June 26, Schumer said in letters to the FDIC, the OTS and two other federal agencies that IndyMac may have “serious problems” with its loan holdings…
…That public warning prompted depositors to pull $1.3 billion out of accounts between June 27 and Thursday.
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.
So…what do you think about this? Does this directly effect you or your business in any way?