IndyMac Taken Over by Feds
The housing crisis has pushed California bank IndyMac under control of the federal government:
The federal government took control of Pasadena-based IndyMac Bank today, in what regulators called the second-largest bank failure in U.S. history.
The Office of Thrift Supervision in Washington, the chief regulator of IndyMac, said it transferred control of the $32-billion bank to the Federal Deposit Insurance Corp.
Branches will be closed over the weekend, but the FDIC will reopen the bank Monday as IndyMac Federal Bank, the OTS said.
Regulators said depositors would have no access to banking services online and by telephone this weekend, but could continue to use ATMs, debit cards and checks. Online banking and phone banking services are to resume operations Monday.
Federal authorities said based on a preliminary analysis, the takeover of IndyMac would cost the FDIC between $4 billion and $8 billion.
IndyMac’s failure had been widely expected in recent days, as regulators said it was not well-capitalized. Its stock has plummeted to mere pennies a share and some nervous depositors have been pulling their funds. The bank has been reeling from losses on defaulted mortgages made at the height of the housing boom.
California had one of the hottest home building markets in the nation. It’s also taken some of the worst hits. So it’s no surprise a California bank failed. Ed Morrissey wants to blame Sen. Chuck Schumer for the collapse. A bank in even semi-good shape doesn’t collapse because of a Senator’s letter. IndyMac obviously had serious financial problems.
IndyMac is the fifth bank this year to fail. in 2007 three banks failed with none going under in 2005-2006.
Come Monday the new IndyMac Federal Bank will open for business with worried depositors taking deposits elsewhere. While that happens federal regulators will look at selling part or all of the bank’s assets. Regulators estimate the cost of the bailout will be $4-8 billion. Those funds come from insurance premiums banks pay to the FDIC. Taxpayers’ money isn’t one the line.
“IndyMac Bank Seized by Federal Regulators”
It’s not really a bailout. It’s a claim on a deposit insurance policy by the depositors at the bank to the FDIC… that’s the point. You said it yourself… taxpayer dollars aren’t on the line here.