IndyMac is Seized by Regulators

[JuniperLea]

Source: The Wall Street Journal

July 11, 2008

IndyMac Bancorp Inc., a prolific mortgage specialist that helped fuel the housing boom, was seized Friday by federal regulators in one of the largest bank failures in U.S. history.

The Pasadena, Calif. thrift was one of the largest savings and loans in the country with about $32 billion in assets. It now joins an infamous list of collapsed banks, topped by Continental Illinois National Bank and Trust Co., which failed in 1984 with $40 billion of assets.

IndyMac specialized in Alt-A loans, a type of mortgage that can often be offered to borrowers who don't fully document their incomes or assets. The company sold most of the loans it originated but continued to hold some on its books. As defaults piled up, IndyMac's finances deteriorated.

In a written statement, the Office of Thrift Supervision, which regulated IndyMac, said "the immediate cause" of the failure was statements made by New York Democratic Senator Charles Schumer. Mr. Schumer in late June publicly raised concerns about the bank's solvency.





Read more: http://online.wsj.com/article/SB121581435073947103.html?mod=hps_us_whats_news

---

How many do you suppose we can afford to bail out?

[slackmaster]

1. Bad day to be someone who works there

I've been through that one a couple of times.

[JuniperLea]

4. I've had loan officers...

Applying for receptionist and administrative assistant positions... it's so sad.

[LaurenG]

2. So it's all Schumer's fault!?!

:rofl:

[JuniperLea]

3. Hilarious, isn't it?

It can't be due to all their shady dealings, it must be the Dem's fault for pointing his finger and saying something truthful!

[cojoel]

11. always on the GOP watch

These massive bank failures seem to happen on the republican watch. Savings & Loan and now this mess.

[whopis01]

36. Don't kid yourself...

There were plenty of bank failures during the last democratic watch as well.

About 85 total. Not as big as this one granted, but that is about 3 times as many as have failed in the last 8 years (30).

[yardwork]

39. It's not the number of banks, it's the impact on the economy that the failures have.

Bill Clinton's term - good economy.

The chimp's term - not so good.

[Trajan]

58. So ... Things are actually BETTER now than ever before ?

Then what is everybody complaining about ? ...

PLEASE explain ....

[mcg]

28. Shoot the messenger, as if his words caused the trouble. nt

[yardwork]

40. The party of individual responsibility strikes again.

[Wapsie B]

5. I'd love to see that any bailout be contingent on

having the personal assets of these bank officers seized. Every last dime in domestic and off-shore accounts.

[defendandprotect]

26. Yes . . and how about we all OWN this stuff we're bailing out . . .

[Wapsie B]

50. Yes, I've always wanted to own a bank.

Take a dime of taxpayer $$ and forfeit private ownership. This would apply to banks, corporations, even professional sports teams. Make the taxpayers majority stockholders in whatever's bailed out.

[defendandprotect]

52. In the S&L theft and embezzlements . . . many of the banks were later purchased

at huge discounts, if I recall correctly.

Also, our government banks are run in ways which make them less attractive as competition
against private banks than used to be the case.

Purposefully done, of course ---

[Demeter]

6. This Must Have Leaked Earlier--

Explains the frenzy in the stock markets.

[KoKo]

19. Ha! CNBC.... TALKED ALL DAY ABOUT Freddie and Fannie....not "Indy Mac!" Typical Bushworld...

"Look where we point you"....and not "Over THERE" where the real filth and Criminality are bubbling over!

:puke: And, what about all those folks who worked there? The CEO/CFO/COO/and the rest of the "C's" will get "Golden Parachutes and Golden Coffins" as their Criminality is exposed...and covered up...but the EMPLOYEES get the "GOLDEN BOOT." DISGUSTING!

[Pale Blue Dot]

32. The Freddie/Fannie situation is potentially 100x worse.

It deserved the coverage it got today, and it was the reason for the volatility in the markets today.

When/if Freddie and Fannie fail it very well could be the end of the American way of life. This may sound like hyperbole, but it isn't.

[tigereye]

38. it could be, but it is highly unlikely that would be allowed to happen

either the govt will step in, or Fred/Fan will be allowed to opt out of whatever capitalization rules are being proposed...


(that's what the financial analyst on Fresh Air said, anyway.)


It's amazing that this whole thing was allowed to happen - I blame the lack of regulation of our current "far-sighted" administration Typical that they would try to shift the blame. Typical.

[Purveyor]

7. This coupled with the Fannie/Freddie situation is quite dire indeed!

Is a total collapse of the US banking system/ecomony nigh?

[slackmaster]

8. It didn't collapse in the early '90s

A lot of institutions went down in flames, but the system as a whole pulled through.

[Purveyor]

9. Back then the US was 'credit worthy' and able to sustain the losses.

When you are talking $5 trillion with just Fred/Fann alone, I'm not sure it can be accomplished this time unless the Fed just prints notes and deals with hyperinflation later.

The foreign investment spigot appears to be running dry except for hard tangibles such as property.

I'm certainly no authority on this situation. Just an aging dirt farmer in observation mode. :)

[Amonester]

13. "unless the Fed just prints notes and deals with hyperinflation later"

sure seems like the Havemores' Fed is doing just that

joe & joette sixpack, their kids & their kids' grand-kids will not only have to foot the bill, but the ever increasing interest overhead on top of that

but they shouldn't Whine about the Havemores Club robbing 'em all blind 'cause they will call them names :wow: :mad:

[galileoreloaded]

10. But in the 90's

The wealth of the country hadn't been picked clean or offshored, most companies hadn't outsourced yet, and the heaviest borrowing and inflationary debt was uncreated until about 1998.
This time it will be different. Think Mexico. Few at the top, most at the bottom.
Have a great weekend!!!!

[slackmaster]

59. A lot of people were concerned that Japanese corporations were buying up commercial real estate

They lost their shirts on it. We went down, and they went down. We all recovered.

This time the drain of our country's wealth is going to the oil-producing nations. The key to getting out of this mess is to fix our dependency on petroleum. It's going to be a big shift, but once we resolve to do it, things will change quickly.

[KoKo]

20. There really weren't any "so called Banks/Mortgage Lenders" called "Indy Mac" back then in the 90's.

It wasn't that "HIP" a time that any of us would have bothered with something called "INDY MAC" to think about. It wouldn't have been what anyone thought of us a "legitimate name for a lending institution" and they hadn't at that point de-regulated EVERYTHING so that "catchy names" could have CREDS amonst us who were young with families and coming off Carter and Reagan Economies...we were getting BUSTED in our jobs and housing...so we weren't looking for "catchy."

That's all gone now...but, believe me...none of us would have gone with something called "Indy Mac." Most of us could barely use the early Computers except for IBM'ers and those who were really into the Computer culture. Rest of us were just "grunting ourselves along" trying to get whatever job we could as our banks crashed...that had "REAL NAMES" ...not catchy names that mean nothing but hype for glitch.

[jmowreader]

51. "IndyMac" was named that in 1997

I looked it up...IndyMac started life in 1985 as "Countrywide Mortgage Investment." This arm of Countrywide Mortgage was started so that Countrywide (who sells every mortgage they write) would be able to write mortgages too large for normal mortgage buyers. In 1997, it was spun off into its own firm, which was named IndyMac. And you're absolutely right--it's not a legitimate name for a lending institution.

You want to see how fucked up this "catchy name" shit is? Look at Washington Mutual. In the 1970s and 1980s, this was an appropriately sober financial institution. You could tell by their commercials, which had this old guy speaking to you, and their slogan, "The Friend of the Family." Man, you KNEW this bank was solid as granite just by looking at it, and looks weren't deceiving. Now they call it "WaMu" and the slogan is "Whoo hoo!" I wouldn't put a fucking nickel in this bank today.

[Demeter]

48. Little Savings and Loans Went Under--Not the Biggies

This time it's Bear & Stearns, Lehmans, Citicorp, Countrywide, Fannie and Freddie they're worried about.

Not to mention USB in Switzerland.

[slackmaster]

60. More than 1,000 federally chartered S&Ls were seized from 1986 - 1995

I believe the loss of assets by investors was in the hundreds of billions of dollars. Hundreds of thousands of jobs were lost.

[girl gone mad]

15. Anyone who doesn't think it's a possibility...

isn't paying attention or chooses to delude themselves.

The loon is looking pretty good right now.

[Wizard777]

12. Marvin Bush Strikes again?

I swear Barbara Bush didn't have any kids that lived.

[paparush]

17. LOL!

Gunnery Sergeant Hartman: Did your parents have any children that lived?
Private Gomer Pyle: Sir, yes, sir.
Gunnery Sergeant Hartman: I'll bet they regret that. You're so ugly you could be a modern art masterpiece.

[The_Casual_Observer]

14. The FDIC is going to own all the US banks at this rate. Where does it end?

[roamer65]

16. Another $32b in M3 money supply growth.

Pretty soon the Fed is going to create around 5 trillion in new money to shore up the entire banking system. They have no choice.

[high density]

18. Assets to a bank == loans

[jmowreader]

21. The real reason IndyMac failed

Forget all the fraud stuff. This is worse.

IndyMac was a major player in the Construction Loan business. Construction loans are short-term, higher-than-mortgage-interest loans used by contractors to buy building materials for complete structures. These are SUPPOSED to be used as part of a loan-to-mortgage deal. If you're going to be the homeowner once there's a home to own, and you're building a $500,000 house, you don't want to pay interest on the whole half-million for the seven months it's going to take to build the home. Instead, you take out a $250,000 (or whatever materials plus land will cost) construction loan that will convert to a $500,000 mortgage as soon as the certificate of occupancy has been issued.

IndyMac's primary construction loan business was in spec homes--ones you don't yet have a customer for. (They also sold these loans through The Home Depot, and had to rebate five percent of all HD purchases made with the loan proceeds.) When they started doing it, Clinton was in office and homes sold easily. Now housing starts are down, spec homes aren't selling and many of these loans either have or will go into default.

I'm certain there was fraud and mismanagement at this bank, but they would have failed even if they were run perfectly simply because of the business they were in.

[bertman]

34. jmowreader that was a pretty accurate description of what a construction loan covers but

let me elaborate a bit.

The construction loan is designed to cover most or all of the actual costs of building a home including, as already mentioned, land and building materials. Just to be precise let's throw in labor costs and management costs, subcontractor costs (masons, framers, plumber, electrician, HVAC sub, trim man, roofer, sheetrocker, painter, cabinetmaker, tile, etc, etc you get my drift), permits, and the builder's markup to cover his overhead (insurance, office, staff, benefits, etc.) and to allow him to (hopefully) make a profit.

Thanks for indulging my proclivity for detail.

So, my list might help to give some perspective as to how many hard-working (and yes, it is hard work) Americans are going to be looking for employment due to this financial malfeasance.

But, Phil Gramm wants all of you prissy-assed blue-collar types to stop your goddam whining and shut the fuck up like good, patriotic Americans are supposed to do.

Meanwhile, Phil and his financial sector (Congressional critter buyin') buddies are making millions while millions of Americans lose their jobs, their homes and their hope.

This is nothing but unarmed robbery and the taxpayers are once again gonna pay for it.

Makes me sick.

[MNBrewer]

22. That's my mortgage company

Hmmm....

[littlecryinggirl]

37. Don't worry

your mortgage will get sold to someone less reputable.

[Robb]

56. ...Behind every dark cloud

is a bolt of lightning. :D

[Broadslidin]

23. Just maybe, B. Clinton & his Repug Pals should not have gutted F.D.R.'s Glass-Steagall Act in 1999.

While makin' White House :puke: Whoopee,
Wonderin' what Billy Bob's Cut of the Action was...?

[yardwork]

41. Do you ever get bored of blaming everything on Bill Clinton's penis?

[hobbit709]

24. Is this some of the "whining" Sen Grammstand was going on about?

[bluesmail]

25. This is a Hugh Friday Newsdump story. I'm no expert

So I'm waiting for further developments. JMHO. I don't know much about economics/banks. I'm keeping an eye open on this story.

[World Citizen]

27. any relation to Joe?

just the facts ma'am

[bluesmail]

30. FUGWB

[lonestarnot]

31. Or did they take lessons from the Keating Bunch?

[percussivemadness]

42. dow will bounce Monday at the earliest

Tuesday at the latest

[Demeter]

49. Yeah. In the Downward Direction

[percussivemadness]

54. lets see..:)

[bronxiteforever]

29. Kick & R

[desktop]

33. Symptomatic of a major tanking US economy

But you're not going to hear about it on the networks other than a few comments about how things are a little down but its a good time to buy stocks and homes. CNBC, FOXnews, and the rest say buy, buy, buy. You be the judge, I'm not buying nothing.

[percussivemadness]

43. yeah right

and if the US economy tanks, so does China, India, Japan et all.

Not going to happen, its going to be tough but this isn`t the end of the world...

[Pale Blue Dot]

44. Can you give more detail?

What is the single best reason why you believe it's "not going to happen"?

[percussivemadness]

46. Hey Finnfan

hope you have bookmarked the other thread :)

Not going to happen mate, going to be tough, but the end of the world isn`t nigh :)

[Indigo Walrus]

35. This sucks!!

I'm one of the "lucky" 40% who was not canned the other day.


I hope my key card still works when I go to work monday morning.

e.

[whistle]

45. This may result in another "Black Monday" like 1987 under Reagan

[percussivemadness]

47. no arguments here

but the US nation didn`t collapse...And it`s not going to happen this time

[roamer65]

53. Monday will be hell on the stock markets.

[whistle]

55. What should be carefully watched Monday morning when the markets open?

[roamer65]

57. Watch the NIKKEI in Japan late Sunday night.

If it tanks, get ready for a rough ride.

Only thing that *may* stabilize our market is massive Fed intervention. If the Dow drops severely, then starts shooting up inexplicably, it is usually an indicator that the Fed is creating money out thin air to mop up unwanted garbage paper from the markets. Like UpInArms proved, just one day operation was $140 billion last week. Mind boggling and historic, but not in a good way.

[slackmaster]

61. I agree with roamer65

Not much you can do about it if it happens, but NIKKEI will be the bellwether.