IndyMac Failure May Prompt Rush to Pull Bank Deposits

[Purveyor]

By Josh P. Hamilton and Daniel Taub

July 17 (Bloomberg) -- IndyMac Bancorp Inc.'s collapse may spur withdrawals from banks ranging from First BanCorp in Puerto Rico to Los Angeles-based Nara Bancorp Inc. as customers trim accounts below the $100,000 limit on deposit insurance, according to Sandler O'Neill & Partners LP.

``IndyMac's failure has people worried about others,'' Mark Fitzgibbon, a principal at Sandler O'Neill, said in an interview. Fitzgibbon told clients in a report this week that signs of weakness may prompt customers ``to more actively move deposits to banks that are perceived to be healthier.''

The result could be a liquidity squeeze at banks that rely on ``jumbo'' deposits, Fitzgibbon said. His report, published July 15, included more than 50 companies with jumbo time accounts, typically certificates of deposit, that exceeded 25 percent of first-quarter deposits.

Topping the list was First BanCorp at 72 percent. Puerto Rico-based Doral Financial Corp. had 60 percent and Nara Bancorp had 53 percent, according to Sandler. Bank of America Corp., the biggest U.S. consumer bank, stood at 12 percent at the end of 2007; the report didn't have more recent data.

IndyMac, which had about $18 billion of deposits, was seized by U.S. regulators on July 11. It opened this week as IndyMac Federal Bank FSB under U.S. ownership. About 10,000 customers had $1 billion of uninsured deposits, the Federal Deposit Insurance Corp. said. They'll get 50 cents on the dollar for deposits above $100,000, with more possible after IndyMac is sold.

BLOOMBERG: http://www.bloomberg.com/apps/news?pid=20601087&sid=aJJLGYzHGVjA&refer=worldwide

[PBS Poll-435]

1. My friend runs a Wells Fargo branch

And since the IndyMac thingy, that branch has increased its deposits by 3 or 4 million.

Wells Fargo is the ONLY Moody's "Aaa" rated bank in the US.

[Hydra]

2. ROFL!

:rofl:

Bet you ANYTHING Bush will come trotting out saying that we have to raise the cap to $250,000 or even $500,000 per account in order to stabilize the situation.

Gee, I wonder who will pay for that if the liquidated bank's assets aren't enough?

[rocktivity]

3. That's a shame

and just when they've started a world tour, not to mention appearing on Steve Colbert...



:evilgrin:
rocknation

[hisownpetard]

4. Why should I care about Limbaugh's banking problems?

:hi:

[wryter2000]

5. LOL

I actually read it that way at first.

I was picturing him taking his limosine up to the front of the bank, breezing by the mere mortals who've been standing in line for ours, and then lighting up the obnoxious cigar and blowing smoke into the teller's face.