A morning run on IndyMac Federal

This is Santa Monica this morning, where about 100 customers were lined up when the IndyMac Federal branch on Wilshire opened for its very first day of business. Judging by what I saw and heard, a number of customers have decided not to do their banking with the federal government.

"We're gonna close a couple of accounts," Jack Freed, of Stevenson Ranch, told me. "We're just nervous. Not that any other bank would be any better, but as least they haven't been taken over by the FDIC."

The line looks shorter than it is -- it takes a left turn and snakes back into an alley, which at least offers some shade. I spoke with four customers, all were cleaning out their accounts. One guy figured he would lose $50,000 -- he says a teller had told him his money would be safe as long as no single account held more than $100,000.  The guy holding the umbrella and sitting down near the left says he was first in line -- at 3:50 a.m.

Click here for more on nervous customers pulling cash out of IndyMac.

Your thoughts? Comments? E-mail story tips to peter.viles@latimes.com
Photo Credit: L.A. Land

Comments

[CD]

SHAME ON THE BANKS. CROOKS, LIERS, THIEVES.
PAULSON IS THE HEAD OF THIS GANG OF THIEVES.

[buz]

Reminds me of the lines that used to form outside new housing developments a few years ago. People literally camped out overnight to be first in line to grab that 650K condo before they all sold out.

[n_n]

The link to the story is a mailto link instead of regular link. Can you fix please?

[puckhead]

Why is the FDIC even going through the charade of opening all of the Indymac branches and pretending that it’s business as usual? No one wants to keep their money with the “new” Indymac and the FDIC is just wasting money by paying Indymac employees to keep the branches open. Have the customers submit a claim for the accounts with the FDIC and just close the bank and branches. Stick a fork in them.

[mike]

UM CD

shame on people with no money or income borrowing money

all i can say is thank god that this problem does not affect the better parts of los angeles.

hey pete: how about a blog about how this debacle is NOT affecting the good parts of L.A. ??

[Scott]

Shame on the idiots that couldn't afford the loan they begged for and shame on CD for not knowing how to spell.

[Jack]

"[H]e says a teller had told him his money would be safe as long as no single account held more than $100,000..."

Except it doesn't work that way. If you have three $50K CDs in one institution under the same name, the total FDIC guarantee is $100K. Your other $50K is twisting in the wind.

(A married couple can juice the limit by having two accounts in only one or the other spouse's name and then an account in a joint name.)

[Laura]

That's right it's 100K per name, not per account. I thought that several yrs ago as well...still though what mess.

I don't understand why the federal gov. had to take over Indymac? Someone explain this...

If the bank is going to fail let it fail and the account holders can make a claim to the FDIC for their money. Aren't the account holders going to have to do that anyway? I'd like to know if these people standing in line actually received their money today?

Way to much gov. involvement. I don't like it...master plan I'd say.

[Laker]

puckhead,
I still keep my money with Indymac federal. Why do you say that nobody wants to stay there???
As of today, I get 3.7% on a liquid savings account. Nobody can beat that.
If they lower the rates, i will leave them...

Jack,
If you are marries with Jane and both of you have 3 accounts:
Jack has personal account $100K, Jane has personal account $100K, and you also have a 3rd joint account with $200K.
Guess what, according to FDIC website, you are insured for $200K total, that means the other $200K are NOT insured......and most likely that 50% of the other $200k is gone...

[Laker]

Laura,
The reason FDIC took over is to calm down the people/depositors in other institutions as for the safety of their money. They want to show that this process is standard and that you will receive you funds up to $100K with no problem.
Also, FDIC will try to sell the bank to another bank (Wells Fargo, BoA) and thus transfer all accounts automatically.
I had an account with NetBank that was closed about last year. ING Direct took them over, and the FDIC did not need to take control and all that good stuff.
Thing is Netbank was 50 times smaller than Indymac...today there are hardly any companies that have to cash to buy other companies..,without government help aka JP Morgan chase....

[CD]

Bad spelling , moi ? C'est impossible !!

[Gina]

Laker, not so. Jack's account is insured to $100,000, Jane's account is insured to $100,000, and their joint account is insured to $100,000. So the FDIC will cover $300,000 in their case for three different accounts because each account has a different ownership. As well, if they each opened an account in the name of a recovable trusts, naming the other as survivor beneficiaries, they can take the total to $500,000, but they have to have five different accounts. (If either Jack or Jane died after the accounts opened but before bank failed, then they would not have the $500,000 coverage.) The Wall Street Journal today has a good story on how to set up your accounts for max coverage. The accounts must be titled correctly, however, or the coverage may not kick in. Sometimes recovable trust accounts are not set up correctly by a bank so the FDIC would not consider it an account with a separate ownership.

[alice B Toklas]

Herbert Hoover's slogan was "A chicken in every Pot". Bush's slogan is "A $479K house for every immigrant!

Pedro and Anna and their 3 kids wanted a piece of the American dream...no down, no docs, stated income, no ID, Matricular card OK...loan for that brand new 4bd., 3ba in Palmdale. No problemo! Just sign on the dotted line!

What Pedro and Anna didn't realize is that that beautifuldream house would cost them $2500/mo; $4700/yr in property taxes; ins.; and maintenance. Aw heck...ne one told them! The problem is...Pedro is a gardener and Anna cleans houses...combined gross income of $35,000/year! They only have an 8th grade education, and had NO idea that their meager income would not cover the costs of this beautiful house on the hill.

Nor did they realize that they would have nothing left for food and living expenses...3 kids can become a little costly - even though the taxpayers provide them with a free education and all medical expenses.

Pedro, Anna, and the kids stayed as long as they could; but alas, they could not find another family or two to move in to share the mortgage, etc., and they were forced to leave their beautiful dream house when the sheriff arrived to change their beautiful shiny brass front door locks.

Let's face it folks...life's a bitch sometimes!

[Fourth Generation]

Oh goodie! A good old run on the bank. Let's keep up with this one great American tradition. Who said old times never come back?