A run on Indymac? Not at this branch.
News item: IndyMac today blamed a U.S. senator for spooking depositors into pulling their money out of its banks. From Bloomberg: "IndyMac Bancorp, the U.S. mortgage company forced to stop most of its lending as capital deteriorated, has faced 'elevated levels of deposit withdrawals' since Senator Charles Schumer said last month the bank may fail. Schumer's comments about the California lender's reliance on deposits purchased from third parties are causing customers to pull their money and making it harder to raise funds, the company said in a regulatory filing today."
Your blogger biked over to the Santa Monica branch of IndyMac's bank this morning and witnessed no evidence of an old-fashioned run on the bank. Two elderly gentlemen were waiting on the sidewalk for the bank to open at 9 a.m. Neither wanted to be quoted by name, but both were willing to talk.
One of the two told me he was closing his account. "I know it's insured," he said. "I'm just concerned about it. I don't want to be last in line." He peered inside the bank and asked, "Do you think they're going to open today?"
I asked the second gentleman if he too was closing his account. He tilted his head a little and gave me a look that said, "Are you kidding?"
"It's FDIC-insured!" he said loudly. "It's guaranteed!" I asked if he knew of the bank's recent troubles and he interrupted: "It's on the front page of the Los Angeles Times! It's in the Journal!" He said he was making a withdrawal but not closing his account.
The first gentleman interrupted: "Do you think they're going to open today?"
The branch did open, at 8:50 a.m., 10 minutes ahead of schedule.
Your thoughts? Comments? E-mail story tips to peter.viles@latimes.com
Photo: Advertisement at the Santa Monica branch of IndyMac.
Credit: Peter Viles
They have 18 billion in deposits, 96% of which is insured...
Doesn't that mean 700 million isn't insured?
You get car insurance in case you get in a crash, but the everyone knows to not get involved in a crash if at possible to begin with. I think it is simple prudence for people to withdraw money in institutions with questionable financials. For those with deposits over the insured amount they quite simply have to get their money out, it isn't prudence it is financial survival.
Posted by: Cal | July 08, 2008 at 11:41 AM
I think you need to give LA commuters some more time to make their way down to the branch...I bet there will be an even greater run on the bank now that the Indymac news is frontpage material. I think the general public always lags the media by a day or two.
Posted by: Mortgage Truth | July 08, 2008 at 11:42 AM
Damn. You know what immediately came to mind when I saw this poster? The infamous Lyndon Johnson daisy ad:
http://www.youtube.com/watch?v=63h_v6uf0Ao
Next up - Downey Savings:
http://finance.google.com/finance?q=dsl&meta=hl%3Den
Posted by: TakeFive | July 08, 2008 at 11:44 AM
I suspect there's no run on the bank because, well, there's no reason to be concerned at all. The LAT should write the article the WSJ wrote a few weeks ago on the mechanics of an FDIC bank takeover. Short version: it's not "It's a wonderful life."
The FDIC says it typically takes 1-2 days to get your money. Recent failures have taken less (bank closes Friday, another bank has your money on Monday). Here's the actual information, not the hype:
http://www.fdic.gov./deposit/deposits/insured/yid.pdf
Next time you go to the bank look at the FDIC sticker and ponder the words "backed by the Full Faith and Credit of the United States Government." If that makes you uncomfortable, by all means go nuts and pull your money out of the bank. Doing that guarantees that you, and every other taxpayer, are going to have the privilege of bailing out IndyMac. Or, keep your wits about you, let IndyMac try and survive, and maybe in the process save you me and everyone else some tax money.
Posted by: bode | July 08, 2008 at 11:51 AM
I AM PRAYING THAT INDYMAC SHALL SURVIVE AND CONTINUE TO GROW AND GROW AND GROW..THE MISTAKES THAT WERE MADE SHALL REPEAT ,,THE PEOPLE WHO HAVE DEPOSITS SHOULD ALL GET THE MONEY BACK,,,AMEN
Posted by: GEISHA BULLHEAD | July 08, 2008 at 12:34 PM
Indy bank is now offering the highest CD interest that I could find. A 4.45 yield on 5k or more. I guess they are trying to shore up their base. I'm considering putting some in for a year. What's the worse that could happen??? The stock market already has beaten me down almost 20%...............
Posted by: Rayo | July 08, 2008 at 04:33 PM
Has anybody stopped by the FDIC website to check out how other banks' finances are? Readers will be surprised at how many recognizable names are in trouble. Needless to say, the government is mum on this because they don't want to create a panic.
Posted by: TrojanDLA | July 08, 2008 at 05:02 PM
Check how much usd fdic really has.
few banks like imb go down fdic will be in red.
Posted by: ml | July 08, 2008 at 08:40 PM
The IndyBank ponzi scheme; its a game of musical chairs.
Where will you be when the music stops? The music goes
round and round and it comes out here.
George and Mary Bailey are in Hawaii on their honeymoon.
As Bedford falls. And Juju pedals.
Posted by: yours truly, Johnny Dollar | July 09, 2008 at 06:13 AM
Johnny Dollar...it's ZUZU's petals.....
Posted by: la voce bella | July 09, 2008 at 06:04 PM
Indymac stinks!!
Posted by: Luv4550 | July 10, 2008 at 02:40 PM
La Voce Bella....
and its Bedford Falls
"pedals" as in bicycles around...Bedford Falls.
Posted by: yours truly, Johnny Dollar | July 10, 2008 at 04:03 PM
La Voce Bella..
better to pedal around Bedford Falls...
than down Mandeville Canyon.
Worst thing could happen to you bicycling around
Bedford Falls is to have Mr. Potter roll past you in
his wheelchair and then slam on his brakes in front
of you.
Posted by: yours truly, Johnny Dollar | July 10, 2008 at 04:07 PM
"Countrywide. You can depend on us."
(.....to do what?)
Posted by: yours truly, Johnny Dollar | July 11, 2008 at 07:15 AM
YOU GUYS ARE ASLEEP. MUCH OF THEIR MONEY HAS BEEN RAISED VIA THE INTERNET.AS A DEPOSITOR ON THE EAST COAST I HAVE BEN UNABLE TO GET A PHONE ANSWERED FOR 4 DAYS.LEAVING MESSAGES 4 TIMES HAS RESULTED IN O CALL BACKS AS PROMISED.WE HAVE HELD FOR 18 HOURS TOTAL TRYING TO GET SOMEONE IN ORDER TO WITHDRAW FUNDS.IF YOU PHYSICALLY CAN GET THERE YOU ARE LUCKY.TO GO TO A BRANCH AND IMPLY THERE IS NO RUN IGNORES HOW THEY OBTAINED DEPOSITS.THERE IS A RUN YOU JUST CAN'T GET YOUR MONEY.
Posted by: Walter | July 11, 2008 at 01:42 PM
I think Charles Schumer, the senator, may have illegally bashed IndyMac's financials a month or so ago. I believe it is illegal to degrade any federally insured banking instituion, and this prohibition is to help stabilize the banks to prevent a "run on the bank," as happened in the 1930's. Maybe some smart reader could research this.
Posted by: ArmyVet | July 11, 2008 at 07:30 PM