Breaking: Federal regulators take control of IndyMac
Breaking news from L.A. Times: "Federal regulators say they have taken control of Pasadena-based IndyMac and will transfer control to the FDIC."
More: "The federal government said it took control of troubled 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 Pasadena-based IndyMac, said it transferred control of the $32-billion bank to the Federal Deposit Insurance Corp."
Battered by bad loans, and a declining balance sheet, IndyMac is viewed as all but worthless by investors, who drove its stock down to just $.28/share today prior to word of the federal takeover. The shares had peaked at $50.11 in 2006.
The federal takeover of the bank comes just four days after IndyMac announced that, at the request of federal regulators, it was exiting the mortgage business and laying off more than half of its staff.
As recently as last week, the struggling thrift had denied that it was close to failure, saying it was working with regulators to improve its "safety and soundness."
But the Mortgage Lender Implode-O-Meter website reported earlier today, "The FDIC is in charge." of IndyMac. Full post: "The FDIC is in charge" was the verbal announcement ringing through the halls of IndyMac's Pasadena offices. "Everyone show up for work on Monday."
Will file more on this later. More on IndyMac here.
Your thoughts? Comments? E-mail story tips to peter.viles@latimes.com
Photo Credit: Bloomberg News
Is there anything at all that supports the inane notion that pricing will hold up in "nicer areas?"
I mean, is there any bit of news whatsoever that indicates financing is normalizing? the economy is stabilized? credit markets are functioning properly? energy prices are stable? foreclosures abating? job losses narrowing?
Anyone?
Or will the tens of thousands of homes in Newport, Irvine, West LA, Pas, South Pas, San Marino, Encino, South Bay, BH, Studio City, Los Feliz, etc. all hold their value because "shockg said so" and "the inventory increases are slowing" (nevermind shadow inventory) and "only in Fontucky."
Posted by: It All Happens on the Margin | July 11, 2008 at 05:50 PM
Run on a bank? FDIC rescue? I am scared sh*tless. As a small business owner, this scares the crap outa me.
We rescued a property (and friends) from foreclosure a year ago, gonna lose our shirts in the necessary remodel (how someone didn't die living there we are grateful for).
Not all of us are nuts. Not all of us are greedy.
Posted by: anonymous | July 11, 2008 at 06:33 PM
Yawn.
Just the beginning.
Give me a nudge when FDIC goes under.
Maybe there is a reason that old timers traditionally kept 5-10% of their net worth in PM's.
Think about it.
Posted by: E | July 11, 2008 at 08:02 PM
I blame the government regulators because banks like IndyMac were allowed to take risks within the limits the law allowed. I do not hear stories that IMB was violating the law. Clearly then the law gave them too much latitude in lending. They should have been required to more carefully verify assets and income before lending with substantial penalties to lender and borrower for non-compliance. Also more exotic Alt-A mortages and their ilk should have been disallowed. Now lets just enjoy our TEOTWAWKI because we cannot rewind. Unfortunately this may be merely the canary in the coal mine. We ain't seen nothing yet -no jobs, hyperinflation, no oil. Get ready for scavenging. No more spoiled video game days and SUV supersize me. Or not! I hope not and everything is just rosy. But I doubt it.
Posted by: Matt Boynton | July 11, 2008 at 08:08 PM
A friend and colleague of mine worked as a wholesale loan rep for Indy Mac a few years back. We've both been in real estate since 1980, but a lot of their hot-shot execs hadn't really seen a major downturn before.
My friend told warned an IndyMac V.P. that it made no sense to make 100% loans to borrowers with shaky credit and no income verification, especially when the market was nearing a peak.
"Nobody's ever lost a penny on these loans" was the V.P's response.
Famous last words!
Posted by: SoCalRealEstateNews | July 11, 2008 at 10:23 PM
This is the best news I've heard all year. Burn baby, burn. I hope all the banks collapse and we hit Great Depression II. Then I can afford a house on my $40k salary!!
Posted by: HousEHUNTER | July 12, 2008 at 03:16 AM
It is one thing to for a senator to send a letter of "concern" to the OTS or FDIC. It is quite another for him to purposely make the letter public. By making his "concerns" public, he all but ensured large depositors would quickly withdraw their money and cause this bank to collapse. If I were amongst the "top dogs" at IndyMac, I'd be putting together a class action lawsuit against Chucky.
Posted by: gkirkland | July 12, 2008 at 03:26 AM
Househunter, if you're not a troll, you might think about the possibility of not being able to buy a depresseion era house due to the $40k salary evaporating.
Posted by: Uncle Billy Went to Washington | July 12, 2008 at 09:33 AM
Indy will be one of many over the next few months that hit the wall. Really not a concern unless you are a major depisitor. Just one more reason to always stay in debt and do not be a chump and save.
Posted by: Sam | July 12, 2008 at 02:44 PM
Uncle Billy Went to Washington,
While HousEHUNTER will probably lose his $40K job if/when his great depression II hits. If he is not in debt, and has some savings in a healthy bank and/or under the mattress, he will find a job after 6-12 months to pay him about the same money.
However, he could then afford to buy a $80,000 house....same house that use to cost $800,000 in 2006....
Me personally don't think we will get great depression II. I do think we will have a very long recession, with many job lost, and many banks failed. The standard of living will collapse as the middle class will turn to poverty and welfare. Interest rates will rise to double digit, RE prices will over correct, All RE investors/speculators will burn and leave the RE field for some good time.
Posted by: Laker | July 12, 2008 at 03:39 PM
That post from HousEHUNTER pretty much illustrates why he makes $40K. Nuff said.
Posted by: puckhead | July 12, 2008 at 11:38 PM
Mark Mozillo was the leading force behind IndyMac's failure. He was given his position there as the President/CEO of the mortgage division, as a favor to his father who sold the bank years ago for $70M+. Mark is the most arrogant, self-serving bank failing employee I ever worked for!
Posted by: Greg Bradford | November 01, 2009 at 08:29 AM