Update: IndyMac to slash 53% of jobs, halt retail, wholesale lending
Breaking news on IndyMac today: The troubled mortgage lender is halting retail and wholesale lending and will lay off more than half of its staff, according to Calculated Risk. Acting at the request of federal regulators, IndyMac said today it will slash 3,800 jobs in the next couple of months.
The mortgage blog Blown Mortgage headlines its story, "IndyMac is done." The California company is one of the largest independent mortgage companies left in America, but it is clinging to life -- its shares closed at 71 cents today, down 98% from their peak of nearly $49/share in May 2006.
In a dire letter to shareholders, CEO Michael Perry acknowledged that federal regulators have told the bank it is no longer "well capitalized" and have requested a new business plan to keep the bank in business.
Federal regulators ... "have
advised us that we are no longer 'well capitalized', which we stated
on May 12 was a possible scenario," Perry said in the letter today. "Our regulators have also asked us
to submit to them a new business plan for their review and approval,
something on which we have been working with them for some time. We
have agreed on the basic elements of the plan, and the regulators have
directed us to begin executing on it."
More: "As a result of the above, we have made the difficult decision,
effective July 7, 2008, that we will no longer accept any new loan
submissions or rate locks in our retail and wholesale forward mortgage
lending channels, except for our servicing retention channel. ... Unfortunately,
the above actions will necessitate the reduction in our present
workforce from approximately 7,200 to roughly 3,400 or so over the next
couple of months, which should reduce our operating expenses by roughly
60%."
Please note: Headline corrected.
Your thoughts? Comments? E-mail story tips to peter.viles@latimes.com.
Photo Credit: Bloomberg News
Stock's down 99%. Investors have lost hundreds of millions of dollars.
Company laying off thousands more. Can't even pay the severance they promised just recently.
Shutting down the main business of operation. Not allowed to even write new loans. Feds on their heels. CFO canned last week. Billions of bad debts. Dozens of lawsuits, no doubt more coming.
Yet the CEO is still employed? A 50% paycut? A 100% paycut is more like it.
Posted by: Anonymous | July 07, 2008 at 02:13 PM
During IndyMac's hayday I worked from them. As long as you were breathing, your loan was approved. Countrywide and all of the assoicated companies should have never been in business. The mortgage banking industry should be ashamed of what they have done to this country. Sound underwriting decisions were thrown out the window. Glad I did not work there for very long. I refused to compromse my reputation and left a few years agon. Just like Mr. Mozillo, Mr. Perry will not suffer any consequences- only the employees will.
Posted by: Former IndyMac Underwriter | July 07, 2008 at 02:38 PM
Mike Perry should be fired immediately. He was way too inexperienced when he began leading this company and it has shown. Indy is a spin off of Countrywide, another loser with the same mentality
Posted by: Joe Mollen | July 07, 2008 at 02:39 PM
Greed, Greed, Greed! Go for it baby. Does not it seem this a "go-for-it" society where you fill your bag and who cares about the people you lay-off, the families you hurt, and generally who cares! But the CEO's know how to play the game. Act real concerened, say comforting things, and play the "I'm not accountable game". Is any body out there that niave to think Angello M., and this blowhard from IndyMac gives a hoot. Is anybody that stupid out there that thinks Bush and his VP give a damm.
Posted by: Anonymous | July 07, 2008 at 02:40 PM
As a former customer, I cannot tell you the joy that I feel. I would only be happier if they shut down completely.
Posted by: russell | July 07, 2008 at 02:54 PM
Wait until the laid off employees meet all their loan defaulters at the homeless shelters. It's not going to be a pretty sight.
Posted by: August | July 07, 2008 at 03:00 PM
I guess Countrywide is the only one with the fed sponsored buyout that lets the ex CEOs walk away with millions in severence.
All the layoffs in loan processing, hmmm, I hear you can make a great living doing medical billing these days.
Posted by: anonymous | July 07, 2008 at 03:01 PM
russell:it appears your wish may come true, I have a new loan in process that I was going to directed to Indy but, Whew.........it looks like that won't be happening.
Posted by: Nelcisco | July 07, 2008 at 03:04 PM
More mortgage news, from Bloomberg today:
Freddie, Fannie plunge on speculation firms may need to raise $75 Billion.
Posted by: MyLessThanPrimeBeef | July 07, 2008 at 03:47 PM
This afternoon I walked by their HQ on Lake Ave in Pasadena. There were a bunch of employees milling about outside, commiserating about their fates. Some cursing at the management. Even though, according to the news article, the HQ office was relatively well off, in terms of layoffs.
I doubt if much work got done at that office today.
Posted by: Wes Boudville | July 07, 2008 at 03:53 PM
does anyone know what the CEO was bankrolling?
Just curious.
seax
Posted by: seax | July 07, 2008 at 04:03 PM
http://www.youtube.com/watch?v=_hnylJ2scVU&NR=1
Posted by: Nelson Muntz | July 07, 2008 at 05:07 PM
From IndyMac's letter to stakeholders (issued over the signature of Michael W. Perry, Chairman and Chief Executive Officer): "Given Indymac's current financial position and these significant layoffs, I strongly believe it is appropriate that I further materially reduce my own compensation. As a result, I have requested of Indymac's Board of Directors that they reduce my base salary by 50%. "
Read this carefully. Most executives take low base salaries and load up on options and bonuses. This guy isn't giving up much at all. A review of IndyMac's last few annual reports should be enlightening.
Posted by: Doug in Toronto | July 08, 2008 at 05:57 AM