WaMu wary of IndyMac cashier's checks

More strange doings tonight surrounding the failure and federal takeover of IndyMac: some rival banks are refusing to honor cashier's checks written by IndyMac -- even though those checks are backed by the federal government.

John Bovenzi, the FDIC official now running IndyMac, tells the Los Angeles Times today he is "deeply troubled by reports that there are financial institutions that are refusing to honor or are placing excessive holds on IndyMac Federal checks."

On latimes.com tonight: "Sheryl MacPhee, 46, said she liquidated a certificate of deposit at IndyMac's San Marino branch Tuesday morning after a two-hour wait. She then took the cashier's check to a Washington Mutual branch in South Pasadena to deposit. 

"MacPhee said a WaMu manager told her that under a new corporate policy, the bank was not accepting IndyMac checks. If a customer insisted on depositing the check, it could be eight weeks or more before the full amount would be accessible, she said she was told."

More: "WaMu spokeswoman Olivia Riley declined to discuss details of the bank's check policies. 'We have a check hold policy that takes into consideration a variety of factors,' she said. 'WaMu is accepting checks from IndyMac customers; however, depending on the specifics, funds will be subject to an extended hold period.'  Wells Fargo said it too was placing extended holds on many IndyMac checks as a precaution.

"Officials at the Office of Thrift Supervision, WaMu's chief regulator, are investigating the complaints about the checks, OTS spokesman William Ruberry said." 

Your thoughts? Comments? E-mail story tips to peter.viles@latimes.com.
Photo Credit: Bloomberg News
 

Comments

[Laker]

Peter,
Is this a joke or what???
If WAMU placed an eight week hold time on poor Sheryl MacPhee, she could never see that money....
You know why?
There is a good chance that WAMU itself will go under during those 8 weeks.
Don't be surprised to see another new bank Washington Mutual FEDERAL BANK....LOL
WAMU got to be kidding, they are insolvent themselves...an 8 weeks. Give me a break.
It also shows you the fundamental lack of knowledge by bank managers...They don't realize that today Indymac FEDERAL checks worth a lot more than WAMU checks and even Wells's checks (even after their good wall street day)

[Julia]

As a WAMU customer, I'm glad they're being careful. This would be a prime opportunity for criminals to make a lot of money counterfeiting checks.

[Tom Lindmark]

Obviously, her account was under the $100K limit or she wouldn't have received a cashiers check. Why in the world did she take money from a bank owned by the federal government and put it in a bank that is on the edge?

I guess this is why a guy like Schumer can panic a large part of the population.

[Nelcisco]

thanx for the tip Laker, you're sort of confirming my anxiety about WAMU, which I have $ in.

Revelations talks about the beast causing every rich, poor, free and slave to recieve a mark. Although its a religious theory thats believed by faith only,one may wander, I mean, how will the rich allow that to happen to them? They're generally in control of their own financial destiny..........OR ARE THEY????

we're living in times that nobody knows what awaits us financially, " Banks are financially sound" Bush says in his press conference Tuesday. Why is there so much anxiety then? HMMM?

[Duke of Moral Hazard]

Wamu? Isn't that the same bank that gave rep. Laura Richardson a mortgage when she had already defaulted numerous times and owned multiple homes -- indicating mortgage fraud on her loan applications?

Same Wamu that unilaterally rescinded her foreclosure while she was driving around in the most expensive taxpayer funded car in Washington?

Looks like she's a genius if Wamu has the same problems as Indymac -- she'll be able to go without making payments on her multiple homes for years.

[RichW]

Right on Laker !!

WAMU not honoring IndyMac FSB checks ? hahahaha now theres the epitome of the pot calling the kettle black...

[upthecreek]

Let me get this straight.. see takes all her money out of INDYMAC and runs to Wamu. Is this person clueless.
I think you can find a little stronger bank than Wamu
Hey!!! why not try Downey Savings..

"A fool and their money."...you know the rest

[Dave]

WaMu has always had absurd hold policies. I once tried to deposit cash into my account so I could pay my quarterly taxes. WaMu wanted to put a 10-day hold on the cash, notwithstanding that I had more than twenty times the cash deposit in a CD and that a cash hold violated the law. That was the last day I did business with WaMu.

[Doug in Toronto]

Working in the banking business as I do, I know one thing for sure: WaMu is not letting the funds sit there and do nothing. My guess is that the checks are clearing regularly, but WaMu is holding them to make a few bucks from the float before releasing the funds. An 8-week hold is ridiculous: 8 days is unusually long. Overnight MM funds don't have a good yield right now, so WaMu is keeping the funds a little longer in the hope of making some extra interest. However, I'm sure they'll do the right thing and pass this profit along to the depositors. Not.

[Steve]

Why would you put your money in the next loser Wamu/Downey. Does she want to repeat the Indy hell again. What is sage now is regional banks in the Rocky Mountian/Midwest region who do not have the loan exposure to CA/NV/AZ. You want to keep your money safe get your cerified check and fly to Denver asap and make a deposit in one of the highly rated regional banks, then move from the hell hole and live happily ever after.

[Michael Snyder]

Some years ago I had issues with a bank placing weeks long holds on cheques deposited in their ATMs. Not buying their line about the days they said it took to process a cheque, I made a deposit n a Saturday evening with a mathematical error. The correction slip was date & time stamped the following Sunday morning at 5am. On Monday I took that document & visited the branch manager. I let him spoon out his pablum about lengthy processing times, then I showed him the deposit & correction. To his credit his response was, "How much do we owe you?" I've stayed with that bank for the last decade.
WAMU is notorious for charging fees for charging fees & has been for years. What's more they're up to their eyeballs in the same muck that just sucked IndyMac under. Moving funds into that institution is akin to transferring from the Lusitania to the Titanic. In this age of electronic transfers the only reason to "hold" funds for more than a few hours is to gain interest off of other people's money. Can't Realtors loose their license for that?

[Fourth Generation]

Ha! Is not this laughable? WaMu putting restrictions on IndyMac, when WaMu is also in the hole? Unbelievable. They still think they are in any position to imposse conditions. People keep your money and yourself away from those pestilences of the banking industry. Have some pride for God's sake.

[chad]

About 6 years ago I had a checking account with Wamu and they put a 10-day hold on a cashiers check from a home equity loan which was written on a major bank (I think it was US Bank). I closed the account shortly thereafter.

I moved my account to Bank of the West. Last summer they put a hold on a large cashiers check from my credit union, though the check was drawn on BofA. It was a 10 day hold because they said the check was from out of the area (bad excuse--I'm in the SFV, the credit union is on the Westside, and BofA is, well, BofA) and I didn't deposit the check at the branch where I opened the account. I have never been real happy with Bank of the West but considering customer service is pretty much the same wherever you go I haven't gone through the hassle of switching somewhere else.

[Tombstone Realty]

I find it oddly amusing that WAMU is treating the US Government like a deadbeat check bouncer.

If I were the FDIC, I'd march in the corporate offices of WaMu with my little Fiduciary Army Squad, and tell them they HAVE to accept the checks with the following numbers, or else.

"Because we're the FDIC".

Of course, it may not be long before the FDIC goes marching into their lobby anyway.....

[TakeFive]

Posted by: Julia :

"This would be a prime opportunity for criminals to make a lot of money counterfeiting checks. "

Spot on.

There was a rush to make loans, and now a rush to clean up the mess. This is where big mistakes get bigger.

Lots of people have now been trained to bark "Katrina, Katrina, Katrina!" anytime the government doesn't immediately serve there needs.

Well we saw what happened with Katrina. The Gov handed out gift cards for housing & food and the money was spent on hookers and drugs. Billion$ have been wasted on Katrina relief because we hade to DO something fast. Meanwhile, New Orleans is still a wretched dump.

I say to WaMu - take all the time you need. After all, many are insisting the Gov is incompetent. And, this will give the depositors a chance for due diligence this time around.

[TrojanDLA]

I can only laugh.

[Nick]

This seems prudent, in light of the disaster the FDIC is currently creating by delaying insured payouts from IndyMac accounts. If the other banks are having trouble clearing the funds (which wouldn't surprise me, given the scrutiny the FDIC is applying to the IndyMac accounts), they would be prudent to put holds on the checks. Unfortunately, this has the effect of undermining the whole purpose for the FDIC: to provide security in the event of bank failures, to prevent runs on banks which are struggling.

If I were the FDIC, I'd do two things. 1) Make sure every cashier's check is payable immediately before you cut it, so that you can pay them immediately, and 2) Fine any bank which puts a hold on the funds beyond one day after they receive the funds (it would be up to the bank to show the OTS they didn't receive the funds). The FDIC needs to realize their job is to instill confidence, not pursue personal crusades and risky gambles with taxpayer money.

[yours truly, Johnny Dollar]

Southern California climate is Mediterranean;
Southern California money is Italian lira.
Former: run to. Latter: run from.
Funny money; but, I'm not laughing.
My wife has her money "buried in a box" far from a bank.
She is laughing. And, not "all the way to the bank."

[yours truly, Johnny Dollar]

WaMu? Rhymes with SNAFU.

[LA]

It seems only a matter of time before banks are so desperate that they start putting holds on deposits made in cash.

[mike]

i'll take a check from the indy mac any day. wamu is perpetuating a problem they are already having with that policy. also i am sure that the shareholders are thrilled that their bank is not accepting money at this time. i swear i sit here at my desk eating crow from the public all day for a salary of crap and these bankers get paid big bucks to make stupid descisions about millions of dollars and if i make one small f-up they fire me and put the next 30k per year guy in my spot.

[sgv]

I walked in to my local WaMu branch in San Marino on Tuesday, and was struck by the number of people waiting in line...that brach is usually like a morgue inside. The first thing that crossed my mind was I bet these are IndyMac refugees looking to deposit their money in to the next failing institiution.

[Candice]

I would just like to say I had a few checks cut from this Indymac fiasco that combined totaled over 100,000. I have an account at WAMU but never considered putting my Indymac checks in the bank. Reason is that WAMU stock is shaking and in light of Indymac WAMU is not really doing well. Hopefully they can turn themselves around.

I would gather WAMU is putting such long holds on Indymac checks even though the checks are guaranteed by FDIC is that they probably do not want a repeat of a similar 'money run' on their own bank. I am only assuming that a lot of people have regular savings or checking accounts at WAMU and as the Indymac FDIC checks are supposed to be able to be cashed if a person brings it in. If even 30 to 40 % of the Indymac checks are brought in to be cashed right away they would run out of their own WAMU available cash. YES they can get back their money from FDIC checks but that would take time (and even 1/2 a day in a bank now is precious time - remember the 11 day money run for Indymac and how much they lost in those 11 days). AND a bank needs to hold money to make money in their investments.

Also if a bank does not place a hold on the Indymac checks - think first - do you want money in this bank? They do not care to call and check if the funds are available. FAKE checks can be easily made too. A bank can easily go bankrupt from taking bad checks. BAD (fake) checks are not FDIC covered.

8 weeks is excessively long but yeah, WAMU is probably holding the funds to make more money. I would check other banks. I checked other banks and each bank's hold is around 5 to 11 days. I deposited into these banks as CDs so the hold period is not that much of a deal for me as I do not expect to withdraw right away.

No matter how bad WAMU is doing I hope people would not be too upset about their hold policy - just go elsewhere; and do not repeat 'money runs' as to bringing another bank down because its just too much hassle to wait in line AGAIN.

People also mentioned why are people taking money out of a FDIC run bank to go put into other shaky banks. Well, my reason is you are no longer gaining interest in the money you have in the CDs that you once had with Indymac as all accounts were calculated with a closing interest as of July 11. SO if I had left my money in the Indymac FDIC bank I would be leaving in dead money which if I withdrew early on the Monday I can open new CDs at other interest paying banks.

NO - I am not greedy I just want my hard earned money to be safe and making me money. People calling Indymac customers greedy for depositing in a bank that was offering high interest are just illogical. WE ALL NEED MONEY and we work to get money so its not right for anyone to say we are greedy to try to make more money from our money. If you don't have a bank account anywhere is the only reason I can see that you are calling others greedy.

[the problemwithcaring]

It seems only a matter of time before banks are so desperate that they start putting holds on deposits made in cash.

Posted by: LA |

WaMu already places holds on cash deposits made after business hours in an ATM (called temporary, one day or overnight holds), cash deposits made to open new accounts, and/or when transactions appear suspicious, say, cash deposits follow what WaMu considers prolonged periods of lack of activity.

Or whenever the hell they want. They are a bank, right? We are just the stoopid depositors.

[American Patriot]

How about forcing the banks that put excessive holds on the money to pay a 50% - 100% interest rate on those checks. OR put those banks next on the list to be investigated/audited. Sounds good to me!