Breaking: Federal regulators take control of IndyMac

Yup, they show up on the fdic website under "quoth the raven, nevermore"

FDIC Failed Bank List here, for your perusal. Expect more soon.

http://www.fdic.gov/bank/individual/failed/banklist.html

Timely article from American Banker as to what it all means for the FDIC:

http://americanbanker.com/article.html?id=
20080709TREHT6H9

I thought the issue about the priority of the FHLB over the FDIC in regards to which assets they get was interesting. Definitely a doozy of a blowup.

I just hope that this will be remembered and that when mortgage lending rules tighten back up that people will see that there is a reason for due-diligence and sensible loan criteria.

Ban:

- teaser rates
- interest only payments for any period
- hidden fees
- loans without a down payment

Enforce:

- Due dilligence

Add new requirements:

- 50% of a mortgage has to be funded by sources within a 200 mile radius of the home.

The above will return the markets to normalcy for the long term.

Good Ridance, now it is time for Freddie Mac and co. to go.

Scared yet?

This is only the beginning, folks. Hope you have a king-sized mattress to stuff your money under.

Next week: Downey Savings and Loan

52Wk High: 65.67
52Wk Low: 1.66
Jul 11 - Close: 1.69

http://finance.google.com/finance?q=dsl&meta=hl%3Den

SO, what does the Fed takeover mean for those of us with loans (albeit nonshaky ones) from IndyMac?

Take the blinders off people we have been in a major recession since Dec 2007 and with the fall of IndyMac and soon Fannie Mae and Freddie Mac this is looking more like a depression. My bet is that at least 5 more banks and mortgage companies will fail. Looks like the stimulus checks really saved the economy.

Caledonian, see following link:

http://www.fdic.gov/bank/individual/failed/IndyMac.html

I believe banks should have a rating system just like restaurants posted on the front door, A through F credit ratings, etc. Let people know how safe their money is at all times.

This seems more than just some piddly recession - I mean, this is as if the whole market was built on quicksand, and now the whole damn thing is going down.

No point in sticking your cash in a mattress, when the mattress ends up being worth more.

Monday. Oh man Monday will be vicious on Wall Street - either because of people afraid of their bank, or because day traders are going to do their damnedest to push the weak over that financial cliff.

You were saying?......
I know in my advertising efforts with them, they
were beyond the valley of arrogance.
aka: what goes around comes around.

Windu: "Scared yet?"

Scared of what? I think everything is progressing along logically and I think America can handle the blow, especially if we recognize the problem. But Indymac going under, and the others to come, are manageable events. People need to be smart and be diversified as well as leave well within their means. Then the vagaries of economic whims wont ever be scary to them.

Now if I was highly in debt and was at the limit of my means I'd be scared. But they should have been scared a long time ago.

Caledonia Kid:
"If you had a loan with IndyMac Bank, F.S.B., you should continue to make your payments as usual. The terms of your loan will not change under the terms of the loan contract because they are contractually agreed to your promissory note with the failed institution. Checks should be made payable as usual and sent to the same address until further notice. "

http://www.fdic.gov/bank/individual/failed/IndyMac.html

I'm curious why we are saying IndyMac was "battered" by bad loans. According to my friend who worked there for eight years, most of the loans were actually "good loans," but when the market to buy these loans dried up, IndyMac was stuck with loans on its balance sheet that its business model was not prepared to deal with. Inside the company, the feeling is not that IndyMac was doing "bad" business, but that the environment changed so quickly it was ill-prepared for the transition. IndyMac never wrote sub-prime loans and exited the Alt-A market two years ago.

I just hope you all learned your lessons, those of you who voted for Bush and those of you who just keep blogging to keep Bush in power. This is your work.

The days of wine and roses are over. I told my cat no more fancy cat food for him. From now on it's rat food only. I don't know if he will ever get used to it though.

Also, why should banks have ratings? They are FDIC-insured, after all.

The banking regulator said it closed IndyMac after customers began a run on the lender following the June 26 release of a letter by Sen. Charles Schumer, D-N.Y., urging several bank regulatory agencies that they take steps to prevent IndyMac's collapse.

In the 11 days that followed the letter's release, depositors took out more than $1.3 billion, regulators said.

Banks have a rating system, it is binary though. They are either well capitalized or not and the switch is turned overnight by the FDIC.

Thgis is great................fee's, fee's, fee's............The moron that ran this Bank is gonn'na walk with millions! That's called a screw up general public......

I could have doubled my money today with FRE but I was sleeping in --hmm?

I love California and the USA!!!!

I wish T. Boone Pickens was on the ballot :)

This week, IndyMac collapses.

Next Week, Fannie Mae and Freddie Mac will fall.

Then, Lehman will become insolvent.

Who’s next?

Mr. Mozillo must be so proud of what he has accomplished along with the other disaters his greed created. Fate may have not written the final chapter. May he never live long enough to enjoy what he stole.

Hey, I live in LA too:

the FDIC itself uses rankings of bank capitalization, which are made only partially available to the public. I talked with a FDIC analyst myself a couple weeks ago, the reasoning for not full disclosure being that if the people knew that a particular bank is undercapitalized to the brink of being labeled "unsafe and unsound", then depositors (if awaken) would create a Schumer run (run on the bank), reinforcing the negative feedback loop and possibly bringing down the institution.

Hey, you also may want to know that FDIC funds are not infinite, in fact they are (before the IMB collapse) just $ 53 Billion (check the FDIC site and look for the DIF report) and possibly after IMB there will only remain $ 45 Billion to cover the remaining insolvent banks....it will only take 7-8 more Indymacs, or 14-17 half Indymacs to totally extinguish the FDIC fund, an event that seems very likely every passing day...which bank you have your hard earned money deposited in amigo? do you trust blindly that your money is safe???? ah and remember, any amount in excess of $ 100k at a bank is deemed at least a 50%, if not total, loss... adios...greetings from NorCal!

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."

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.

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.

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.

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!

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!!

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.

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.

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.

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.

That post from HousEHUNTER pretty much illustrates why he makes $40K. Nuff said.