IndyMac Bank Seized by Federal Regulators; Second Largest Bank Failure in U.S. History
July 12th, 2008Via: Los Angeles Times:
The federal government took control of Pasadena-based IndyMac Bank on Friday in what regulators called the second-largest bank failure in U.S. history.
Citing a massive run on deposits, regulators shut its main branch three hours early, leaving customers stunned and upset. One woman leaned on the locked doors, pleading with an employee inside: “Please, please, I want to take out a portion.” All she could do was read a two-page notice taped to the door.
The bank’s 33 branches will be closed over the weekend, but the Federal Deposit Insurance Corp. will reopen the bank on Monday as IndyMac Federal Bank, said the Office of Thrift Supervision in Washington. Customers will not be able to bank by phone or Internet over the weekend, regulators said, but can continue to use ATMs, debit cards and checks. Normal branch hours, online banking and phone banking services were to resume Monday.
Based on a preliminary analysis, federal authorities said the takeover of IndyMac, which had $32 billion in listed assets, would cost the FDIC between $4 billion and $8 billion. Regulators said deposits of up to $100,000 were safe and insured by the FDIC.
IndyMac’s failure had been widely expected in recent days. As the bank was shuttering offices and laying off employees to cope with huge losses from defaulted mortgages made at the height of the housing boom, nervous depositors were pulling out $100 million a day. The bank’s stock price had plummeted to under $1 as analysts predicted the company’s imminent demise.
Here’s the report on this financial-sector disaster at the liberal political news-blog where I’m a regular commentor. Note my comment assigning possible blame for this fiasco on the repeal of the Glass-Steagall Act in 1999 by a Republican congress.
Excellent comment from a poster identifying themselves as “tm” from the above-linked blog:
And the guy who pushed for the Glass-Steagle repeal was Clinton’s Treasury secretary, Bob Rubin. And he is now Obama’s chief economic advisor. Which means that even if Obama wins, Wall Street will still be calling the shots, of course.
That would be me.
I saw another Wall Street-owned Democrat, the Senate Banking Committee chairman Chris Dodd, on C-SPAN the other day, arguing for a Federal bailout of Freddie Mac & Fannie Mae “because they are so vital to our economy and such wonderful companies”. The problem is, every failing company in the country will be able to make a reasonable case that they should be bailed out by the Feds (we are already seeing this with more and more companies dumping their pension obligations on the Pension Benefit Guarantee Corporation). This is the Conservative Nanny State our country has become. http://www.amazon.com/Conservative-Nanny-State-Wealthy-Government/dp/1411693957
The Obama Kool-Aid is starting to become a lot like that tea that some people make out of dried, pulverized opium-poppy pods: You have to hold your nose and chase it down with something sweet (“the lesser of two evils!”) to get something that awful-tasting down your throat; and while it gives one a good feeling after that, it’s a completely artificial good feeling that doesn’t last!
If you look at this map of the USA on the NY Fed, you will notice the concentration of foreclosures and non-prime loans look at lot like red/blue state maps with disaster concentrated in the Democratic-dominated states.
http://www.newyorkfed.org/mortgagemaps/