Monday, July 14, 2008

Chronicles Of Depression 2.0: #150

Oh, let's do some IndyMac, the first domino to fall, last Friday.

IndyMac borrowers line up in California to withdraw their cash
PASADENA, California (Reuters) - IndyMac Bancorp Inc customers lined up outside a branch at the company's headquarters on Monday, hoping to withdraw their money after regulators seized what was once one of the largest mortgage lenders in the United States.

Several hundred people arrived around 4 a.m., five hours before the Federal Deposit Insurance Corp planned to open that branch.

Regulators seized Pasadena-based IndyMac on Friday after a bank run in which customers withdrew $1.3 billion of deposits over 11 business days, as worries about the company's survival grew, regulators said. The bank has 33 branches in Southern California.

The FDIC said the renamed IndyMac Federal Bank will cover insured deposits, mostly up to $100,000, and initially cover 50 percent of uninsured deposits.

"I have $360,000 in this bank, and I was misled by this bank," said Robert Clark, a Glendale resident who was waiting on line. "I gave the names of my mother, my sister and my brother on the account so I thought I would be insured. I don't know what to do. I really don't know what to do."

Emphasis added by me.

I wonder how many people sensed an actual run was going on at that bank over the course of those eleven days?

John Bovenzi, the FDIC's chief operating officer, talked with some customers and tried to reassure them as they waited for the doors to open.

"This bank is as safe and as sound as any bank in the country right now," he told one depositor. Bovenzi added that the FDIC was "going to get as much money as we can" to compensate investors with uninsured deposits.

Emphasis added by me.

That Should Scare The Shit Out Of You.

Gerard Cassidy, an analyst at RBC Capital Markets, on Sunday estimated that 300 U.S. banks might fail over the next three years because of credit losses and tight capital markets.

Emphasis added by me.

That 100 banks failing a year. That's about one bank about every three and a half days. For three years.

But you know these things never happen in an orderly manner. So some weeks we could have five banks failing. Plop plop plop plop plop!

Next article:

Feds cite Schumer in collapse of IndyMac

The point, however, is awarded to Schumer, who responded:
"If OTS had done its job as regulator and not let IndyMac's poor and loose lending practices continue, we wouldn't be where we are today ... Instead of pointing false fingers of blame, OTS should start doing its job to prevent future IndyMacs.''

Emphasis added by me.

Sounds like OTS [the Office of Thrift Supervision] was about as reliable as these guys!

Hey, give me one of these No Work jobs. I can do much No Work for pay! I'll even volunteer to do No Work overtime, goddammit!

One more time:

Sen. Schumer defends comments on IndyMac collapse
"The regulator here was asleep at the switch," Schumer said. "The administration is doing what they always do, blaming the fire on the person who called 9-1-1.

Ha! Good for him.

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