Crisis Deepens as Big Bank Fails

Post by **Linnea** » 07-12-2008 02:35 AM

WSJ - July 12th, 2008

IndyMac Seized
In Largest Bust
In Two Decades
By DAMIAN PALETTA and DAVID ENRICH
July 12, 2008; Page A1

IndyMac Bank, a prolific mortgage specialist that helped fuel the housing boom, was seized Friday by federal regulators, in the third-largest bank failure in U.S. history.

IndyMac is the biggest mortgage lender to go under since a fall in housing prices and surge in defaults began rippling through the economy last year -- and it likely won't be the last. Banking regulators are bracing for a slew of failures over the next year as analysts say housing prices have yet to bottom out.

The collapse is expected to cost the Federal Deposit Insurance Corp. between $4 billion and $8 billion, potentially wiping out more than 10% of the FDIC's $53 billion deposit-insurance fund.

The Pasadena, Calif., thrift was one of the largest savings and loans in the country, with about $32 billion in assets. It now joins an infamous list of collapsed banks, topped by Continental Illinois National Bank & Trust Co., which failed in 1984 with $40 billion of assets. The second-largest failure was American Savings & Loan Association of Stockton, Calif., in 1988.

The director of the Office of Thrift Supervision, John Reich, blamed IndyMac's failure on comments made in late June by Sen. Charles Schumer (D., N.Y.), who sent a letter to the regulator raising concerns about the bank's solvency. In the following 11 days, spooked depositors withdrew a total of $1.3 billion. Mr. Reich said Sen. Schumer gave the bank a "heart attack."

"Would the institution have failed without the deposit run?" Mr. Reich asked reporters. "We'll never know the answer to that question."

Mr. Schumer quickly fired back.

"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," Sen. Schumer said. "Instead of pointing false fingers of blame, OTS should start doing its job to prevent future IndyMacs."

Article:

http://online.wsj.com/article/SB1215814 ... whats_news

skydancer · Post by **skydancer** » 07-12-2008 07:06 AM

It seems that IndyMac couldn't find any other fiduciary to bail em out or they never would have given out pink slips this past week to so many of their employees.

Its standard for the federal banking regulators to walk in on a Friday morning, this gives em the entire weekend to run the necessary audits.

Unfortunately I've been involved in bank take overs ... first the federal regulators walk in before the next bank is allow to
run another audit. This is standard protocol to count and recount everything.

I had to do this three times in under 18 months when the bank I was employed by absorbed three other banks. Never did we or the FDIC have to deny any account holders there funds.

skydancer · Post by **skydancer** » 07-12-2008 07:22 AM

Here's a link to refresh the memories of some of the older crowd.

http://en.wikipedia.org/wiki/Savings_and_Loan_crisis

I'd also like to point out that the deregulation is what has gotten us in this situation today. It really looks as if its another Michael Milken scam.

SETIsLady · Post by **SETIsLady** » 07-12-2008 08:07 AM

skydancer wrote: Never did we or the FDIC have to deny any account holders there funds.

Thats good to know Skydancer.

Bobbi Snow · Post by **Bobbi Snow** » 07-12-2008 10:59 AM

But, wait! Didn't Phil Graham just yesterday tell us that we're in a MENTAL recession? Not a financial one??

Post by **Linnea** » 07-12-2008 11:28 AM

Say again - the third-largest bank failure in US history

...and, bring the popcorn?

Shirleypal · Post by **Shirleypal** » 07-13-2008 08:00 PM

U.S. Plans To Help Mortgage Giants
Steps to shore up mortgage giants Fannie Mae and Freddie Mac, whose shares have
plunged as losses from their mortgage holdings threatened their financial
survival, were announced by the Federal Reserve and Treasury Sunday.

MORE DETAILS:
http://www.clickondetroit.com/tu/5zihqVNGc.html

Psychicwolf · Post by **Psychicwolf** » 07-13-2008 09:56 PM

When Congress okays the Treasury to buy equity in Fannie and Freddie the American people just bought all that debt. Sure hope those folks pay their mortgages in a timely fashion! This isn't a bailout of the home owners, this is a sweet deal for the bond holders. SCORE!
And we have Senator Dodd's 300 billion Home Loan Aid Bill. More good money follows bad. The bulk of which will benefit his friends at Countrywide. How much money will we have to borrow from the Chinese to pay for this?
Advertising has us chasing cars and clothes, working jobs we hate so we can buy stuff we don't need. We're the middle children of history. No purpose or place. We have no Great War. No Great Depression. Our Great War's a spiritual war... our Great Depression is our lives. We've all been raised on television to believe that one day we'd all be millionaires, and movie gods, and rock stars. But the majority won't. And we're slowly learning that fact. And we're very, very pissed off.
But, watching the local news. they showed a few hundred morons in Brett Favre shirts protesting to keep him with the Packers... Meanwhile these iditos have no idea they are about to buy some FNM stock...Keep the sheeple at bay and you win!

Psychicwolf · Post by **Psychicwolf** » 07-13-2008 10:02 PM

Oh, and the other debt we're going to take on? GM amd Ford are in such trouble, the next thing is the Fed taking over the retirement plans for these giants.

Know how sweet those retirement plans are for those autoworkers? Well, you're going to, because we're going to be paying them!

Psychicwolf · Post by **Psychicwolf** » 07-13-2008 10:04 PM

Oh, and Iran starts trading oil in Euros next week!

SETIsLady · Post by **SETIsLady** » 07-14-2008 05:35 PM

Heres an interesting article that I came across today.

Let the Lawsuits Begin:
Banks Brace for a Storm of Litigation

In an article in The San Francisco Chronicle in December 2007, attorney Sean Olender suggested that the real reason for the subprime bailout schemes being proposed by the U.S. Treasury Department was not to keep strapped borrowers in their homes so much as to stave off a spate of lawsuits against the banks. The plan then on the table was an interest rate freeze on a limited number of subprime loans. Olender wrote:

The rest here

http://www.webofdebt.com/articles/bracing-storm.php

Psychicwolf · Post by **Psychicwolf** » 07-14-2008 10:51 PM

Avarice, mismanagement, ossification, combined with an increasingly competitive market. That should be the text on the GM headstone.

(Realignment is usually "busness" for layoffs)

e Source: General Motors Corporation

GM CEO Wagoner To Announce Company Actions to Align Business to Current Market Conditions
Monday July 14, 4:07 pm ET

DETROIT, July 14 /CNW/ -- (NYSE: GM - News) General Motors Chairman and CEO Rick Wagoner will hold a news conference on Tuesday, July 15 to discuss actions the company is taking to align the business to current market conditions.
The press conference will begin at 9:00 a.m. EDT in the Jefferson Room of the Renaissance Conference Center on the second level of GM global headquarters in Detroit. The satellite feed for the press conference is:

Satellite: AMC 16
Transponder: 23
Downlink: 12160 Vertical
Audios: 6.2/6.8
Analog, Ku Band

A listen and Q&A line will be available for media:

U.S.: 800.288.8974
Outside U.S.: 612.332.0335
Ask for the GM media briefing

Preceding the press briefing will be an employee broadcast that will also be made available to the media. The employee broadcast will begin at 8:30 am EDT. Wagoner will address employees for approximately 20 minutes. Satellite access to the briefing is available at the coordinates listed above.

Telephone access (listen only) for the media will be available at:

U.S.: 800.288.8974
Outside U.S.: 612.332.0335
Ask for the GM media briefing

A conference call for financial analysts and the media will follow at 11:15 a.m. The call will be hosted by Wagoner along with other members of the GM senior leadership team including COO and President Fritz Henderson, CFO Ray Young and Vice Chairman and Head of Global Product Development Bob Lutz. The call will begin with remarks followed by a question-and-answer session.
To participate in North America, dial 800.786.6596. To participate outside North America, dial 212.231.2906. The conference call will also be webcast live on GM's Investor website http://investor.gm.com in the Calendar/Events section. The webcast and charts will available via a hot link at GM Media OnLine (http://media.gm.com).

Archive: A taped replay of the call will be made available from 1:15 p.m. EDT, July 15, 2008, until 1:15 p.m. EDT, July 17, 2008. In North America, please dial 800.633.8284 (or 402.977.9140 for access outside North America) and enter reservation number 21388602 for access to the taped replay.

http://finance.yahoo.com/

Psychicwolf · Post by **Psychicwolf** » 07-14-2008 11:14 PM

Great article on the Freddie and Faniie bailout. Willem Buiter usually employs a rapier British wit to his columns. He's doesn't bother today...he heads straight for the jugular. LOL

The rescue of Fannie and Freddie by Hankie and Feddie

The bail-out of Fannie Mae and Freddie Mac by the combined forces of the US Treasury and the Federal Reserve Board is the ugliest exercise of its kind I have ever observed outside early transition economies and mature banana republics.

http://blogs.ft.com/maverecon/2008/07/t ... nd-feddie/

We're all sub-prime now!

Psychicwolf · Post by **Psychicwolf** » 07-14-2008 11:37 PM

Tomorrow's headline: "Dow Down, Run on Bank, Multiple Banks Stocks Tank"

I think the sheeple and holdout money managers may have a wakeup call tomorrow morning.

Shirleypal · Post by **Shirleypal** » 07-16-2008 03:37 PM

FBI Investigating IndyMac For Possible Fraud
The Associated Press has learned that the FBI is investigating now-defunct
IndyMac banks for possible fraud.
MORE DETAILS: http://www.clickondetroit.com/tu/5zmv4kHKh.html