Bankrupt Banker: IndyMac

FBI is investigating possible fraud at IndyMac

The FBI is investigating possible fraud at IndyMac, the California lender which was seized by regulators last Friday after America's biggest high street bank failure for two decades. Law enforcement sources told the Associated Press that the inquiry revolved around home loans made by IndyMac to risky borrowers and was focused on the bank itself, rather than on individuals who ran it.The FBI declined to comment on IndyMac specifically, although a spokesman said the scope of the bureau's examination of the sub-prime mortgage industry had broadened from 19 inquiries to 21 since April. A spokesman said: "We receive information from a variety of sources on a daily basis, and we have an obligation to review each allegation on its merits." Banking regulators took over IndyMac after a run on deposits, as customers withdrew $1.3bn in 10 days. At its peak, IndyMac had assets of $32bn. Under a federal insurance scheme, the first $100,000 of savings for each depositor is guaranteed. But anxious customers continued queueing outside branches to withdraw savings this week. Pasadena-based IndyMac is the fifth US bank to close this year, and is the biggest failure since the Chicago bank Continental Illinois collapsed in 1984. An estimated 10,000 customers could lose unprotected deposits of some $1bn. A New York senator, Charles Schumer, who wrote a public letter in June raising concerns about lax lending at IndyMac, has been blamed by the Office of Thrift Supervision for inciting panic among customers. Schumer argues that the OTS is responsible for allowing the bank to become vulnerable in the first place. IndyMac's demise has prompted jitters about other regional banks. Seattle-based Washington Mutual and Ohio's National City Corporation were obliged to issue statements denying liquidity crises this week after their shares plunged.

FBI is investigating possible fraud at IndyMac

The FBI is investigating possible fraud at IndyMac, the California lender which was seized by regulators last Friday after America's big...

IndyMac is the largest regulated thrift to fail and the second-largest financial institution to close in U.S. history

New chief executive of IndyMac Bancorp, brought in by the government to manage the failed bank, said new lending standards should prevent the kind of problems that have brought down credit markets.John Bovenzi, the chief operating officer of the Federal Deposit Insurance Corp., reassured consumers that bank failures have been rare in the past, and that if more banks do fail, the government has enough in reserve "I think the important point to make is that, historically, only a very small percentage of the banks on our problem banks list ever failed," he said on CNN late Sunday. "While there are 90 banks on the list, there would be no expectation that 90 of those banks would fail."Bovenzi took the helm of what will be IndyMac Federal Bank when the government stepped in late Friday afternoon to save the struggling institution.The Office of Thrift Supervision transferred control of IndyMac to the FDIC because it did not think the lender could meet its depositors' demands. IndyMac is the largest regulated thrift to fail and the second-largest financial institution to close in U.S. history, regulators said after taking control of the bank.As of March 31, IndyMac had $19.06 billion in total deposits.Bovenzi reminded consumers that all accounts worth $100,000 and less are automatically insured by the FDIC, which has $53 billion in insurance funds. And he noted that there are ways to structure accounts so that more than $100,000 is covered."If there are other bank failures in the coming weeks, I think the same message, if your accounts are under $100,000, you have absolutely nothing to worry about," he said. "You can still find ways to protect more if you like."Beyond $53 billion, he said the FDIC would have go to other banks to raise more money, adding that in that case, consumers could expect some of that to be passed on in fees."Well, obviously it's a difficult time and there were certainly institutions that made loans that shouldn't have been made," he said. "There are standards being put out, hopefully, at institutions with better underwriting going forward so that this problem doesn't repeat itself."

IndyMac is the largest regulated thrift to fail and the second-largest financial institution to close in U.S. history

New chief executive of IndyMac Bancorp, brought in by the government to manage the failed bank, said new lending standards should prevent th...