Consumer Group Targets IndyMac Over Alt-A Mortgages
As if IndyMac Bancorp Inc. (IMB) didn't have enough problems of the real variety right now -- trying to find sources of capital among them, as bank losses tied to Alt-A mortgages mount -- the Center for Responsible Lending on Monday took aim at what many expect to be the next target for consumer groups' ire, now that Countrywide Financial is no more. The CRL's latest report, "Indymac: What Went Wrong?", claims that the thrift "put itself in a hole by engaging in unsound and abusive lending during the nation's mortgage boom." The report was released on the heels of a leaked letter from Sen. Charles Schumer (D-NY) to bank regulators last week that questioned the bank's financial footing amid growing losses. The report collects the stories of 19 former employees from interviews and court documents, and paints a picture of IndyMac that sounds similar to the brush used to paint Countrywide's business practices. "[T]he drive to close loans ruled even when IndyMac's own risk experts recommended against approvals," the CRL claimed in the report. "CRL's investigation provides a body of evidence that discredits the idea that IndyMac and other lenders were victims of overreaching borrowers or rogue mortgage brokers," said Michael Hudson, the report's primary author and a senior investigator at CRL, in a press statement put out by the consumer group on Monday. The timing had more than a few industry participants rolling their eyes, based on HW's discussions with executives. "Indy's got problems that they've yet to own up to, sure," said one executive at a national bank, who asked not to be identified in this story. "But coming out with something like this right after Schumer's letter? And right as Countrywide exits? A little too convenient a truth, at least in my eyes." The CRL allegations were the subject of unusual vitriol from the bank on Wednesday morning; in a press statement on its corporate blog, IndyMac communications director Grove Nichols characterized the report as a "hit piece" and said it was "shoddy journalism at best and cannot be considered fact-based research in any way." "The CRL never contacted anyone at Indymac to check on any of the facts they assert or to get our response on any of the issues they have raised," Nichols said. Nichols said many of the claims in the report were culled from plaintiffs' complaints in pending lawsuits -- one of which includes the CRL as plaintiff -- and that IndyMac wouldn't comment heavily on the claims made against it, preferring to "let these matters be decided in the courts," adding that he was "confident in the outcome." "Indymac is at the center of a housing and credit crisis the likes of which has not been seen since the Great Depression," he said. The bank's stock close at $.65 on the New York Stock Exchange Tuesday, and has been below the $1 watermark for roughly a week. Disclosure: The author held no positions in publicly-traded firms mentioned herein when this story was originally published. HW reporters and writers follow a strict disclosure policy, the first in the mortgage trade.