Last week Bloomberg published the transcript from an interview with Federal Deposit Insurance Corp. Chairman Sheila Bair where she talks about why IndyMac’s high-risk lending and mortgage losses make it “unattractive”. Bair believes the high risk loans will force the agency to strengthen the firm and find a buyer. The interview gives good insight into why we haven’t seen a sale of Financial Freedom yet.
Below are a couple snippets from the transcript:
MS. WOODRUFF: Why couldn’t a buyer be found to pick up the assets and the deposits at IndyMac?
MS. BAIR: Well, this is a very large institution, and it did do a lot of high-risk lending. It has – you know, it had already stopped at the loan origination platform because its mortgage origination had just become not viable and was losing money. So it was a very large institution. It also did not have a strong what we call a core deposit base. A lot of the deposits were brokered, meaning securities brokers just placed deposits and the institutions – as opposed to the institution having a relationship with the customer directly. And even the deposits were not brokered that were in the branches were above market rates. So there are a number of things about this institution that, to be honest with you, make it unattractive to a potential purchaser. So what we’re trying to do now is do what we can to strengthen it, strengthen the asset quality, strengthen the servicing portfolio so we can sell it off and get a better value hopefully.
MS. WOODRUFF: Why couldn’t a buyer be found to pick up the assets and the deposits at IndyMac?
MS. BAIR: Well, this is a very large institution, and it did do a lot of high-risk lending. It has – you know, it had already stopped at the loan origination platform because its mortgage origination had just become not viable and was losing money. So it was a very large institution. It also did not have a strong what we call a core deposit base. A lot of the deposits were brokered, meaning securities brokers just placed deposits and the institutions – as opposed to the institution having a relationship with the customer directly. And even the deposits were not brokered that were in the branches were above market rates. So there are a number of things about this institution that, to be honest with you, make it unattractive to a potential purchaser. So what we’re trying to do now is do what we can to strengthen it, strengthen the asset quality, strengthen the servicing portfolio so we can sell it off and get a better value hopefully.
To read a copy of the full transcript click the link below.
FDIC’s Bair Says IndyMac `Unattractive’ to Buyers (Transcript)
