IndyMac to Trim Operations, Suspends Commercial Lending

Late today Bloomberg reported that after losing 90% of its market value this year, Indymac may soon close some operations Chief Executive Officer Michael Perry said.  “We’re certainly going to whittle back some of our business activities,” Perry said in a telephone interview today. “We don’t have anything finalized, or even the plans developed right at this moment.”

Over the weekend, the LA Times reported that depositors were lining up at some of its San Gabriel Valley branches to pull their money after different reports were released that questioned the company’s survival.  Since June 26 Indymac customers have withdrawn about $100 million from the bank’s branches, or about 0.5 percent of total deposits, IndyMac said.

It turns out the trimming has already started… Today, ML Implode reported that an email was sent to customers of Indymac’s commercial lending unit that said:

“ICLC, due to the current market and capital constraints has ceased lending operations as of 7/1/08.

A formal announcement from ICLC will be coming out tomorrow regarding details and loans in process.”

An official notice was sent out a few minutes after.  There has been talk of the company exiting the home lending business completely but in his interview with Bloomberg, Perry said that speculation “is just a rumor. There’s no basis in fact for it today.”

On top of all of this news the company was blasted by the Center For Responsible Lending which released a 22-page report that accuses the company of “unsound and abusive lending” during the recent boom.  The CFRL interviewed 19 ex-employees and touches upon “Disneyland loans” which was a name given to poorly documented loans by Indymac personnel in honor of a mortgage awarded to a Disneyland cashier who reportedly earned $90,000 a year, per the loan application.

Indymac stock closed today at $0.62.

IndyMac to Trim Operations, Not Shut Down, Perry Says (Update1)

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