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It’s Official, Office of Thrift Supervision Closes IndyMac, FDIC Named Conservator

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Today the FDIC announced that IndyMac Bank, F.S.B., Pasadena, CA, was closed by the Office of Thrift Supervision (OTS).  As conservator the FDIC will establish and operate the new IndyMac Federal Bank, FSB to maximize the value of the institution for a future sale and to maintain banking services in the communities formerly served by the failed bank.  The insured deposits and substantially all the assets will be transferred to IndyMac, FSB.  Brokered deposits will be held by the FDIC and those insured deposits will be paid off when the insurance determination is complete.

RMD was forwarded a separate announcement from the OTS which sated that the closing stemmed from a deposit run that began and continued after the public release of a June 26 letter to the OTS and the FDIC from Senator Charles Schumer of New York.  The letter expressed concerns about IndyMac’s viability and over the past 11 business days depositors withdrew more than $1.3 billion from their accounts.

“This institution failed today due to a liquidity crisis” said OTS director John Reich. “Although this institution was already in distress, I am troubled by any interference in the regulatory process.” IndyMac is the largest OTS-regulated thrift ever to fail and, according to FDIC data, the second largest financial institution to close in U.S. history.

IndyMac Bank, FSB had total assets of $32.01 billion and total deposits of $19.06 billion as of March 31, 2008.  Of the $19.06 billion of deposits about $1 billion of them are potentially uninsured deposits and are held by approximately 10,000 depositors.  Based on preliminary analysis, the estimated cost of the resolution to the Deposit Insurance Fund is between $4 and $8 billion.

The press release didn’t mention anything about Financial Freedom but it looks like they will be selling it soon.  To read a copy of the press release click the link below.

FDIC Establishes IndyMac Federal Bank, FSB as Successor to IndyMac Bank, F.S.B., Pasadena, California

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