Siyonara Indymac

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[quote author="PadreBrian" date=1216124197]Don't worry. TD Ameritrade has ZERO mortgage paper. :) Just a fun coincidence.</blockquote>


It is almost certainly a coincidence (hopefully), but my understanding from this thread (http://www.irvinehousingblog.com/forums/viewthread/2630/) is that the failure of IndyMAC could in theory be enough to take down a brokerage whether or not they are holding any mortgage paper.
 
<a href="http://www.reuters.com/article/bondsNews/idUSWBT00941020080714">FDIC's Bair halts foreclosure on IndyMac mortgages</a>



<em>WASHINGTON, July 14 (Reuters) - The Federal Deposit Insurance Corp has temporarily halted any foreclosures on the $15 billion of bank-owned mortgage loans found in IndyMac's portfolio, FDIC Chairman Sheila Bair said on Monday.



Bair said in an interview on CNBC television that IndyMac, which the FDIC took over after it failed on Friday, had a $200 billion mortgage servicing portfolio.



She also said the "overwhelming majority" of U.S. banks are "safe and sound." </em>



I wonder if when the FDIC gets going on the foreclosures again, if they will discount them heavily, or price them at WTF prices? I know during the S&L;crisis, they were selling assets for cheap.
 
[quote author="EvaLSeraphim" date=1216112948]Why the FDIC didn't print out 10 sheets of paper explaining this and have the "next 10" read it before they came in the branch for their turn is beyond me.</blockquote>


<em>*graph shakes and scratches head from the picturing the image of the FDIC being just like FEMA.*</em>
 
[quote author="skek" date=1216105567]Graph, I know you are a snarky bastard but I didn't read your post as making fun of senior citizens. Your posting of the picture just provoked my initial reaction -- I dunno, maybe the old guy in the picture reminded me of my late grandfather, maybe it was the realization that people who didn't have anything to do with the housing bubble are being hurt by it, maybe it was the fact that our "greatest generation" deserves better than to have to live through another Great Depression and all that entails. In any event, I just wanted to express some sympathy for folks like the gentleman in the picture. The "making fun of senior citizens" started after my post.</blockquote>


Eh, I just wanted to be clear about what my intentions were, not only to you but everyone else. I also wanted to add my rant, which I think adds to your point. I [strike]think[/strike] know there is some serious lack of financial understanding going on in society today, and I would hate for younger generations to be pushing the Kool-Aid onto their parents. Some of those people remember what it was like to have real bank run, or at least vividly recall the S&L;crisis. I remember my dad taking me to the Lincoln Savings to withdraw the savings account he had set up for me after the FDIC had taken them over. I wasn't that young, but he wanted to teach me a lesson from his mistake, and show the teller who their customer really was. Many people do not have that kind of memory in their head, but I do and I would never have put my money into an IMB account even if their interest rate is twice what my bank's rate is, and I wouldn't let my mom either.
 
I read in the Daily Pilot this morning about a CDM man who had $600K deposited at the Costa Mesa branch, only $400K of it was insured. 10,000 accounts worth $1B are uninsured. I really didn't think that people that had that much cash would put it in an uninsured situation. There are plenty of banks to spread around $100K deposits and $200K IRAs. ????
 
I just went to double check that my bank (OCTFCU) was FDIC insured... and its not

I guess credit unions don't get FDIC insured they are insured by the National Credit Union Administration (NCUA)



I have never heard of NCUA... can someone shed some light on them? Are they basically the same as FDIC?
 
Since this is such a popular thread that has been at the top of the forum list the past few days...



Could a mod PLEASE correct the title spelling to the correct romaji, which is "Sayonara"? Seeing "Siyonara" is getting annoying...
 
[quote author="FairEconomist" date=1216119085]The Schumer business shows the regulators were being criminally negligent. The FDIC is estimating a 60-80% recovery for deposits. They had already lost a THIRD of the money deposited with them! It's a total outrage that such a bank was operating - never mind that it was paying above-market savings rates while continuing to make bad loans. And - get this - IT WASN'T EVEN ON THE WATCH LIST!



So what exactly is Schumer supposed to do? Hypothetically he's on the oversight committee - but the Bush adminstration won't even respond to subpoenas, so there isn't much they can do, and they're clearly ignoring their responsibilities, since IndyMac should have been shuttered ages ago. So he either lets them continue to sit on their hands while IndyMac racks up billions more in losses the feds will eventually pay for anyway, or he goes public. Well, he saved the country a billion or two on IndyMac since they're closed now and no longer adding to losses, so bully for him. What we need now is an investigation of why the FDIC and OTS were ignoring a hopelessly insolvent bank. That, though, will have to wait for a president who will recognize and obey the law and subpoenas.</blockquote>


You're missing my point. I completely agree that IndyMac was unsound and needed be shut down or sold. But again, look at Fremont, the Feds did it without creating a run on the bank and wholesale panic. Look even at Countrywide. There was a mini run, but it got sold to B of A (with or without Fed help?) without the Feds having to step in as middleman. Also look at E-Trade. There was a mini run there, but the bank recovered because the run was small enough that they could take interim measures. IndyMac had no such opportunity.



Keep in mind that just because the FDIC does not announce what they are doing does not mean they are doing nothing. The point is to prevent a run and worsen conditions for the bank and make it more difficult to recover, sell or liquidate.
 
Thanks for that Eva. Until I read your post, I had been under the view that it was IndyMac who posted a $900M loss last quarter, figured they had no one to blame other than themselves. I see your point that there could have been less chaos, minimizing the fall out.
 
Just to follow up. I was listening to "Air Talk" on the way into work and they were interviewing someone from the FDIC. A caller who had money at Indy asked about WaMu given its share price, analyst recommendations, etc., and the FDIC rep said in no uncertain terms, <em>"We do not comment about ongoing bank operations."</em>
 
[quote author="EvaLSeraphim" date=1216163562]

You're missing my point. I completely agree that IndyMac was unsound and needed be shut down or sold. But again, look at Fremont, the Feds did it without creating a run on the bank and wholesale panic. </blockquote>


But the regulators had obviously decided they were not going to shut it down, by any method. They had refused to even watchlist it. They had clearly made the decision to let it go on indefinitely and unless somebody forced their hand they were happily going to let it continue racking up 2 billion or so a year in losses for the treasury. If they had been doing their jobs, Indy would already have been merged and solved.



The real problem is that there are 28 billion in banks <i>worse</i> than IndyMac (watchlisted) and god knows how much in banks like Indy that should be shut down but which are being ignored. And all those banks are sitting around racking up losses. If you want to see REAL panic, wait until the FDIC goes broke because the regulators refused to shut down insolvent banks and the banks racked up enough losses in the meantime to take the whole system down.



That, I think, is the crux of the matter. The regulators have decided to do nothing and hope that the mess can be dropped, considerably enlarged, in somebody else's lap. Schumer knows this and is trying to make them actually do their jobs. It would be best for everybody (except possibly the administration leadership) if the regulators did their jobs and closed down banks properly. But since they're not, better to shutter them now, cheaper, and reduce the risk of a complete banking system collapse later.
 
<em>* Trooper makes a mental note to find out where trojanman lives and resolves to give him a ticket *

</em>

Seriously, that was such a callous comment. Using a guestimate on his age, I'm sure this old guy was alive during the last Depression and wants his money out NOW. My Gram lived through it and used to keep most of her cash under her mattress, no kidding. She never forgot and never trusted banks again.



As she got on in years and dementia started to set in, she would frequently "lose" her jewelry. Everytime I went on a search for it, my first stop was under the mattress....where it <em>always</em> was. Funny, even in her altered state of mind, she still remembered that the mattress was the safe place.
 
<strong><span style="font-size: 16px;">Tempers Flare at IndyMac Branch, Police Called</span></strong>



<a href="http://ktla.trb.com/news/ktla-mortgages,0,1444873.story">IndyMadness</a> July 15, Encino
 
Seeing the business about a police scene at an Indymac branch makes me want to say something, but Eva already said it better:



[quote author="EvaLSeraphim" date=1216112948]This is what really annoyed me about the photos and stories. The Rubicon was crossed on Friday. Grabbing cash today won't make one bit of difference. In fact, it may be worse. You stuff your manilla envelope full of the cash you withdrew from a now safe bank (or as safe as any bank can be), hope you don't get robbed on your way to your car, and wind up depositing the cash with those nice folks at Downey Savings. People are doing far more harm than good by ratcheting up the hysteria. Moreover, it further compromises people's faith in the banking system at a time when such faith is needed, and what the FDIC's mission partially is.



Why the FDIC didn't print out 10 sheets of paper explaining this and have the "next 10" read it before they came in the branch for their turn is beyond me.</blockquote>


Ditto for the media. Really, every story on IndyMac should mention that it's *now* as safe as a bank can be. Why don't the TV reporters ask people "now that IndyMac is a branch of the federal government whhy do you want to take your money out?" I'm actually considering opening an account there since I'm with Wamu and I'd like an account I don't have to worry about getting closed.
 
[quote author="FairEconomist" date=1216174917]I'm actually considering opening an account there since I'm with Wamu and I'd like an account I don't have to worry about getting closed.</blockquote>


It won't get closed. It will just get . . . <em>transferred.</em> ;-)
 
i guess i'll have to ask...



what do you think the best thing for those with over 100K to do? i always wondered what those with let's say a million dollars do with their money...



1. make deposits into 10+ banks?

2. ??????



i just heard of a story of a friend of a friend that had 5 million in indymac....fdic called and offered 2.5million. he took it. sad situation...which made me think of what those over the 100K insured limit should do....
 
[quote author="arc777" date=1216213074]i guess i'll have to ask...



what do you think the best thing for those with over 100K to do? i always wondered what those with let's say a million dollars do with their money...



1. make deposits into 10+ banks?

2. ??????



i just heard of a story of a friend of a friend that had 5 million in indymac....fdic called and offered 2.5million. he took it. sad situation...which made me think of what those over the 100K insured limit should do....</blockquote>
Wow, losing $2.5MM can't be fun. I'd be ready to go postal. I guess the best thing to do is to diversify your investments. Open a few accounts at a couple of banks, open a few trading accounts with some muni bonds, and the rest you can invest in some other manner (business venture, real estate, commodities, etc).



Btw, GO TROJANS!!!
 
[quote author="arc777" date=1216213074]i guess i'll have to ask...



what do you think the best thing for those with over 100K to do? i always wondered what those with let's say a million dollars do with their money...



1. make deposits into 10+ banks?

2. ??????



i just heard of a story of a friend of a friend that had 5 million in indymac....fdic called and offered 2.5million. he took it. sad situation...which made me think of what those over the 100K insured limit should do....</blockquote>


UTM has a point: asset allocation. For cash, spreading the money around among various banks is what we've done. There are limits above $100K if one qualifies (e.g., I think joint accounts have a $200K limit), so that's fewer banks to have to deal with.
 
[quote author="Astute Observer" date=1216241800]The 50% payout is only the advance type. Later, when the FDIC consolidated the asset, he will expect the rest of the portions, or majority of it, to be send to him. Or I am completely wrong on this based on what happened to the other banks that were taken over by the fed?</blockquote>
<a href="http://www.fdic.gov/bank/individual/failed/indymac_q_and_a.html">Here's the FDIC's Q&A;sheet for IndyMac. </a> I think it will answer your questions.
 
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