just in in-tray, the signal for a good old fashioned bank run
What are the odds that the FDIC shuts down IndyMac this weekend?
I agree with Schumer in this instance, but he certainly seems to have provided the ammunition for a bank run today as well.....
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IndyMac Shares Drop-off Causes Alarm
By JAMES R. HAGERTY
June 27, 2008; Page C3
The share price of IndyMac Bancorp Inc. dropped below $1 as worries grew about the mortgage lender's ability to deal with heavy losses on defaults.
Sen. Charles Schumer (D., N.Y.) sent letters to federal regulators asking them to more closely monitor the financial health of IndyMac, the thrift operator based in Pasadena, Calif. Sen. Schumer wrote that he is "concerned that IndyMac's financial deterioration poses significant risks to both taxpayers and borrowers and that the regulatory community may not be prepared to take measures that would help prevent the collapse of IndyMac or minimize the damage should such a failure occur."
The letters, drafts of which were viewed by The Wall Street Journal, were sent Thursday to the Federal Deposit Insurance Corp. and the Office of Thrift Supervision, which regulate IndyMac, as well as to the Federal Housing Finance Board. The finance board regulates the 12 regional Federal Home Loan Banks, which are owned by banks and thrifts but chartered by Congress.
IndyMac's share price has collapsed amid growing investor fears over the effects of rising defaults and falling home prices on it and other mortgage lenders. IndyMac shares closed at 80 cents on the New York Stock Exchange, down from $1.08 Wednesday and about $31 a year earlier. Under NYSE rules, shares can be delisted if they remain below $1 for an extended time.
Michael Perry, chairman and chief executive of IndyMac, declined to comment on the letters, saying he had not seen them. "We're working hard on trying to raise capital," he said. It should be clear within a few weeks whether that's possible in the near term, Mr. Perry said.
Spokesmen for the finance board and the Office of Thrift Supervision declined to comment on Sen. Schumer's letter. Andrew Gray, a spokesman for the FDIC, said the agency "does not comment on open and operating institutions."
IndyMac had $10.4 billion of loans, or "advances," from the Federal Home Loan Bank of San Francisco at the end of the first quarter. Such loans are backed by collateral, typically mortgage loans. Sen. Schumer's letter asked the bank and finance board whether the credit and collateral terms for IndyMac "accurately reflect the associated risks." He also asked whether the San Francisco bank plans "actions to mitigate the risks of its exposure to IndyMac."
Sen. Schumer said it is "troubling" that deposits placed by brokers account for about 37% of IndyMac's total deposits. Brokered deposits are considered more susceptible to sudden withdrawals.
In May, IndyMac posted a $184.2 million loss for the first quarter. At that time, IndyMac warned it could fall below the minimum level of capital needed to be classified as "well capitalized" and the regulatory response to that was unknown
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