IndyMac goes belly up !!!

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U.S. Shuts Big Bank As Crisis Intensifies
By Damian Paletta and David Enrich
Word Count: 746 | Companies Featured in This Article: IndyMac Bank

IndyMac Bank, a prolific mortgage specialist that helped fuel the housing boom, was seized Friday by federal regulators in one of the largest bank failures in U.S. history.

The Pasadena, Calif., thrift was one of the largest savings and loans in the country with about $32 billion in assets. It now joins an infamous list of collapsed banks, topped by Continental Illinois National Bank and Trust Co., which failed in 1984 with $40 billion of assets.

IndyMac specialized in Alt-A loans, a type of mortgage that can often be offered to borrowers who don't fully document their incomes or assets. ...

It's on IndyMac Bank's web site.

.... apparently the same can happen to Fannie and Freddy .....

This isnt even funny, because that's who holds the mortgage on my 2nd house... Does this mean I'm free of paying the rest of my unpaid mortgage? LOL

Good riddance, personally, I blame all the idiots who signed contracts they did not understand.

fucking tube sites.

Well, not so far off ...

As paysites gave tons of free porn, they gave " trial " mortgages at a super low rate ....

You are likely just joking but..

Naw your debt will be carried over.

It's not like if you owed a business that declared bankruptcy...

I wonder if I can renegotiate a lower rate on my mortgage now.

This freaked me a little when I saw it, as I have my mortgage with them.

This is what I got off the site though...

VI. Loan Customers
If you had a loan with IndyMac Bank, F.S.B., you should continue to make your payments as usual. The terms of your loan will not change under the terms of the loan contract because they are contractually agreed to your promissory note with the failed institution. Checks should be made payable as usual and sent to the same address until further notice.
For all questions regarding new loans and the lending policies of IndyMac Federal Bank, please contact 800-998-2900 or visit the IndyMac Federal Bank website at www.IndyMac.com.
*******

If I read that right, I don't have too much to worry about.

They are now a federal bank... All of their assets are transferred over and basically it will be business as usual except that if you had more than $100,000 invested you just lost a lot of the extra...

Mutual funds are UNINSURED...

Ooooooooooops.

Yeah, I was joking about the debt part. I had already read the disclosures on the site regarding those of us who have our mortgages thru them. It really sucks for those who had their money with them though. Anything over $100k you're only getting 50 cents on the dollar. That hurts.

thanks for the ifos. it made me freak

First of many to come.

Only $100k was protected? Thats awful..... i just saw some people outside the bank on a news network running around like lost sheep.

I'd hate to be one of those ie id hate to be one of those who've lost a lot of money not hate to be a sheep. Well id hate to be a sheep too. Infact, id hate to be a sheep which was lost had also lost its life savings.

it sucks when you cant keep money in the bank...

Great news, I hope more financial institutions go bust... this is what happens when you vote for the current administration

The next one on the list are:
FED and DSL. Both of them are going to implode in a few months. Then there will be a WAMU and then FDIC is without money. And there are dozens of banks on the way to BK too. Guess who will pay it with FDIC out of money....

I made a lot of cash with put options on financials and I will made a lot of cash with put options in the future too, but this news isnt great. If forced "mark to market" you have entire US bank system bankrupted. Even without "mark to market" there is going to be implosion of Credit Default Swaps which would hurt significantly entire US bank system. I expect that only 2-3 big players will survive after everything is done.

This is why I will never keep an account with more than $100,000 in it.. I'll have 10 accounts and keep moving money around.. You can tell me how that's dumb, yadda yadda.. but it is done by lots of people for reasons exactly like this..

meh, it all pales in comparison to what happened in the late 20s and early 30s in the US, when the majority of banks in the US went under like dominos. About 9000 banks in total went under.

Failures will happen (bankers are greedy), and there will be some huge failures, but there is a much more structured process to it now than back in the great depression.

Haha, I do the same thing.

Even before this mess started, I never trusted the idiots that run these banks.

It blows my mind people don't read or know about the FDIC. 100k on banks 250K on brokerage account holding cash. Keep several accounts and keep them spread over traditional and Internet if you really want to be safe.

Yep. Had a friend that won the lotto in Florida. Said he would not be like all the rest and he would not hire an accountant. ONce the people from the bank really explained that the FDIC only covered up to 100k, and he could lose the rest, he hired an accountant to help him manage the accounts.

he won 19 mil,

Lol
The tubesites are gonna get more traffic now that no one can afford their mortgage.. let alone porn.

most of the people i saw on the news freaking out were lucky to have $1k in the bank much less $100k.

Indy was just beggining, next on the list is FED,DSL, NCC, ZION and WAMU. Pretty soon FDIC will be without money.
Also this is a confidence game, which is slowly decreasing day by day.... once it will turn out, no bullshiting from FED, goverment or wallstreet banks can put it back. There is going to be hunderds of BK banks in a year or two, even without runs on the banks as their mortage portfolio is often enought to put them down.

No worried, we'll just print more like we've been doing the past couple years.

Greed is what made the US great.. greed is what will bring about it's downfall..

I agree. There are a ton of online solutions too. ING, HSBC, Emigrant Direct, Capital One, and a slew of others offer easy to setup savings accounts that pay pretty good interest rates.

Totally agree.

I mean what was it that they missed?

The part that reads...

"Pay XXX for the first year, then pay the new rate at XXXXXX! You may qualify for a new loan after the first year."

Qualifying for a loan after the first year is the killer because most the people that bought the house do not have the credit line to get a reasonable mortgage!

The long short... People were buying homes that the Banks knew would never qualify without a minimum of a 5 year good credit line! Good Qualifyers is havign a 10 year line of credit that is good. The buyers themselves should have never considered buying in the first place.

Ironic thing is the vast majority of home buyers now own home's worth less than what they bought it for and stuck 15 to 30 years paying for it! I say get the fucking torches and light up them houses.

they should all go tits up and the market should be allowed to correct itself on its own... rather than asking tax payers to bail out people who should have never been allowed to buy homes to begin with. they knew it.. the banks knew it... the people who bought the loans knew it.

from a one of few guys who is/was 100 right on the money with whole financial crises:

from RGE Monitor Nouriel Roubini :

This is by far the worst financial crisis since the Great Depression
Hundreds of small banks with massive exposure to real estate (the average small bank has 67% of its assets in real estate) will go bust. Dozens of large regional/national banks (a’ la IndyMac) are also bankrupt given their extreme exposure to real estate and will also go bust
Some major money center banks are also semi-insolvent and while they are deemed too big to fail their rescue with FDIC money will be extremely costly.
In a few years time there will be no major independent broker dealers as their business model (securitization, slice & dice and transfer of toxic credit risk and piling fees upon fees rather than earning income from holding credit risk) is bust and the risk of a bank-like run on their very short term liquid liabilities is a fundamental flaw in their structure (i.e. the four remaining U.S. big brokers dealers will either go bust or will have to be merged with traditional commercial banks). Firms that borrow liquid and short, highly leverage themselves and lend in longer term and illiquid ways (i.e. most of the shadow banking system) cannot survive without formal deposit insurance and formal permanent lender of last resort support from the central bank.
The FDIC that has already depleted 10% of its funds in the rescue of IndyMac alone will run out of funds and will have to be recapitalized by Congress as its insurance premia were woefully insufficient to cover the hole from the biggest banking crisis since the Great Depression
Fannie and Freddie are insolvent and the Treasury bailout plan (the mother of all moral hazard bailout) is socialism for the rich, the well connected and Wall Street; it is the continuation of a corrupt system where profits are privatized and losses are socialized. Instead of wiping out shareholders of the two GSEs, replacing corrupt and incompetent managers and forcing a haircut on the claims of the creditors/bondholders such a plan bails out shareholders, managers and creditors at a massive cost to U.S. taxpayers.
This financial crisis will imply credit losses of at least $1 trillion and more likely $2 trillion.
This is not just a subprime mortgage crisis; this is the crisis of an entire subprime financial system: losses are spreading from subprime to near prime and prime mortgages; to commercial real estate; to unsecured consumer credit (credit cards, student loans, auto loans); to leveraged loans that financed reckless debt-laden LBOs; to muni bonds that will go bust as hundred of municipalities will go bust; to industrial and commercial loans; to corporate bonds whose default rate will jump from close to 0% to over 10%; to CDSs where $62 trillion of nominal protection sits on top an outstanding stock of only $6 trillion of bonds and where counterparty risk – and the collapse of many counterparties – will lead to a systemic collapse of this market.
This will be the most severe U.S. recession in decades with the U.S. consumer being on the ropes and faltering big time as soon as the temporary effect of the tax rebates will fade out by mid-summer (July). This U.S. consumer is shopped out, saving less, debt burdened and being hammered by falling home prices, falling equity prices, falling jobs and incomes, rising inflation and rising oil and energy prices. This will be a long, ugly and nasty U-shaped recession lasting 12 to 18 months, not the mild 6 month V-shaped recession that the delusional consensus expects.
Equity prices in the US and abroad will go much deeper in bear territory. In a typical US recession equity prices fall by an average of 28% relative to the peak. But this is not a typical US recession; it is rather a severe one associated with a severe financial crisis. Thus, equity prices will fall by about 40% relative to their peak. So, we are only barely mid-way in the meltdown of stock markets.
The rest of the world will not decouple from the US recession and from the US financial meltdown; it will re-couple big time. Already 12 major economies are on the way to a recessionary hard landing; while the rest of the world will experience a severe growth slowdown only one step removed from a global recession. Given this sharp global economic slowdown oil, energy and commodity prices will fall 20 to 30% from their recent bubbly peaks.
The current U.S recession and sharp global economic slowdown is combining the worst of the oil shocks of the 1970s with the worst of the asset/credit bust shocks (and ensuing credit crunch and investment busts) of 1990-91 and 2001: like in 1973 and 1979 we are facing a stagflationary shock to oil, energy and other commodity prices that by itself may tip many oil importing countries into a sharp slowdown or an outright recession. Also, like 1990-91 and 2001 we are now facing another asset bubble and credit bubble gone bust big time: the housing and overall household credit boom of the last seven years has now gone bust in the same way as the 1980s housing bubble and 1990s tech bubble went bust in 1990 and in 2000 triggering recessions. And a similar housing/asset/credit bubble is going bust in other countries – U.K., Spain, Ireland, Italy, Portugal, etc. – leading to a risk of a hard landing in these economies.
But over time inflation will be the last problem that the Fed will have to face as a severe US recession and global slowdown will lead to a sharp reduction in inflationary pressures in the U.S.: slack in goods markets with demand falling below supply will reduce pricing power of firms; slack in labor markets with unemployment rising will reduce wage pressures and labor costs pressures; a fall in commodity prices of the order of 20-30% will further reduce inflationary pressure. The Fed will have to cut the Fed Funds rate much more – as severe downside risks to growth and to financial stability will dominate any short-term upward inflationary pressures. Leaving aside the risk of a collapse of the US dollar given this easier monetary policy the Fed Funds rate may end up being closer to 0% than 1% by the end of this financial disaster and severe recession cycle.
The Bretton Woods 2 regime of fixed exchange rates to the US dollar and/or heavily managed exchange will unravel – as the first Bretton Woods regimes did in the early 1970s – as US twin deficits, recession, financial crisis and rising commodity and goods inflation in emerging market economies will destroy the basis for it existence.
Thus, the scenario of 12 steps to a financial disaster that I outlined in my February 2008 paper is unfolding as predicted. If anything financial conditions are now much worse than they were at the previous peak of this financial