Buyout artist Christopher Flowers, hedge fund operator John Paulson and the chairman of New York private equity firm Dune Capital Management L.P. are partners in a company applying to purchase the failed IndyMac Bank, according to the Office of Thrift Supervision.
An announcement of a sale agreement could come as soon as Monday, according to people familiar with the situation.
The name of the potential acquirer is HoldCo LLC, according to an OTS spokeswoman, and among the limited partners listed on the application for a holding company charter are Mr. Flowers, Mr. Paulson and Steve Mnuchin, the chairman and co-CEO of Dune, which was founded in 2004 by Mr. Mnuchin and Dan Neidich, both formerly Goldman Sachs & Co. executives. Dune's general counsel declined comment Sunday and referred inquiries to the Federal Deposit Insurance Corp., which seized control of IndyMac in July and has been seeking a buyer ever since. Mr. Flowers and Mr. Paulson could not be reached.
Mr. Flowers led a deal to buy another troubled bank several months ago. The Office of the Comptroller of the Currency approved his application to buy First National Bank of Cainesville in Missouri. Mr. Paulson has made billions the last few years by betting that housing prices would drop and foreclosures would rise.
Holdco has applied for a federal holding company charter and the conversion of IndyMac from a mutual savings bank to a stock-held institution as part of the change in ownership, the OTS spokeswoman said. The FDIC, she said, is considering a sale to this applicant and needs to have a letter of intent signed before the OTS can grant its approval. The FDIC, she said, was "talking about" a closing in late January or early February.
The FDIC, which declined comment Sunday, has estimated that its deposit-insurance fund would lose $8.9 billion as a result of the failure, but the final figure would depend on how much the regulator can receive for IndyMac's assets.
IndyMac Bank had roughly $32 billion in assets when it failed, which made it one of the country's largest thrifts. If the deal is completed, the new owners would gain control of an extensive branch network on the West coast. The deal - expected to be for roughly $14 billion - could also include a loss-sharing agreement that would have the FDIC backstop losses on loans beyond a certain level, according to one person familiar with the discussions.
IndyMac's failure in July marked a low point for government officials during the financial crisis, as media coverage of long lines outside the California branches sparked panic among customers across the country. Of the 25 banks that have failed so far this year, Indymac is the only one the FDIC has been unable to sell.
FDIC officials had hoped to complete a sale by October.
Dune's pursuit of IndyMac illustrates the renewed interest in the nation's troubled banks as regulators consider more charters for nonbank investors. On Nov. 17, the Office of the Comptroller of the Currency granted an 18-month "shelf" national bank charter to a group led by Texas billionaire and 1980s S&L rescuer Gerald Ford, giving him preliminary approval to bid on any failed banks during that period via Ford Group Bank.
Several insurance companies have also applied to become thrift-holding companies to buy other banks and apply for federal rescue money.