Just call it IndyMac Federal Bank for now. That’s what happens when the Office of Thrift Supervision closes you down and the Federal Deposit Insurance Corp. converts you into a conservatorship. IndyMac tried staying above water, laying off more than half its workforce, deciding to pull out of the retail and wholesale mortgage businesses, and selling more than 60 retail mortgage branches to Northbrook, IL-based Prospect Mortgage. It had hoped to survive as an S&L and focus on its reverse-mortgage business.
But the OTS had already deemed IndyMac no longer well capitalized. Plus, there was negative press about a couple of scolding letters penned by Sen. Chuck Schumer (D-NY) and depositors started pulling their money out. In a SEC filing on July 8 IndyMac blamed the senator’s letters for its sorry situation; OTS director John M. Reich joined in over the weekend, telling reporters the letters gave the lender a “heart attack.” But the bank had already warned investors of its precarious position, which was widely reported in the press as well. The warning proved out.
Under the FDIC conservatorship, the former management’s layoff plan and decision to abandon the retail and wholesale mortgage market remains intact, as does its deal with Prospect Mortgage, according to an FDIC spokesman. IndyMac had assets of $32.01 billion and deposits of $19.06 billion as of March 31. The price-tag of the resolution is estimated at $4 to $8 billion.