IndyMac Seized By Federal Regulators

Bloomberg News reports:

• IndyMac Bancorp Inc. became the second- biggest federally insured financial company to be seized by U.S. regulators after a run by depositors left the California mortgage lender short on cash. The Federal Deposit Insurance Corp. will run a successor institution, IndyMac Federal Bank FSB, starting [Monday], the Office of Thrift Supervision said in an e-mail yesterday. The regulator blamed U.S. Senator Charles Schumer for creating a "liquidity crisis'' after a letter on June 26, in which he expressed concern that the bank may fail. The Pasadena, California-based lender specialized in so-called Alt-A mortgages, which didn't require borrowers to provide documentation on their incomes.

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• After peaking at $50.11 on May 8, 2006, IndyMac shares lost 87 percent of their value in 2007 and another 95 percent this year. The stock fell 3 cents to 28 cents at 4 p.m. New York time [Friday].

For more, see IndyMac Seized by U.S. Regulators; Schumer Blamed for Failure.

For a recent Center for Responsible Lending investigative report on this lender, see IndyMac: What Went Wrong? (How an "Alt-A" Leader Fueled its Growth with Unsound and Abusive Mortgage Lending).