IndyMac Shut Down By Office of Thrift Supervision

In a press release 4 days ago, IndyMac said they were shutting down their retail and wholesale lending units but keeping their 33 branch banking network. The next day, a private equity firm purchased IndyMac’s retail lending operations for an undisclosed amount. Today, the Office of Thrift Supervision shut down IndyMac’s retail banking operations and transferred control to the FDIC because it did didn’t believe that IndyMac could meet depositors’ demands. Under U.S. law, the FDIC is charged with the duty of winding up the affairs of IndyMac Bank. On the same date, a new institution was chartered, IndyMac Federal Bank, FSB (“IndyMac Federal Bank”), and the OTS immediately placed IndyMac Federal Bank into conservatorship and appointed the FDIC as Conservator. According to an AP report:

The bank is the largest regulated thrift to fail and the second largest financial institution to close in U.S. history, regulators said. IndyMac had $32.01 billion in assets as of March 31.

Here’s the FDIC’s failed bank list. Based on preliminary analysis, the estimated cost of the resolution to the Deposit Insurance Fund is between $4 and $8 billion. IndyMac Bank, F.S.B. is the fifth FDIC-insured failure of the year. The last FDIC-insured failure in California was the Southern Pacific Bank, Torrance, on February 7, 2003.