After failing and being seized by the FDIC earlier this year, Indymac is now on the block to be bought within 90 days. The FDIC has taken on the role of investment bank as the bank failures mount. After the Indymac failure depleted the FDIC fund, FDIC head Sheila Bair took on a new approach, which is to broker deals for troubled banks so that they don’t have to absorb all of the losses.
The plan worked as they helped get JP Morgan Chase to take over WAMU and Wells Fargo to take over Wachovia. Indymac, WAMU, and Wachoivia were among the largest players in negative amortization Option ARMs. The other two players were Countrywide which was taken over by Bank of America and Downey Savings which was recently taken over by US Bank. Now US Bank is thought to be a top suitor for Indymac.
In other banking news, GMAC was granted a banking charter by the Federal Reserve so they can now access TARP funds to help their auto lending. They also have a significant residential mortgage operation and status of that unit is unknown at this time.
In 2006 GMAC sold 51% of the firm to private equity firm Cerberus. As part of this deal…
GM owned all of GMAC until it sold a 51 percent stake in GMAC in 2006 to a group led by Cerberus, the New York-based private equity firm. As part of today’s agreement, GM will reduce its ownership in GMAC to less than 10 percent and transfer what remains to an independent trust, which will dispose of the stakes within three years.
Cerberus funds that hold GMAC stakes will distribute them to their investors, the Fed said. Cerberus’s voting control will be cut to less than 15 percent, or 33 percent of GMAC’s total equity. None of the recipients will have more than 5 percent of the votes or 7.5 percent of the total equity. The Fed also required Cerberus employees and consultants to stop providing services or acting as “dual employees” of GMAC.