Senator raises prospect of IndyMac Bank failure
The U.S. Senator who leads the Senate subcommittee that oversees the Federal Reserve and economic policy has written letters to federal bank regulators questioning the condition of IndyMac Bancorp Inc. of Pasadena.
Sen. Charles Schumer, a Democrat from New York, sent the letters to the Federal Deposit Insurance Corp., the Office of Thrift Supervision, the Federal Housing Finance Board and the Federal Home Loan Bank of San Francisco. The letters said Schumer is concerned IndyMac "may have serious problems with its current loan holdings, and could face a failure if prescriptive measures are not taken quickly." The Business Journal obtained a copy of one of Schumer’s letters on Friday.
Schumer, who serves on the Senate Committee on Banking, Housing and Urban Affairs and is chairman of its Economic Policy Subcommittee, cited concerns that the bank’s condition is a risk to taxpayers and borrowers.
Moody’s Investors Service Inc. on Tuesday downgraded IndyMac. In January, when IndyMac announced job cuts, it employed 130 people in Rancho Cordova.
Calls to IndyMac’s media relations department were routed to an automated message saying the bank (NYSE: IMB) is in its second-quarter quiet period, which started June 25, and will not make comments about its performance until its quarterly earnings announcement faxless payday loans. No scheduled date for that announcement was immediately available.
The $32 billion bank was a major alt-A lender, making loans to people who are just below the level of prime borrowers but with credit better than those who could only land subprime loans.
Schumer cited IndyMac’s reliance on brokered deposits to back their loan portfolio as cause for concern. Brokered deposits are large pooled groups of certificates of deposit. Typically they are expensive for the bank because they bear relatively high interest rates and often require the borrowing bank to pay a commission.
IndyMac stock closed up 1 percent at 81 cents a share Friday. The bank stock’s 52-week price range has fluctuated between 75 cents and $31.50 per share.
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Filed under: economics by Forest