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O.M.G. Emdeplam was right! Main Idaho Real Estate Insights
For this that are frequent visitors you may rcognized Emdeplam as a regular commentor. He called this a while back so we wanted to give him credit, that damn Emdeplam.

Bank Closing - IndyMac Bank, F.S.B., Pasadena, CA

On July 11, 2008, IndyMac Bank, F.S.B., Pasadena, CA  was closed by the Office of Thrift Supervision (OTS) and the Federal Deposit Insurance Corporation (FDIC) was named Conservator. All non-brokered insured deposit accounts have been transferred to IndyMac Federal Bank, F.S.B. (IndyMac Federal Bank), Pasadena, CA ("assuming institution") a newly chartered full-service FDIC-insured institution; for further information, please visit the FDIC web site: IndyMac Bank (www.fdic.gov).
 
Posted by tlangford at 7/12/2008 4:09:00 PM
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Comments (9)
Re:O.M.G. Emdeplam was right!
Thanks.

It is a shame. Greed and reckless profiteering mean that many honest people will lose money or become unemployed by this event.

Wish I could say it will be unique. Level 3 assets, ridiculous financial gearing and questionable accounting mean we WILL see other monster banks have to be put down. Wachovia? WaMu? Citi? Downey 3rd5th others... I have a list of 12 now that are all good bets (short to zero).

Big news is Freddie Fannie who are insolvent (ask former Fed member Poole). They have failed in their mission (housing is more unaffordable because of them), and gambled in a way that was only allowed becuase of their large contributions to the pockets of congress. They will either fail (and cause mass destruction) or be bailed out (an enormous cost) that will result in the loss of AAA USA credit rating, a moonshot on T-Bills.... and therefore mortgage rates...
Posted by on 7/12/2008 3:51 PM
Re:O.M.G. Emdeplam was right!
Update, it will be Freddie. They auction $3B of notes on Monday. It will fail.

The Fed Res does not have the balance sheet at the moment. There could be a save, but that would be met by a massive gov bond sell off.

I doubt Freddie makes it thru the week.If it does the gov will have interviened and mortgages rates will be up by about a percent.
Posted by on 7/12/2008 4:03 PM
Re:O.M.G. Emdeplam was right!
Was it "Greed and reckless profiteering" or panic that led to IndyMac's failure. Here are some excerpts from the Office of Thrift Supervision's Press Release at 6:00 pm EDT yesterday:

The OTS has determined that the current institution, IndyMac Bank, is unlikely to be able to meet continued depositors demands in the normal course of business and is therefore in an unsafe and unsound condition. The immediate cause of the closing was a deposit run that began and continued after the public release of a June 26 letter to the OTS and the FDIC from Senator Charles Schumer of New York. The letter expressed concerns about IndyMacs viability. In the following 11 business days, depositors withdrew more than $1.3 billion from their accounts. This institution failed today due to a liquidity crisis, OTS Director John Reich said. Although this institution was already in distress, I
am troubled by any interference in the regulatory process.

As a result of an OTS examination that began in January 2008, the OTS deemed IndyMac to be in troubled condition. An overwhelming majority of problem institutions are able to successfully modify their operations and business plans, work closely with their regulator and eventually return to a healthy condition.

IndyMac had reacted to market conditions and OTS concerns in November 2007 by changing its operations and business plan to build a foundation for recovery. IndyMac was actively seeking to arrange a significant capital infusion or find a buyer. The recent release of the senators letter undermined the public confidence essential for a financial institution and took away the time IndyMac needed to pursue a recovery.

The OTS Fact Sheet provided the following information:
Deposit inflows in the three days prior to June 27, 2008: $31.2 million
Deposit outflows beginning June 27, 2008: $730.2 million through July 7 and $1.3 billion through July 10
Loan servicing (March 2008 10-Q statement): $184.5 billion in loans serviced for others, including 16 percent pay-option ARMs, 10 percent reverse mortgages and 39 percent fixed-rate mortgages
Loan servicing portfolio delinquency rate: 8.26 percent

Chuck Miller GMB CGB MIRM CMP MCSP CSP
President / Builder Chuck Miller Construction Inc.
(208) 229-2553
[email protected]
www.chuckmillerconstruction.com
Posted by on 7/12/2008 5:01 PM
Re:O.M.G. Emdeplam was right!
Chuck-

I am rarely a Schumer fan, but in this case he is 100% right...OTS and the FED are to blame. Schumer couldn't bring down US Bank (better run) or GE or a hedge fund...IMB was already in a stock death spiral >90% loss..

OTS should have been pying attention to this whole mess. We now have 90+ organizations on FDIC death watch. The Fed, OTS and OCC put the banks into an impaired capital position in the first place by allowing them to play games with sweeps and such, thereby destroying the usual 10% reserve requirements. This degradation of reserves means that much smaller problems kill the bank than would otherwise be the case.

The fact is OTS/Fed have allowed banks to SERIOUSLY breach capital requirements to the point that they are barely solvent or in fact 'walking' insolvent. Banks are holding capital, which in the market is worth only 20-40% of the value the banks claim.WHEN A BANK RUN COMES, those assets are USELESS...if they had the cash, IT WOULD NOT HAVE BEEN A BK. These banks thru 'creative accounting' are booking profits from Pick-apay loans on the difference between what is paid, and what is fully owned...KNOWING THAT >20% of these loans are blowing up.

Anyone taking a few hours to read the 10Q's of these banks can see the Obvious. 266 lenders in BK, IMB stock down 90%, Fraud in accounting, less than 2% real asset reserves...but it was Schumer right?

At the time the bank was siezed...liabilities exceeded capital by >10B ???? Yet our accounting system and OTC perfers to let them play these games...then actual do their jobs and force banks to mark to market and have ACTUAL reserves.

Who will they blame when its WaMu? Wachovia? Downey? National City? --- go read their financial statements...beauties...paying dividends on profits booked from loans which are basically in default... haha

Rumor has it the Fed is gonna throw 15B at FRE...about $150 bucks for each of us. It will kill shareholders (seriously dilute them)..and it is a drop in the ocean...maybe lifesupport for another few months. This kind of taxpayer nationalization should be good for another nice uptick on US Gov bonds. (FULL DISCLOSURE...I AM SHORT TREASURIES from 3.8% on the 10yr) This nationalization of failed business should be good for another run from gov debt! Foreigners won't hold our crap and well see how that jams mortgage rates.
Posted by on 7/13/2008 12:59 AM
Re:O.M.G. Emdeplam was right!
FRAUD- You can infer the value of Indy's book from FDIC releases now... three cases
Best case- 75%
Med- 63%
Worst- 56%

These were assets being held at 100% value. NOT ONLY THAT, but the bank geared loans based on the full value. Makes for some nice bonuses though!

Whats your bet on our other leading banking and lendering players?
A) Indy was an outlyer, was crazier by far, and worse with accounting...all other banks really have 100% value in their stated assets
B) These big banks all played the same game...they HAD TO TO COMPETE with the REGULATORS TURNING A BLIND EYE!

If A is correct you should go out and buy huge long dated call options on all the big financials tomorrow

If B is correct :-) , EVEN IN THE BEST CASE...you have many more MAJOR BANKS who are technically INSOLVENT TODAY!

WHERE ARE THE COPS? OTS? FED? There is NO regulatory oversight...it is a joke?

but let's just blame Schumer
Posted by on 7/13/2008 1:14 AM
Re:O.M.G. Emdeplam was right!
FRAUD- You can infer the value of Indy's book from FDIC releases now... three cases
Best case- 75%
Med- 63%
Worst- 56%

These were assets being held at 100% value. NOT ONLY THAT, but the bank geared loans based on the full value. Makes for some nice bonuses though!

Whats your bet on our other leading banking and lendering players?
A) Indy was an outlyer, was crazier by far, and worse with accounting...all other banks really have 100% value in their stated assets
B) These big banks all played the same game...they HAD TO TO COMPETE with the REGULATORS TURNING A BLIND EYE!

If A is correct you should go out and buy huge long dated call options on all the big financials tomorrow

If B is correct :-) , EVEN IN THE BEST CASE...you have many more MAJOR BANKS who are technically INSOLVENT TODAY!

WHERE ARE THE COPS? OTS? FED? There is NO regulatory oversight...it is a joke?

but let's just blame Schumer
Posted by on 7/13/2008 1:15 AM
Re:O.M.G. Emdeplam was right!
Todays action, whose next???

Washington Mutual, Inc. WM -28.90%
National City Corporation NCC -29.86%
Zions Bancorporation ZION -15.88%
Posted by on 7/14/2008 9:53 AM
Re:O.M.G. Emdeplam was right!
Its a race National City and WaMu...WaMu by the way might just take down FDIC! The bets against these guys going bk are insane...people are literally betting huge sums that will only pay off if the stock goes below 2 quarters...wow
Posted by on 7/14/2008 10:02 AM
Re:O.M.G. Emdeplam was right!
WaMu, ML-Implode is reporting lines now, people sweeping accounts...
WaMu was on anallyst Dick Bove's top under-capitalized high non-performing loan lists.
No take down talk yet
Posted by on 7/14/2008 12:28 PM

 

Michelle Penick, Boise Idaho Real Estate Agent

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