IndyMac Falls Under Goverment Control

I’m just a humble Daytona Beach real estate agent, but I’m uncomfortable with the way the federal government is handling, or not handling, the fallout from almost unregulated mortgage lending. IndyMac, one of 90 banks on the FDIC’s watch list, failed yesterday (July 11, 2008). Which other banks are on the list? That’s none of your business. The federal government is protecting the banks from runs on their deposits.

There is some controversy around this failure. Senator Chuck Schumer (Democrat from NY) wrote a letter to regulators questioning the viability of IndyMac. The Office of Thrift Supervision (OTS) claimed that the June 26 letter from Schumer prompted a run on the bank with customers withdrawing more than $1.3 billion.

Schumer says that poor oversight caused the failure, not his letter. I don’t know who is right, but none it seems right. It can be argued that the political infighting has already cost 3,500 Americans their jobs and taxpayers from $4-8 billion, but I bet that estimate is low.

The moral is get any money over $100,000 out of the bank and into another account. You don’t know if your bank is one of remaining 89 on the soon to fail government list.

In a side note, if you have an IndyMac mortgage, keep making the payments. The loan will be sold, but the bank will still be operating, just as a government entity.

More information can be found on a blog post I made: IndyMac Failure and Daytona Beach Real Estate.