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Old 07-14-2008, 03:13 PM
 
Location: Old Town Alexandria
14,495 posts, read 24,236,487 times
Reputation: 8847

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IndyMac in Pasadena now paying 50 cents on the dollar for any savings, investments over 100k....Can it get any worse?

Maybe next Bush can creat Hoovervilles, people can live in tents instead of houses(Oh, we already had that- Katrina, where they are better off, according to Barbara Bush.)
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Old 07-14-2008, 03:35 PM
 
Location: WA
5,471 posts, read 21,900,560 times
Reputation: 6157
Most banks cannot stand a rapid run on deposits... blame this on the guy who started the run...

Here's from the press release issued by IndyMac's regulator, the Office of Thrift Supervision: "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 IndyMac’s 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."
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Old 07-14-2008, 04:25 PM
 
Location: Chino, CA
1,458 posts, read 3,005,318 times
Reputation: 553
Was Indymac Really in that bad of a shape? Looking at their corporate blog it doesn't appear that Indymac was as bad of shape as people thought. In fact, something notable to mention is that Indymac's Executives were equally affected by the fall of their share price since they didn't bail on the company but instead vested more into it:

"The fact of the matter is that the current market has been a disaster for everyone in our industry, and Indymac’s shareholders have suffered along with the shareholders of many other financial institutions. However, in contrast to some other institutions, Indymac’s key executives and board members have clearly suffered along with our shareholders, as none of our key executives or directors have sold any shares of Indymac stock since the crisis began at the beginning of 2007 and, in fact, many have made substantial purchases of stock in 2007 and 2008."

Furthermore Indymac's loan quality was better than the industry and they have long switched to GSE/FHA loans in the beginning of the year:

"Indymac’s cumulative Alt-A loss experience was 22 basis points (BPs) through March 31. Although this was up from 8 BPs at the end of Q4-07, it remains lower than the industry’s cumulative Alt-A loss experience of 25 BPs. Further, while the Alt-A loss experience for both Indymac and the industry has increased considerably in 2008, it remains at a significantly lower level relative to the industry’s cumulative subprime loss experience. The cumulative subprime loss experience for the industry, at 226 BPs through March 31, 2008, is 9 times greater than the industry’s Alt-A loss experience and 10.3 times greater than Indymac’s Alt-A loss experience. While Indymac produced 7.1% of the industry’s total Alt-A production for the period measured (2002 to Q1-08), our subprime lending made up less than 3% of our production and 0.89% of the industry’s total subprime production. While Indymac was a leading Alt-A lender, prior to changing our production model to an almost entirely GSE-FHA/VA platform, we were not even ranked among the top 25 subprime lenders by National Mortgage News for the period 2005-2007."

Anyways, if you want to see things in their perspective instead of mass media/analysts perspective, here's the link to their corporate blog:
The IMB Report

Of course the naysayers and doomsters consider any lender/bank to be pure evil and should be abolished.

-chuck22b

Last edited by chuck22b; 07-14-2008 at 04:35 PM..
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Old 07-15-2008, 06:54 AM
 
Location: Forests of Maine
31,505 posts, read 51,078,069 times
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Quote:
Originally Posted by dreamofmonterey View Post
IndyMac in Pasadena now paying 50 cents on the dollar for any savings, investments over 100k....Can it get any worse? ...
LOL

Where have you been?

Certainly it can get worse.

I should think that it is most certainly going to get much worse.
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Old 07-15-2008, 02:24 PM
 
Location: Backwoods of Maine
7,252 posts, read 8,565,593 times
Reputation: 19634
Quote:
Originally Posted by forest beekeeper View Post
LOL

Where have you been?

Certainly it can get worse.

I should think that it is most certainly going to get much worse.
How true! So far, this is not anywhere near as bad as the S&L crisis of the late 80's/early 90's. It is worse than the early 1930's only insofar as dollar amounts go - but then, there are far more dollars in circulation now.

The Fed is a bank and will attempt to save all the banks, no matter what this does to the dollar or to the taxpayer. That is the only scary part of this for me, that so many will suffer just so that poorly-run banks can be saved to go on being poorly-run!

You go figure!
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Old 07-15-2008, 02:32 PM
 
Location: Ohio
21,270 posts, read 15,062,579 times
Reputation: 17682
Quote:
Originally Posted by dreamofmonterey View Post
IndyMac in Pasadena now paying 50 cents on the dollar for any savings, investments over 100k....Can it get any worse?
I just can't feel sorry for someone with a $200,000 account that's walking away with $150,000.

I'm not sure what part of "deposits are insured up to $100,000" people didn't understand.
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Old 07-15-2008, 03:28 PM
 
Location: Chino, CA
1,458 posts, read 3,005,318 times
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Quote:
Originally Posted by Mircea View Post
I just can't feel sorry for someone with a $200,000 account that's walking away with $150,000.

I'm not sure what part of "deposits are insured up to $100,000" people didn't understand.
Yup, people like to blame everybody but themselves. Hence why we bank with multiple institutions and make sure that money in the bank, is money that is "insured" in the bank.

If Indymac's assets are worth approximately $32 billion and there is a total of ~$18billion in deposits. Since depositors are the first in the list for claims... I don't really understand why everybody is in such a panic. I have accounts with them, and we actually plan to keep it there for now since their rates are still pretty good.

"In accordance with Federal law, allowed claims will be paid, after administrative expenses, in the following order of priority:
  • Depositors
  • General Unsecured Creditors
  • Subordinated Debt
  • Stockholders"
http://www.fdic.gov/bank/individual/....html#Priority

Go figure...

-chuck22b
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Old 07-15-2008, 06:44 PM
 
Location: Sherman Oaks, CA
6,309 posts, read 15,781,513 times
Reputation: 8404
I work at a retail brokerage firm, and I cannot tell you how difficult a day it was today. After two days off (maybe I should be grateful that I missed the hoopla on Friday and Monday!), I returned to the office today to do almost nothing but field phone calls from worried clients. We had to explain the FDIC insurance caps over and over again. The truth of the matter is that although the media loves to run tape of the people standing in line at IndyMac, most of those people didn't have to be there! One woman waited 7 1/2 hours for a $60 check!!! Unless FDIC fails (which would probably mean the U.S. government has failed), people with deposits under $100,000 are fine. Unbelievable. People need to stop panicking.

And if the government does fail, then we're going to have a lot more problems than just the banks!
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Old 07-15-2008, 07:14 PM
 
Location: Great State of Texas
86,068 posts, read 74,693,967 times
Reputation: 27602
There are so many people today that do not understand finances and do not read much of anything.

Ignorance, if anything, may bring the banks to their knees.
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Old 07-15-2008, 07:20 PM
 
Location: Chino, CA
1,458 posts, read 3,005,318 times
Reputation: 553
Quote:
Originally Posted by HappyTexan View Post
There are so many people today that do not understand finances and do not read much of anything.

Ignorance, if anything, may bring the banks to their knees.
I think it's mainly the older folks who are retired and rely heavily on their fixed incomes and interest that are panicking the most. It's understandable, since some faced incredible down turns and lost in the past.

The abhorrible part is how the media instead of quelling their fears is reveling in it and boosting more panic.

-chuck22b
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