It’s one of the biggest bank failures in American history. It may even be the largest once the damage is totaled. It’s also a tough weekend for many IndyMac customers. Imagine surfing over to your bank’s website and finding this:
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., Pasadena, CA (“assuming institution”) a new FDIC-insured Federal Mutual Savings Bank. No advance notice is given to the public when a financial institution is closed.
The FDIC has assembled useful information regarding your relationship with this institution. Besides a checking account, you may have Certificates of Deposit, a business checking account, a Social Security direct deposit, and other relationships with the institution.
Please select the link below to read more about this event:
FDIC Bank Closing Information for IndyMac
The IndyMac websites are expected to be available Monday, July 14, 2008.
If the balance in your account(s) (this includes any accounts in which you have an ownership) is less than $100,000, no action is required on your part at this time. Your entire insured account(s) will be transferred to IndyMac Federal Bank and will be available for business as usual during regular business hours.
Up to a billion dollars in deposits at IndyMac could be uninsured. CNN explains:
When a bank shuts down, traditional bank accounts are insured to at least $100,000. Some accounts such as annuities and mutual funds are not insured at all. Individual Retirement Account funds are insured to $250,000.
However, individuals with multiple accounts in the same name at the same bank are limited to the $100,000 cap, says Allan Roth, a Colorado Springs, Colo. financial planner. If an individual has a $100,000 savings account in her name and a $100,000 joint account with her husband, both accounts would be covered.
“The difference is not in the number of accounts [that each individual has at an FDIC-insured bank],” said Roth. “The difference is in the titling [or name] on the account.”
IndyMac customers with uninsured deposits will get at least half that money back, and they could get more back, depending on what the FDIC gets when it sells the bank, said Bair.
Customers’ funds will be transferred to a new entity – IndyMac Federal FSB – controlled by the FDIC. They will have uninterrupted customer service and access to their funds by ATM, debit cards and checks.
However, customers will have no access to online and phone banking services this weekend, according to the FDIC. Service will resume on Monday. Loan customers were advised to continue making loan payments as usual.
Bank failures happen in good and bad economies so this should in no way trigger a run on the banks. However, it should prompt you to review your accounts to ensure that your funds are properly insured.
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Those with multiple accounts under $100,000 are probably screwed. During the S & L mess I had a friend with three accounts each under $100,000 that totaled $230,000. She was reimbursed a total of $100,000. Those at the bank assured her all the money was insured. There was another S & L across the street. She lobbied Congress to no avail.