BREAKING: IndyMac Bank is Shut Down and Taken Over by Feds



In the past minutes newswires around the country and world are now reporting that the Federal Government has shut down IndyMac Bank and has handed it to the FDIC (Federal Deposit Insurance Corp.) as conservator.

Couple the shut down with the Fannie Mae/Freddie Mac troubles, and we’re in for some really rocky waters next week. I’m willing to bet a lot of money that the announcement was held back from being made prior to the close of the stock market because of fears of a massive crash. Well . . . I think we’ll be seeing that happen this coming Monday!

Fasten your seat belts, people . . . we’re in for a ROCKY RIDE!

IndyMac Bank’s assets were seized by federal regulators on Friday after the mortgage lender succumbed to the pressures of tighter credit, tumbling home prices and rising foreclosures.

The bank is the largest regulated thrift to fail and the second largest financial institution to close in U.S. history, regulators said.

Yahoo Finance

In the biggest bank failure of the housing downturn to date, federal banking regulators today closed IndyMac Bank FSB, naming the Federal Deposit Insurance Corp. as conservator.

The FDIC said it will transfer insured deposits and “substantially all the assets” of IndyMac Bank, to a newly created successor, IndyMac Federal Bank, which will be operated by the FDIC.

Insured depositors and borrowers will automatically become customers of IndyMac Federal, FSB and will continue to have uninterrupted customer service and access to their funds by ATM, debit cards and writing checks. Depositors of IndyMac Federal Bank FSB will have no access to online and phone banking services this weekend, but will regain access to them on Monday.

Inman News

IndyMac Bancorp Inc. became the second-biggest federally insured financial company to fail today after a run by depositors left the California mortgage lender short on cash.

The Pasadena, California-based bank specialized in so-called Alt-A mortgages, which didn’t require borrowers to provide documentation on their incomes. Its home state has been among the hardest hit by foreclosures.


What’s next? Anyone?

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Joshua Dorkin

Joshua Dorkin (@jrdorkin, Google+) founded when he saw a need for free, trustworthy information about real estate investing online. Over the past 12 years, Josh has grown the site from self-funded hobby to full-time job and passion. Today, BiggerPockets brings together over 600,000 members, housing the world’s largest library of real estate content, iTunes’ #1 real estate podcast, and an array of analysis tools, all geared toward helping users succeed.


  1. Bank failures were to be expected during this turmoil. This is not earth shattering news on Wall Street.
    Wachovia is the bell weather, watch Wachovia. If Wachovia fails then traders will start to think a wave of bank failures are coming. Then you will see selling.

  2. Mike – This is a big deal, even though it was expected, and the burden of the crisis falls harder on the backs of taxpayers who have to float IndyMac.

    Saga – Your website supposedly is all about educating people about real estate, yet you don’t understand the simple concept of bank failure. That leads me to fear the information you’re providing on your site. Can you please explain how a bank that has been shut down by the Federal government has a shot in hell of coming back from the crisis soon??

    You’re better off not posting comments with the intention of promoting your website, especially when your comments are just fluff posts that make you look silly.

  3. Wondering if

    These bad loans were made worse by lenders trying their best to make loans to illegal aliens. Even now the banks advertise taking a loan to give your fifteen year old daughter a coming out (quinsineta) party!? How ironic. What a stupid thing to borrow money for… and it is still going on. The legal citizens get stuck with the bill while the lenders who made fat cash get bailed out and the illegal goes back to Mexico with a truck load of furniture that we will pay for!

    Where is the journalist who will investigate where the money went? Who will uncover and expose the enormous influence these corporate monsters have exerted over OUR government?

  4. Chris Lengquist on

    This really is starting to get interesting. I sat in disbelief when I saw a former townhouse of mine rise from $144,000 when I sold it to $429,000 in a matter of 4 years. Stunned I was.

    And now I’m equally stunned, though I expected this, at all the fall-out. And by the way, that townhouse is now worth about $335,000. That’s still a remarkable gain when you isolate the beginning and end values from 2001 till 2008. But if you bought at $429,000, well, not so good.

  5. Pingback: Fasten Your Seat Belts - Bumpy Air Ahead « Kansas City Real Estate Investing

  6. Will people still keep their money to the bank, or keep it at home after this? Is that true people saving more than $ 100 000 on the account won’t get their money back? Scary fact loosing a lot of money.

  7. Hi
    My account was hacked by a hacker and money was taken away from my account , still the cyber police searching for him . bank is giving so many excuses , how should i go about this ? what should i do now ?


  8. As someone who has used Wachovia extensively over the past few years, I’d be surprised if they get into the same sort of trouble (maybe the extensive write-offs they’ve posted really did clean out the mess?). We’ve found them more and more difficult to deal with for the past year or more as they’ve been tightening things up, even in their Worlds Savings business. So much so that we’ve looked for alternatives, both for our business and our clients.

    But these days, never say never – anything is possible with any of these banks as far as financial stability is concerned.

  9. To Mike: Boy were you right when you predicted the media hype!
    Did you see the CNN headline about the Fed shoring up Fannie and Freddi? “Bail-Out” in big, bold print. These are quasi fedearl agencies; the fed had to stand behind them!

    To Real Estate Saga: Your wrong about IndyMac weathering this storm.
    They are finished. Equity investors have lost everthing and the bank will be sold with-in 90 days.

    They shared some underwritting software with me free of charge when I started my company, it would have cost me ~$30,000. if I had to buy it or have a techie develop it for me. Thanks guys, and goodnight.

    They were sound on the commercial side but too much Alt-A on residential.

  10. Interesting development, it seems as though there’s another bank in the news today in California where people are standing in line to withdraw all of their money.

    With FDIC Insurance, surely there shouldn’t really be a need for this?

  11. It’s an interesting conundrum.

    The banks are charging hefty fees just to keep your money in the bank, in fact an account with $100 would be dissipated in 2yrs by fees and charges if left untouched.

    People are pulling there money out and keeping it their mattresses all over again and the banks are suffering.

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