Feds seize bank - once a leading mortgage lender. It may turn out to be most expensive collapse ever. One thing is sure: The credit crisis is still with us.
NEW YORK (CNNMoney.com) -- In what could turn out to be the most expensive bank failure ever, troubled mortgage lender IndyMac Bancorp Inc. was taken over by federal regulators on Friday.
The operations of the Pasadena, Calif.-based thrift - once one of the nation's largest home lenders - were shut down at 3 p.m. PDT by the Office of Thrift Supervision and transferred to the Federal Deposit Insurance Corp.
About 95% of the $19 billion in deposits in the bank are insured, but that leaves
$1 billion that was not covered by FDIC guarantees. According to the agency, 10,000 IndyMac customers could lose as much as half of that amount, or $500 million. The agency says the failure will cost the Deposit Insurance Fund between $4 billion and $8 billion, based on preliminary estimates.
"This will certainly be a costly failure. Whether it's the costliest, we just don't know at this point," FDIC Chairman Sheila Bair said on a conference call late Friday night. The failure could also affect premiums paid by all banks for deposit insurance, she added.
The rise and fall of IndyMac - Jul. 12, 2008
It's Grim out there.
Meanwhile-
Lehman shares plunge again Investors send shares of Wall Street firm 17% lower, a day after it releases more details about quarterly loss.
NEW YORK (CNNMoney.com) -- Shares of Lehman Brothers got socked yet again Friday, ending sharply lower just a day after the Wall Street firm provided more details about last quarter's nearly $3 billion loss.
Lehman shares finished nearly 17% lower. So far this year, Lehman shares are down 78%.
Rose Grant, a managing director at Eastern Investment Advisors in Boston, blamed the decline on broader fears about the underlying health of mortgage buyers Fannie Mae and Freddie Mac and an increase in the cost to insure Lehman's debt.
Lehman shares endure another tough session - Jul. 11, 2008
Getting grimmer and grimmer.
Banks have pretty much stopped lending, even to creditworthy businesses. Some perfectly good businesses here in Thailand are haemorrhaging, because they can't get Capital. This must be happening everywhere.
We are either in, or on the brink of, a Crisis of Confidence. The Fed is not able to bail out everyone, and I think a bad precedent was set by bailing out lowly Bear Sterns.