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US mortgage bank IndyMac goes under, victim of credit crisis
Jul 12, 2008, 12:27 GMT
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For the truth about IndyMac:
'IndyMac specialized in Alt-A loans, a type of mortgage that can often be offered to borrowers who don't fully document their incomes or assets. The company sold most of the loans it originated but continued to hold some on its books. As defaults piled up, IndyMac's finances deteriorated.' It is outrageous that the FDIC would ensure a bank that does not require borrowers to show Social Security Numbers or proof of income for ability to pay. Many of these loan defaults are from Illegal Aliens who use ITIN numbers and other sham documents. Now they just walk away and the American taxpayers can pick up the tab. Absolutely disgraceful. Not surprised for a California-based bank in a State going bankrupt due to illegal aliens and a legislature and governor who live in denial.
In response to Marge1- The fact is that every lender, not just IndyMac, doled out cash to borrowers who applied for loans as 'stated income' or 'Alt-A loans.' I agree with you up to the point where you take a left turn and blame this problem on illegal aliens. How do you account for millions of US citizens who also benefitted from these loans? This bubble is about the banks and their greed. Let's not get all xenophobic at the first sight of trouble.
What would US federal regulators do with all the 'assests' at IndyMac? No Bail Out.
THIS ENTIRE MESS WAS SET UP FOR FAILURE. IN THE END WE WILL BE POORER AND THE GOVERMENT WILL HAVE MORE POWER. I HEARD OLD PEOPLE SAY OVER AND OVER THAT THE BANKS CREATED THE 1929 FALL. I NEVER BELEIVED UNTIL I WATCHED IT HAPPEN. I FEAR THE WORST IS YET TO COME.
The sub-prime diaster is over. Alt-A is over, its time for the A loans to fail. And being in the mortgage business and seeing what I see, its not a guess. Just remember, when the feds rates the rate 24 times, what did you expect? As far as bad loans? Tell me, Why did the State regulators stop the bad loans for all those years when they did there audits? Because it was what the goverment wanted. The sad truth, America srcewed its own. What have I learned, never trust the goverment again. NEVER!
Marge1 is right, there is a elephant in the room and no see it.
Marge1 is right, there is a elephant in the room and no one see it.
Indymac, Countrywide, New Century and others pushed easy lending. Wall Street bought these security backed loans and made a bundle. Many borrowers purchased houses that they couldn't afford.
Who's fault is it?
Everyone. It's called greed! From the average American, to the lenders, to Wall Street, to the federal regulators and congress who are suppose to regulate the industry. Also, local governments benefitted from higher tax revenues.
It's time to pay the piper. We need to bail out Fannie & Freddie to prevent being sucked into the abyss.
Going forward, they should regulate income documentation to only full doc. They should only have 30 or 15 year fixed loan products. Loan Officers and Realtors should have extensive classes on ethics.
Marge1,
Your are very right. The cost of illegals to the taxpayor are just beginning. Defaulted mortgages, schooling for their children, free meals, housing subsidy, WIC and other food 'stamps' are only the tip of the iceberg. Just wait until those who haven't contributed to Social Security, demand (and thanks to Calfornia) will get payouts from s system set up long before illegals started amassing in this country. Talk about an econimic meltdown and war in the streets!
Oh, by the way, thanks a lot Los Angeles for MS13 and to the El Savlordians for forming the most widespread, dangerous and harmful gang threat to OUR society. Thanks too, for costing the American taxpayors millions to incarcerate (that's put into prison for those of you in Rio Linda) a disporportionate number of illegals, especially Hispanic.
Of additional note, is the fact that banks have made loans they shouldn't have made to folks of all kinds that didn't deserve them -- did not qualify under traditional rules for home loans. Looks to me as though the banks got greedy and the borrowers got too big for their britches.
In either case of faulty loans to Americans or illegals, and in the case of baby sitting illegals, Calfornia once again has lead the way down the wrong path. Don't ask me to bail your irresponsible butts out of debt.
Funny when liberals rule, there is always a major mess. With Calfornians, liberals, feminist, homosexuals and foreigners in the lead, this country is already on an irreversable path to destruction.
Thanks a lot (that's muchas gracias) to you Calafornians.
'Darned if it does and darned if it doesn't.' All of this talk about the credit crisis as an example of too much government is silly. From my perspective, the regulation of credit and the money supply is a legitimate function of government that has been reduced in part during this extension of the Reagan era.
Stop and think, even the conservative financial community that dominates Wall Street is calling for us to re-think and tighten the regulations governing our financial institutions.
Appropriately, Americans believe in limited government. But please, it is too simple to pose the issue as one of 'any government is bad government.'
R. William Holland
Board Chair, United Professionals and author
Are There Any Good Jobs Left? Career Management in the Age of the Disposable Worker.
Can't anyone on this board spel wright?
And the stupid democratic party is condoning.
What's America crying about today, folks? So what if your government sold you out and your nation is slipping away from under your feet as we speak! Get a grip, Charlie! We don't need jobs, health care and the like. We are Americans. Forget the banks too. Without a job, you are not going to have a need for banking services. Half the population now living in America are illegals. Get use to it or move to a third-world nation and get a real job while your there.
America is a place where no-care health care lives. Organized crime is in and law-abiding citizens are a thing of the past.
Is anyone else here alarmed by the knee-jerk reactionaries blaming immigrants, and demanding more government?
First of all, this problem was created by collective stupidity. People allowed themselves believe or be persuaded to believe that they could afford loans for homes/cars/other luxury items that they should have known they could not afford. Banks augmented the natural market, to make high yield loans to higher risk applicants seem attractive. Corporations allowed themselves to think these loans, which any amount of inspection would show to be unstable, could be a huge source of cash, forgetting that they were all selling each other renamed shares of the same debt. Government regulatory comities did little or nothing because, as with most government organizations, those in charge of them were too busy reaping the cash from lobbyists hired by the banks and corporations.
Many, many people are to blame for actively taking part in this cycle of idiocy. I'll exempt those who passively did nothing, or allowed themselves to be convinced that the kind of massive growth our economy showed was natural, since even if they had cared or bothered, their representatives would have been likely to do nothing.
Still, this has little to nothing to do with illegal immigrants, or needing more government. This has to do with a perpetuated system of bad and fake credit, and a bloated bureaucracy that WE allowed to become corporatist ever since the 1930s. The kind of xenophobia evinced on these pages is exactly like that which stirred around the Alien and Sedition act, the instillation of Fascism in Italy, and countless genocides world wide.
PLEASE, folks, pick up a damn history book and educate yourselves.
For those who immediately but the blame on the immigrant, illegal or not, please provide statistics or solid evidence. Groundless attacks just make no sense. I am an immigrant from Taiwan and my house if fully paid for. This big borrowing and enjoy before you even have it only exist in US. I remember trying to borrow to purchase my first house. Since I did not believe using credit card to purchase, I was penalized for not having any credit reference and I had to pay higher monthly due to higher interest.
The whole problem is credit become too easy, Wall street purchase the sub-prime without even question so that investor can make bigger $. This prompted the loan brokers to get people to borrow with hardly any requirement. Just think, how many people you know were in the loan business during the past 10 years? Most people have no clue on how much they could afford and just focused on that large house they want. This also prompted to make the housing price way beyond it really should. Greedy wall street investors, greedy banks, greedy loan brokers, greedy home builders, greedy contractors and.. all take advantage of the stupid yet spoiled American public. In the mean time, politician takes credit for putting so many American public in to their 'own house' ! Ah, the good old rich American image!
We are losing our grips of reality. Don't blame others please.
Stupidity and ignorance make Americans predictable. Fat, lazy people can only blame others for their wealth and health precarious condition while others more industrious take the tab. China is still financing but not for long - the cycle has run its course & when the flow stops, very few in the US will be prepared.
I bailed out of USD and moved into Gold mid 2005; I am presently borrowing more USD from more US banks to purchase more Gold... I'll repay these loans when the dollar has been inflated (devalued) to oblivion... Thank you Ben for keeping interest rates so low and thank you Hank for your 'strong dollar policy'.
When the dust clears, I'll use the gold to purchase a bigger part of America; by then, the constitution will be more respected, the consumers' sons will be citizens again and for better or worse, Iraq will self determine its future.
in the meantime, bye bye Miss American pie... It is winter, time to conserve!
Rational,
You left out a key point, that most omit or gloss over. The main reason the mortgage companies and other financial institutions got in so deep was that they thought they had controlled their risk. They were using derivatives (credit default swaps) as insurance against losses due to bad debts. The reason they could do that was that former Senator Gramm (now McCain's campaign top economic advisor!) was responsible for a bill to exempt those types of derivatives from regulation, shortly before he left to become a VP of UBS (who then got into huge trouble with...um...derivatives). Insurance is regulated, so the financial companies couldn't have gone down the path as they did, if they had been using 'actual' insurance products to control risk.
Now that this huge transfer of wealth has taken place (i.e., sucking the equity out of most middle class homes), the middle class is shrinking as the manufacturing losses push the remaining manufacturing workers back to working poor status, and congress tightened bankruptcy laws (generously drafted for them by the banking and financial lobbies), this country is in for a huge transition. This is about to become a nation of indentured servants.
All I can say is wow! The level of ignorance of some here is truly amazing.
Hank - It seems the President, the Governor of California, the House and (until recently) the Senate were all controlled by Republicans for these last many years. I guess those Republicans are the 'Liberals' you're talking about.
This mess was caused by widespread greed, left unchecked by government regulation and private sector 'rating agencies'. The banks, brokers, builders, real estate agents, and even ordinary Americans were greedy beyond the pale. Foreigners had little to do with it except by providing sources of lending (China buying US treasuries) while all our local capital was chasing the madness of this real estate bubble.
If you're looking for someone to blame, look in the mirror.
You guys are a nation of absolute nuts. You claim what a wonderful country you are under one god .... while from European perspective all you really care about is how to make a quick buck screwing your neighbor. Hell with you
if you don't have health care as long as I have it,same goes for the
roof over head, minimum wages,education...Funny thing is, it's costing you
so much more in long run in lost human resources and unnecessary suffering that you could probably provide many of those for free and still save money.
I'm afraid the whole situation requires a more rational approach to be understood.Historically the current situation is the result of the Reagan era,when everything pertaining to the financial market was deregulated ,with the outspoken goal to make credit more widely available for all.The immediate result was a boom indeed.The real estate started booming as cheap credits were made available to a larger public.A secondary result of course is raising prices in the real estate,providing more profit to those that bought early .Buying and selling became a way of living,some of you made big bucks that way.Of course such mechanism can not continue indefinitely .Real estate is also linked to the wider economical conjuncture .As long as housing ifs affordable there is a market .Properties change hands and are a lucrative type of speculation for years,until two problems start to arise;it becomes too expensive to buy a house for the average Joe and so a part of the ùarket faes away.For speculators there is also an end as real estate loses it' attraction after a while,prices can not rise endlessly .And so a lot of people pertaining to these categories having borrowed money ,became giants on clay feet ,to be toppled when the first winds start blowing .Illegal aliens have as little to do with that as extraterrestrials of course .But somebody ha to be blamed,and for sure tha banks providing loans without even checking on their clients will not accept the blame .They are now queuing up at the government to get more money .in this high risk game the bank only get the profits,once they start losing they knock at the door from the government and ask for money.In exchange of what ?More control ?I think that is needed badly .
Of course you can leave it ti the republicans to blame the state,the immigrants,the loanes,the general public,congress,etc,etc.But blame tha banks for creating a product that was bound to fail sooner or latr ?No sir,of course not.Blame the clients because they used what was offered to them by the banks...yes sir,this is the republican version of the facts...slightly at odds with reality .
euroboy you spoke the absolute truth. Our nation teaches individualism and that is the problem. Everyone has this, it is about me attitude, who cares about anyone else. WAKE UP AMERICA IT IS NOT ALL ABOUT THE INDIVIDUAL BECAUSE WE WERE CREATED TO WORK TOGETHER FOR THE COMMON GOOD AND WHEN WE FORGET THIS OUR KINGDOM FALL JUST LIKE ALL THE OTHERS IN HISTORY.
re: ex loan officer - loan officers should have extensive classes on ethics? lol - it's called greed - as many people in this post have said. There's no class to teach you to not want to make maxxx $. I agree that everyone involved is culpible. The worst is yet to come...
While IMB was in dire straits, it could have survived but DEMOCRAT Senator Charles Schumer started the bank run for no reason at all. It was like shouting 'fire, fire, fire' in a movie theater.
An important angle in the IndyMac failure that may get lost in ominous headlines tonight and tomorrow: federal regulators pointedly cited U.S. Sen. Charles Schumer, D-N.Y., in explaining the bank's failure. In simple language, federal regulators blamed Schumer for a run on the bank.
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.'
FDIC insures deposits not loans and is private for profit company (some of you may be duped into thinking its a government institution just like upu think of the FED) what does having a SS# or being able to pay the loan have to do with insuring your deposits. if you put the money in the bank regardless of the source and the bank says its insured then its suppose to be insured. get your facts straight.
People of America please wake up and start looking around and asking questions. Turn off the damn TV which just pollutes your minds.
Please stop being just dolls and slaves of the government.
This country will soon require a drastic measures to fix the situation and the powers that be are steering in that direction however if they do it they will do it the way they want it and there will be a tremendous transfer of wealth towards that group. If we as a country don't take action 80% of the population will end up as slaves LITERALLY (and we're almost there) 15% will be controlling the 80%, remaining 4% will be the administrators and 1% will be in power (again almost there).
God bless humanity
pray pray pray.
Ahum,don't panic guys,remember SP4 telling you your economy was going through the roof,thanks to Bush?Well then ???
Interesting, who is the source of this article. Ok, - moving on. If you have cash it's about time to change it into something of value. Unless, of course, you think confidence in paper will remain no matter what. Oh ya, Weimar Republik comes to mind. But those were the old days. Surely, this could not happen again at least not in the US of A. Look at the bright side everybody will be a paper millionaire. You can light each others last cigar. Gold, Silver who needs it!!!
Schumer should be stripped of all titles, political, and put on trial for causing this run on the bank. Sure the Bank was troubled, but potentially could have recovered. Were it not for Schumers political interference there would NOT have been a run on the bank.
I am not sure what his goal was other than panic the financial markets for political gain. This man has not served the people and hurt many.
So Gay people caused the Banking Crash? What the heck? No, I do not think so...I know of several people in the mortgage business who wrote bad paper and committed fraud. This has gone on in the insurance industry too...they all thrive on lack of 'Regulation...thanks President Reagan and the Republicans...' So sad, because when I was young and dumb I voted for the man. Good government and policies that protect the consumer involve regulation and oversight. Talk to your own Republicans in your state! I love California and Californias...but Reagan came from there!
While Senator Schumer points the blame at the OTC for “not doing its job,” I’d like to know why Senator Schumer was at a loss for words during the housing boom years of no doc loans, 110% financing, 1% Fed Funds rate, etc? As an elected official, Senator Schumer has a responsibility not to incite panic. The Senator’s words have adversely affected IndyMac employees and their families, individual and business customers, and shareholders. The entire US banking sector will be affected if the FDIC has to raise insurance fees to cover the estimated $4-8 billion cost to the FDIC’s insurance fund.1
Federal officials aren’t supposed to cause bank runs. In fact, much of the New Deal bank regulatory apparatus was set up for the purpose of eliminating such panics. When FDR was hit with a massive set of bank runs shortly after taking office, he gave an address in order to calm terrified depositors, assuring them that the banks would reopen shortly, and that everything would be fine. But Chuck Schumer is no FDR. He doesn’t stop bank runs; he starts them. Or, at least, has started one. The collapse of Indymac bank, the second largest bank failure in American history, began with a letter from the office of Senator Charles Schumer on June 27. He questioned the viability of the bank. When a senior senator who is in a number of influential posts regarding oversight of bank regulators directly attacks the confidence of a depository institution, it matters. Not surprisingly, the director of the Office of Thrift Supervision concluded that the collapse of the bank immediately following the Senator’s comments has not a coincidence. Director Reich concluded that Senator Schumer had ‘given the bank a heart attack’.
Why? Why would a federal official with enormous power, destroy an institution on which tens of thousands of depositors (not all of whom are insured) and employees depend? Why would a New York Senator attack a Pasadena bank, acting as some sort of amateur, self-appointed, long-distance bank examiner?
Perhaps this might help answer the question: Indymac has been under attack from the hard left. The Center for Responsible Lending issued an attack on Indymac within a few days of Schumer’s letter. CRL is part of a small army of left of center ‘research’ groups, community organizers, and public interest law firms who make their living accusing home lenders of racial redlining and predatory lending. On June 20th the Center accused Indymac of unfair practices regarding minority borrowers.
A suspicious person might think that a network of lefty attack groups proficient in bank bashing and frequently funded by trial lawyers and short-sellers, coordinated their activities with a law firm on the hunt and a Senator who works closely with the network.
On the other hand, maybe it is a coincidence that CRL and Sen. Schumer attacked the same bank in the same week. Maybe he didn’t know about the CRL report, nor CRL about his letter. Maybe the community group didn’t know about the trial-lawyer class action lawsuit which was launched against Indy a couple of weeks before all of this started.
Yeah, right.
The political class is shifting left. We’re likely to get Obama and Nancy and Harry running the most advanced economy in the world next year. The investor class doesn’t like what it sees coming. That’s why it is scaling back. Capital is going on strike, and we won’t come back to the table until we see that we have a chance to a fair deal.
In refence to the comment made blaming 'the illegals':
It is easy to blame everything on undocumented persons. That seems to be The American Way. Blame it on the immigrants - the problem here is all of us, with the exception of indigenous peoples of America, have roots elsewhere. The U.S., as we know it, has been built by immigrants from every continent.
According to a recent report concerning those affected the mortgage banking crisis, the 'bad' loans (Alt-A and Subprime) were made mostly to whites - at a 2:1 ratio over those made to Hispanics. The report also shows that the defaulted loans retain the same ratio.
Instead of blaming all societal difficulties and failures on immigrants - we should focus on deconstructing the American-embraced value of Greed. This is what drives an industry (led by individuals overcome with greed - it happens to the best of us) to exploit individuals with dreams of homeownership.
Loans were made to persons who truly could not afford these mortgages - but they were made anyway in the interest of profits. This unethical practice is what is currently being questioned by proposed legislation that will provide regulation via a standard of ethics in making loans.
People of various races, primarily whites, were preyed upon by an industry who could be satisfied by making loans to those who could afford them. Hence, the riskier category loans were established as a separate market. Don't you wonder why Countrywide (who owned IndyMac) cut its ties some time back?
The road to where we are today was a long one - one stemming from Enlightenment ideologies that have evolved and dictate our present day societal norms. We have to ask tough questions and take bold action to change the structures that have such a tight grip on us. One way is to establish a standard of how we do business in this country - in a way that pure capitalism can be embraced healthily without extremes - and without exploitation of the people it is supposed to benefit - all of us.
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