IndyMac Bank reopens after seizure

Source: Agencies  |   2008-7-15  |     ONLINE EDITION

INDYMAC Bank, seized last week by federal regulators, reopened yesterday as IndyMac Federal Bank.

Hundreds of depositors lined up outside the bank to get their money back as bank executives tried to assuage their worries.

Bank executives reported that all 33 IndyMac branches were open for business.

IndyMac was shut down Friday by federal regulators during a run on deposits. The federal Office of Thrift Supervision (OTS) reported that US$1.9 billion in consumer deposits were withdrawn.

IndyMac, based in Pasadena, Los Angeles, is the largest bank in California ever to be taken over by regulators and the second largest bank failure in the US history following the Continental Illinois National Bank in 1984.

New IndyMac Chief Operating Officer John Bovenzi, a Federal Deposit Insurance Corp.(FDIC) executive, was in Pasadena Sunday telling the media the new bank was "as safe and sound a bank as any in the country."

But Bovenzi's attempt to reassure jittery customers, stockholders and the financial markets in advance of Monday's reopening did little to assuage worried depositors, particularly those with individual accounts totaling more than 100,000 dollars.

Under the law, individual accounts up to 100,000 dollars, joint accounts up to 200,000 and individual retirement accounts up to 250, 000 are fully insured by the FDIC. Accounts totaling more than that are not insured above those limits.

At the time the bank was taken over by federal regulators IndyMac had about 250,000 customers whose accounts were totally insured. The bank also had 1 billion dollars of potentially uninsured deposits held by about 10,000 depositors.

One of those people is Robert Soto who is worried he may lose part or all of 50,000 dollars -- above his fully insured total -- that he had set aside to buy a home.