Regulator to run IndyMac while buyer sought
WASHINGTON (Reuters) - Mortgage lender IndyMac Bancorp Inc was taken over by the Federal Deposit Insurance Corp on Friday, which will run the bank while it looks for a buyer.
IndyMac is the second-largest financial institution in U.S. history to close.
The FDIC said the estimated cost of the California-based bank's failure to its insurance fund is between $4 billion and $8 billion. The regulator said it would operate IndyMac to maximize the value of the company for future sale.
IndyMac's primary regulator, the Office of Thrift Supervision, blamed comments by New York Democratic Sen. Charles Schumer for causing a run on the deposits at the largest independent publicly traded U.S. mortgage lender.
Depositors have been withdrawing cash at an elevated pace since late June, when Schumer questioned IndyMac's ability to survive the housing crisis.
In the following 11 business days, depositors withdrew more than $1.3 billion from their accounts, the OTS said.
"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," he said.
Calls to Schumer were not immediately returned.
The successor bank run by the FDIC will open for business on Monday. Over the weekend, depositors will have access to their funds by ATM, other debit card transactions and by writing checks. They will have no access via online banking and telephone services until Monday.
The takeover of IndyMac capped a tumultuous day for U.S. financial markets that saw stocks slide on a surging oil price and renewed fears about the stability of the top two home financing providers, Fannie Mae and Freddie Mac.
(Reporting by John Poirier, Karey Wutkowski, Rachelle Younglai; Editing by Toni Reinhold)
