December 24, 2008 / 7:12 AM / 10 years ago

Regulators near deal for IndyMac

NEW YORK (Reuters) - U.S. regulators are expected to announce a deal for the assets of failed mortgage lender IndyMac before the end of the year, a spokesman for the bank said on Wednesday.

A customer who did not want to give his name talks to a security officer (R) at a closed branch of IndyMac Bank in Burbank, California in this July 11, 2008 file photo. U.S. banking regulators are close to a deal to dispose of the failed bank, the Wall Street Journal said, citing people familiar with the situation. REUTERS/Fred Prouser

The exact timing of an announcement and whether the company would be sold as a single entity or in pieces was not clear.

The deadline for final bids for IndyMac’s assets was December 15, said IndyMac spokesman Evan Wagner.

The Federal Deposit Insurance Corp aims to sell IndyMac before the end of the year, FDIC spokesman David Barr said. The FDIC estimates IndyMac’s failure cost the agency $8.9 billion.

The mortgage specialist’s IndyMac Bank unit was taken over by regulators after it failed on July 11 in one of the largest bank failures in U.S. history. At the time, it had $32 billion in assets and $19 billion in deposits.

When it failed, more than 130 FDIC employees swooped in on the California-based mortgage lender to prepare it to reopen under government management as IndyMac Federal Bank. Another 120 employees took part remotely via computer links.

IndyMac Bancorp Inc, the holding company, filed for Chapter 7 protection soon after with the U.S. bankruptcy Court in Los Angeles, indicating it plans to liquidate.

Founded in 1985 by Angelo Mozilo and David Loeb, who also founded Countrywide Financial Corp, IndyMac once specialized in “Alt-A” home loans, which often didn’t require borrowers to fully document income or assets.

It collapsed after defaults mounted and as tight capital markets caused losses on mortgages it couldn’t sell.

The seizure came after panicked customers withdrew more than $1.3 billion of deposits over 11 business days. The withdrawals followed comments in late June by U.S. Sen. Charles Schumer questioning IndyMac’s survival.

Additional reporting by Kim Dixon in Washington and Ajay Kamalakaran in Bangalore; Editing by Jon Loades-Carter and John Wallace

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