Second-largest bank takeover in U.S. history
Citing a run by depositors on the California mortgage lender, which left them short on cash, federal regulators rushed in and took over IndyMac. It's the second largest seizure of a financial institution in U.S. history, behind Continental Illinois in 1984.
The consequences of the seizure are more money will need to be raised to shore up the FDIC program, which is the backup plan if a bank fails. According to a statement by the FDIC, the failure of the California bank will cost the fund between $4 billion to $8 billion.
Those deposits in the bank that are uninsured, which entail about $1 billion spread across approximately 10,000 customers, will receive what is called an "advance dividend," which will pay back about half of the amount of cash not insured.
The FDIC added that, depending on the type of account owned by depositors, they could receive more, as some retirement accounts have limits of $250,000.
For now, the FDIC will run the company as a successor institution called IndyMac Federal Bank, beginning next week.
Those who want to access their funds during the weekend can do so through an ATM, said the Office of Thrift Supervision (OTS) today.
While this is the second-largest seizure of a bank in U.S. history, it is the largest OTS regulated savings and loan to fail.
As of 4 p.m. EDT, the company stock fell to 28 cents a share. Regulators say they'll eventually sell the company.
Related Stories:
Democrat U.S. Sen. Charles Schumer Blamed for Run On IndyMac that brought it down
How regulators take over failed banks
FDIC Establishes Successor to IndyMac Bank
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