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The government's seizure of IndyMac Bank-- and its subsequent investigation for mortgage fraud -- raises concerns for many consumers about whether their banks might be next.
While it is unlikely the nation will see thousands of banks fail as they did during the savings and loan industry collapse in the late 1980s and early '90s, analysts predict there will be more battered financial institutions that are unable to survive in today's marketplace.
On Friday, July 11, 2008, the Office of Thrift Supervision transferred control of the California lender to the Federal Deposit Insurance Corp. because it did not think IndyMac could meet its depositors' demands. By Monday, the bank reopened as IndyMac Federal Bank, FSB, and customers whose deposits were insured by the FDIC were able to access full banking services, including online banking, during normal business hours. On July 16, The Associated Press reported that the FBI is investigating IndyMac for possible mortgage fraud.
IndyMac, like many of the nation's banks, was facing pressures of tighter credit, tumbling home prices and rising foreclosures. In recent weeks it had experienced a run on the bank, with depositors pulling out $100 million a day.
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Credits: The Associated Press
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