IncyMac Siezed by Banking Regulators
SOURCE: Reuters
A type of specialized mortgage that required minimal documentation was the downfall of IndyMac. IndyMac, a California-based bank became the fifth U.S. bank to fail so far this year as the housing bust and credit crunch put a strain on financial institutions. Adam Compton, co-head of global financial stock research at RCM in San Francisco said "IndyMac is a company that was pretty much 100 percent invested in mortgage assets, and we're in a bad mortgage market, and it had no capital. It's not complicated".
An investment banker with Westwood Capital In New York, Daniel Alpert, is predicting that IndyMac's takeover could be one of many to come. Ann Graham who is a former FDIC official said that it isn't unprecedented for the FDIC to run a bank after it fails. She said that this allows time for the FDIC to shop the bank around to potential buyers rather than having to hurry a sale. The FDIC is allowed to operate an institution for up to two years before selling it.
Even though IndyMac is the largest independent publicly traded U.S. mortgage lender, the Office of Thrift Supervision (OTS), who is IndyMac's primary regulator, said that they do not expect significant market impact from the IndyMac closure. The feel this is because the firm is not a systemic institution and is without numerous counterparties.
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A type of specialized mortgage that required minimal documentation was the downfall of IndyMac. IndyMac, a California-based bank became the fifth U.S. bank to fail so far this year as the housing bust and credit crunch put a strain on financial institutions. Adam Compton, co-head of global financial stock research at RCM in San Francisco said "IndyMac is a company that was pretty much 100 percent invested in mortgage assets, and we're in a bad mortgage market, and it had no capital. It's not complicated".
An investment banker with Westwood Capital In New York, Daniel Alpert, is predicting that IndyMac's takeover could be one of many to come. Ann Graham who is a former FDIC official said that it isn't unprecedented for the FDIC to run a bank after it fails. She said that this allows time for the FDIC to shop the bank around to potential buyers rather than having to hurry a sale. The FDIC is allowed to operate an institution for up to two years before selling it.
Even though IndyMac is the largest independent publicly traded U.S. mortgage lender, the Office of Thrift Supervision (OTS), who is IndyMac's primary regulator, said that they do not expect significant market impact from the IndyMac closure. The feel this is because the firm is not a systemic institution and is without numerous counterparties.
Read full report »
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