IndyMac Bank - Pasadena, California Bank Gagal - Episode 346

Freesia Brindski (0:01)

Good afternoon. Good afternoon. Thank you so much for joining me. This is the podcast, The Endurance of Labor Laws. I'm your lovely host, Freesia Brindisi. Today is episode 346, and we're going to take a look at another failed bank. So let's dive in. So today's bank that failed is called IndyMac Bank. This one was located in Pasadena, California. This one failed July 11th in 2008 The acquiring financial institution was OneWest Bank, FSB. In terms of a little bit of background information about them, this one is kind of interesting because it had two different press releases. But here's the introduction, and again, this is directly from the FDIC.gov website. So it says, on March 19th, 2009, the Federal Deposit Insurance Corporation, aka FDIC, completed the sale of IndyMac Federal Bank, FSB, located in Pasadena, California, to OneWest Bank, FSB, also in Pasadena, California. OneWest Bank, FSB, is a newly formed, oh, that's why this is squirrely as well, a newly formed Federal Savings Bank, organized by IMB HoldCo LLC. All deposits of IndyMac Federal Bank, FSB, have been transferred to OneWest Bank, FSB. Then it says, this is the original part, on July 11th, 2008, basically a year earlier, IndyMac Bank, FSB, of Pasadena, California, was closed by the Office of Thrift Supervision, also known as OTS, and the FDIC was named Conservator. All non-brokered, insured deposit accounts, and substantially all of the assets of IndyMac Bank, FSB, have been transferred to IndyMac Federal Bank, FSB, of Pasadena, California, and that is supposedly the temporary, assuming institution. A newly chartered full service FDIC, insured institution. No advance notice is given to the public when a financial institution is closed. I disagree with that. They should be told. The FDIC has assembled useful information regarding your relationship with this institution. Besides a checking account, you may have certificates of deposit, a car loan, a business checking account, a commercial loan, a social security direct deposit, or other relationships with the institution. The FDIC has compiled the following information which should answer many of your questions. So this was kind of, this is the first press release I've seen. Well, it's not even a press release, but it's information from the FDIC's website where it's kind of written specifically to people that have accounts at this bank. All the other ones that we have discussed, the FDIC has never worded it in such a way that it's like being directed at a account holder of the bank that is failing. In terms of the press release, it says the FDIC has issued the following press releases. There were two different ones about the institution's closure. If you represent a media outlet and would like information about the closure in California, that's interesting they say in California, please contact David Barr. The email address is dbarr.gov, with the Office of Public Affairs. Or you can telephone at 202-898-6992 in Washington DC. And it says, please contact Andrew Gray. And that his email address is angray.fdic.gov.

And his telephone number is 202-898-7192.

This one's not written very well. It's kinda taking me aback. So the first press release that came out, it was basically around the exact time that the FDIC was saying, hey, this bank has to close. So this has to be released immediately to the public. So this is directly from the FDIC. It was for immediate release on July 11th, 2008 Again, the media contact in Washington, DC, is Andrew Gray. He has two different numbers, the one I just mentioned, and then his cell phone, supposedly his cell phone, quote unquote, at 202-494-1049.

It also lists the email address that I just gave. And then in California, it says David Barr, and it has his number, his cell phone, that really is his cell phone, at 703-622-4790.

And then again, it gives his email address.

So this one says, FDIC establishes IndyMac Federal Bank, FSB as successor to IndyMac Bank, FSB, Pasadena, California. IndyMac Bank, FSB of Pasadena, California was closed by the Office of Thrift Supervision. The Federal Deposit Insurance Corporation, FDIC, was named conservator. And that's interesting that they didn't name them as receiver. They named them as conservator because this is very interesting. This is one of the few ones where you see the FDIC creating a brand new bank specifically for a failed bank, which doesn't happen very often, so it's kind of odd. So I suspect there's other things going on with this. The FDIC will transfer it insured deposits and substantially all of the assets of IndyMac Bank, FSB of Pasadena, California to IndyMac Federal Bank, FSB. So it's interesting they say will transfer it insured deposits, so if they're not insured they're not being transferred, but it also says and substantially all the assets of this bank. That's very interesting in that wording there because we don't see that very often. It says broker deposits will be held by the FDIC and those insured deposits will be paid off when the insurance determination is complete. IndyMac Bank FSB had total assets, oh no wonder, okay, $32.01 billion in total deposits of $19.06 billion as of March 31st, 2008 As conservator, the FDIC will operate IndyMac Federal Bank FSB to maximize the value of the institution for a future sale and to maintain banking services in the communities that are formally served by IndyMac Bank FSB. Insured depositors and borrowers will automatically become customers of IndyMac Federal FSB and will continue to have uninterrupted customer service and access to their funds by ATM, debit cards and writing checks in the same manner as before. That's very interesting they say that because there's a difference between your funds being insured and not being insured. Goes on to say depositors of IndyMac Federal Bank FSB will have no access to online and phone banking services this weekend. And this is back in the day. These services will be operational again on Monday. Loan customers should continue making loan payments as usual. So even though this bank failed miserably with almost like 32 billion dollars, if you have a loan with them, you'd better be making those payments. So it's kind of a threat. Because here's the thing, this bank's going under, but the bank and the FDIC does not have pity for you. If you're the one who is a depositor, you are the consumer, you are the customer, but you're being put on the hook for this. And eventually all of America would have been put on the hook for this and was put on the hook because whenever a bank goes under, the FDIC uses our tax dollars and our fees that are collected from the banks to offset the cost of this and also to try and save portions of the bank because it would not be appropriate for the FDIC to save the entire bank, but this one is a little odd because again, a federal bank was specifically created for this bank so that it could continue to operate. And I just think that's very odd even though I understand you're dealing with billions of dollars, that's no excuse. So basically this bank thought and also the FDIC stupidly thought and foolishly thought this bank was too big to fail. It's not too big to fail, it did fail and it failed for a reason. And usually the reason, nine times out of ten, like 99.9999% of the reason why it failed is because of upper management sucking it dry of its money and also making really bad financial and banking decisions with other people's money. So FYI, be aware of that. It goes on to say beginning on Monday, July 14th, this is back in the day, IndyMac Federal Bank FSB's 33 branches, no wonder this is such a mess, they have 33 branches, will observe normal operating hours and will continue to offer full banking services, including online banking. For additional information, the FDIC has established a toll free number for customers of IndyMac Federal Bank FSB. The toll free number is 1-866-806-5919 and will operate from 3 p.m. to 9 p.m. Pacific Standard Time, and then daily from 8 a.m. to 8 p.m. thereafter, except Sunday, July 13th, when the hours will be 8 a.m. to 6 p.m. Customers also may visit the FDIC's website so it lists that as well for further information. At the time of closing, IndyMac Bank FSB had about $1 billion of potentially unsecured not unsecured, uninsured deposits held by approximately 10,000 depositors, wow. So this is a really large bank out in California. So I mentioned this one not only because it's on the list but number two, this shows you how squirrely California is. California, as much as I love California, and I really do love California and I pray for California because it is a good state, deep down it's a good state but they just have really bad people that are in charge of different things and it does cause problems. California, whenever it has a problem, it tends to be really bad. Why? Because it's heavily populated. They have a lot of political nonsense and also they have different ports on their seaboard, mean they do a lot of business and so they tend to have a lot of larger banks even if they are squirrely. And like I had never heard of this bank. Most of the banks that we have seen on this list, I have never heard of and I live in Oklahoma. So there are many things that happen in other states, especially on the coast, that people in Bible Belt states or the Central States, we don't hear a lot about because we don't really have these kind of issues. We just don't. So we don't really have a lot of these shenanigans because we're not heavily populated. We don't have a lot of corruption. We do have some but not as bad as California and New York and New Jersey and some of the other states as well, basically on the coast. Because it tends to be the coastal states, if they're run by Democrats, which most of them are, if they are run by Democrats and they're on the coast, whether east or west coast, they tend to be run really bad. And whenever they are run really bad, they are typically run into the ground, not only by their political officials, but also by their banking officials of these different banks, which are not public sector jobs or private sector jobs. So there tends to be this, this kind of mindset of it's the wild wild west in terms of banking. And California is a great state to do that. Like if you want to have a bank and do things really squirrely and kind of have a get rich quick scheme, California is the place to go. But also you could definitely lose everything really quick. Like if you can make it really quick, you can lose it really quick because there's a lot of shady things that go on out there. And I say that as someone that wants nothing but the best for people, but you have to be careful about who you do business with. And this was definitely a bad bank. And here's the thing. I mean, they were dealing with about $32 billion. They could have caught their mistakes, again, when they were out of balance with their finances at $1 billion, $1 million, $100,000, $1,000, $100, $1. They could have caught this way earlier, but they did not because again, they thought they were too, they thought that, let's just say, well, they didn't think this, but they were too big for their bridges, but they thought basically that they were all that in a bag of chips and yet, they're dealing with someone else's money. So, very much not good stewardship. It kind of reminds me of Silicon Valley Bank, but I don't think Silicon Valley Bank had a billion dollar problem. Not as bad as this, but this is like 32 billion technically.