Uncertain life for IndyMac investors

GLENDALE, California – Bewildered and anxious investors queued up to withdraw savings from a branch of failed California-based bank IndyMac on Monday, ignoring assurances that their money would be safe.

Around 200 people waited outside IndyMac’s branch in this prosperous Los Angeles suburb, and some had begun patiently lining up from 5:00 am, sitting on fold-out chairs to be first in line when the doors opened. A burly private security guard stationed at the door greeted worried customers, many of whom were retirees scrambling to withdraw every last dollar and cent from their accounts.Bank staff only allowed eight people into the bank at once, and a uniformed police officer and another security guard were stationed inside the doorway.Many of those waiting outside expressed a similar sense of shock at IndyMac’s collapse, saying the news on Friday that the bank had been seized by federal regulators had caught them by surprise.”I just didn’t ever expect to see anything like this happening in our country.This is the kind of thing that happened in the Depression,” said Dottie La Rose, 50, who was queueing with her mother.”We just want to see what our options are and how much we can withdraw,” added La Rose, blaming IndyMac’s closure on “bad management.”La Rose’s mother meanwhile took aim at the comments from Democratic Senator Charles Schumer last month concerning the bank’s health, which prompted a flood of withdrawals by panicked customers.”I think a lot of this is down to what Schumer said,” Mary La Rose, 76, said.”Shame on him.”The regulatory Office of Thrift Supervision (OTS) announced Friday it had placed the California-based bank, worth an estimated US$32 billion, under the control of the Federal Deposit Insurance Corporation (FDIC).The mortgage lender, which re-opened Monday as IndyMac Federal Bank, marked the largest bank failure in a year of mortgage and foreclosure crises.IndyMac branches were allowing customers to withdraw up to US$100 000 on Monday, and paying 50 cents on the dollar thereafter, reports said Monday.Several investors waiting outside said they planned to withdraw everything they had from the bank, unconvinced by assurances that their savings would be safe because the lender was federally insured.”I’m taking out everything I have and a lot of people I’ve spoken to are doing the same.Don’t believe anything anyone tells you until you’ve got the money in your hand,” said one woman, who asked only to be identified as Susan.”The interesting question is why everybody here if the bank is federally insured? I’ll ask you why – it’s because people just don’t trust financial institutions and the government anymore.”Paul, 37, a real estate investor echoed Susan’s view.”We’re taking everything out,” he told AFP.”I didn’t ever expect anything like this to happen in this day and age,” he said, comparing the fiasco to the scene in the classic 1946 Frank Capra film ‘It’s a Wonderful Life’, where James Stewart has to calm the nerves of an angry mob seeking to withdraw their money from his Savings and Loan.”My wife and I took the trouble to find out whether the bank was federally insured before we put our money in, but even so it’s still worrying.”Rose Batt, a 65-year-old legal secretary, blamed IndyMac’s failure on poor management and greed.”It did not have good management.Someone was just wanting to make more and more money without thinking about what was good for the institution and the investors,” Batt told AFP.”People were obviously getting greedy.And when you’re greedy, you don’t think things through.So you start giving people big loans that they will have no way of being able to pay back, and that’s when problems start.”Nampa-AFPA burly private security guard stationed at the door greeted worried customers, many of whom were retirees scrambling to withdraw every last dollar and cent from their accounts.Bank staff only allowed eight people into the bank at once, and a uniformed police officer and another security guard were stationed inside the doorway.Many of those waiting outside expressed a similar sense of shock at IndyMac’s collapse, saying the news on Friday that the bank had been seized by federal regulators had caught them by surprise.”I just didn’t ever expect to see anything like this happening in our country.This is the kind of thing that happened in the Depression,” said Dottie La Rose, 50, who was queueing with her mother.”We just want to see what our options are and how much we can withdraw,” added La Rose, blaming IndyMac’s closure on “bad management.”La Rose’s mother meanwhile took aim at the comments from Democratic Senator Charles Schumer last month concerning the bank’s health, which prompted a flood of withdrawals by panicked customers.”I think a lot of this is down to what Schumer said,” Mary La Rose, 76, said.”Shame on him.”The regulatory Office of Thrift Supervision (OTS) announced Friday it had placed the California-based bank, worth an estimated US$32 billion, under the control of the Federal Deposit Insurance Corporation (FDIC).The mortgage lender, which re-opened Monday as IndyMac Federal Bank, marked the largest bank failure in a year of mortgage and foreclosure crises.IndyMac branches were allowing customers to withdraw up to US$100 000 on Monday, and paying 50 cents on the dollar thereafter, reports said Monday.Several investors waiting outside said they planned to withdraw everything they had from the bank, unconvinced by assurances that their savings would be safe because the lender was federally insured.”I’m taking out everything I have and a lot of people I’ve spoken to are doing the same.Don’t believe anything anyone tells you until you’ve got the money in your hand,” said one woman, who asked only to be identified as Susan.”The interesting question is why everybody here if the bank is federally insured? I’ll ask you why – it’s because people just don’t trust financial institutions and the government anymore.”Paul, 37, a real estate investor echoed Susan’s view.”We’re taking everything out,” he told AFP.”I didn’t ever expect anything like this to happen in this day and age,” he said, comparing the fiasco to the scene in the classic 1946 Frank Capra film ‘It’s a Wonderful Life’, where James Stewart has to calm the nerves of an angry mob seeking to withdraw their money from his Savings and Loan.”My wife and I took the trouble to find out whether the bank was federally insured before we put our money in, but even so it’s still worrying.”Rose Batt, a 65-year-old legal secretary, blamed IndyMac’s failure on poor management and greed.”It did not have good management.Someone was just wanting to make more and more money without thinking about what was good for the institution and the investors,” Batt told AFP.”People were obviously getting greedy.And when you’re greedy, you don’t think things through.So you start giving people big loans that they will have no way of being able to pay back, and that’s when problems start.”Nampa-AFP