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FDIC lowers IndyMac estimate

Uninsured deposits total $600 million, a bank executive says.

August 13, 2008|E. Scott Reckard | Times Staff Writer

When IndyMac Bank was seized by regulators last month, its uninsured deposits totaled about $600 million, down from the $1 billion first estimated, the bank's new chief executive said in a memo to the staff Tuesday.

The memo from John Bovenzi, the Federal Deposit Insurance Corp. official running IndyMac, said the agency was trying to make the Pasadena-based bank more attractive to prospective buyers by slashing its deposit base, modifying soured loans and offering customers incentives to pay off their home equity lines of credit.

An FDIC spokesman said the new estimate of uninsured deposits stemmed from efforts to identify ways that customers had structured their deposits to stay within FDIC insurance limits, such as jointly held or trust accounts.

The agency has given IndyMac customers access to 50% of their uninsured deposits. Whether they get more will depend on how much the bank's assets can be sold for.

The FDIC originally estimated IndyMac's failure would cost the insurance fund $4 billion to $8 billion. Bovenzi didn't provide an updated estimate.

IndyMac had about $19 billion in deposits when it was declared insolvent, but Bovenzi said the FDIC would seek to transfer only $7 billion of that amount to a buyer of the bank's 33-location branch network. The FDIC returned to customers most of the other deposits because they were accruing high interest rates or the account holders were from outside Southern California -- making the deposits unattractive to potential buyers.

IndyMac is offering its 27,000 home-equity-line customers 2% of their credit line's maximum amount, up to $1,500, if they pay their balances and close the accounts.

Bovenzi said the move could save the FDIC money because home-equity-line balances are selling at a discount -- presumably more than 2%.

The FDIC official also said 60,000 borrowers with loans serviced by IndyMac were 60 or more days behind on payments. He promised in his memo to provide details soon on the bank's loan-modification program.

Separately, IndyMac Bancorp, the parent company that was not taken over by the government, said in a bankruptcy filing Monday that it had $442.6 million in debts, more than 21 times its assets of $20.4 million.

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scott.reckard@latimes.com

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