By E. Scott Reckard, Los Angeles Times Staff Writers and Andrea Chang, Los Angeles Times Staff Writers|July 01, 2008
Battling rumors that it may collapse, Pasadena-based IndyMac Bancorp acknowledged Monday that its financial position had deteriorated but described the fears as overblown and said it was working with regulators to improve its "safety and soundness."
IndyMac, a national home lender burned by the mortgage meltdown, went public after depositors lined up at San Gabriel Valley branches starting Friday to pull out their money. Striving to reassure them, the thrift said nearly all their deposits were insured by the Federal Deposit Insurance Corp.
Nonetheless, Elizabeth Brown closed four accounts totaling $200,000 Monday at an Arcadia branch where about 20 customers were lined up at noon, saying: "The only reason I'm panicking is if anything happens, my money is tied up.
"I don't want to take the chance," said Brown, 62, of Temple City. "I'm going to put my money somewhere else, and if they come back, I'll come back."
Rick McPherson, 64, said he grew worried after hearing news reports that IndyMac was struggling, and withdrew $1,000 he had at IndyMac.
"I'm not certain what happens when a bank fails," said McPherson, a printer from Arcadia. "I don't trust the economy right now."
The concerns were triggered by Sen. Charles E. Schumer (D-N.Y.), chairman of the Joint Economic Committee, who said in public letters to the FDIC and other bank regulators Thursday that IndyMac "could face a failure if prescriptive measures are not taken quickly." IndyMac said Monday that Schumer had created the "wrong impression" about the savings and loan's risks.
FDIC Chairman Sheila Bair has said examiners are forcing lenders to aggressively write down the value of their mortgages and home-builder loans to reflect likely losses from the worst downturn in housing markets since the Depression. To offset those write-downs, the banks and thrifts must get capital infusions from new investors or find buyers -- alternatives that IndyMac spokesman Grove Nichols said were being explored. He declined to provide details.
"Of course we do need to raise capital," Nichols said. "We're working the problem from many angles. That's all I can say."
The company's stock sank 19 cents Monday to close at 62 cents a share. The shares are down 90% this year.
