Depositors of failed IndyMac Bank endured long waits in the summer heat for a second day Tuesday, with crowds becoming irate at several branches and customers with large accounts complaining of serious problems in getting their money.
Banking experts said the chaotic scenes risked touching off runs on other banks unless federal regulators quickly cashed out insured accounts and gave depositors accurate information about their funds.
The Federal Deposit Insurance Corp. took over Pasadena-based IndyMac late Friday and has assured depositors that accounts with $100,000 held in a single name or $250,000 in a retirement account are safe.
But many customers have said that when they checked their balances online, tens of thousands of dollars appeared to be missing. And when they went to branches in search of answers, they encountered lines hundreds of people deep and unhelpful staff members. On Tuesday, reports of unruly crowds brought police to branches in Encino and Northridge, although there were no arrests or injuries.
Noelle Gabay of Northridge, a budget analyst for the state of California, said FDIC officials acknowledged that she was owed $213,500 but provided her access only to $99,000.
"My trust in the FDIC is gone," said Gabay, 49. "The question is now, where do we put our money? Do we buy a bigger mattress?"
Bert Ely, a banking consultant in Arlington, Va., whose clients include financial-services trade groups, said the IndyMac situation was "generating anxieties all across the country."
"They should have been better prepared for this," he said, adding that regulatory oversight of IndyMac had been lax.
Ely noted that the bank, hobbled by massive defaults on loans made at the height of the real estate market, was not on the FDIC's list of troubled institutions as of March 31. It was placed on the list in June. However, he said IndyMac's fall was hastened by public questions from Sen. Charles E. Schumer (D-N.Y.) last month about the bank's strength -- comments that apparently helped trigger a $1.3-billion run on deposits.
Schumer has responded to such criticism by saying that IndyMac brought on its own problems by engaging for years in "poor and loose lending practices" that regulators should have prevented.
Longtime bank analyst Frederick Cannon, chief equity strategist for Keefe, Bruyette & Woods, said because of the distress at IndyMac, executives at other banks "are working very actively with their depositors to explain how insurance works, and what's covered."
John Bovenzi, the FDIC official who is now IndyMac's chief executive, acknowledged that some online records of accounts and insurance were inaccurate, fueling fear and anger among depositors. "They'll need to talk to an FDIC claims manager to sort it out," he said. "Some electronic records may not be complete, and we'll need to get a look at the documents" that set up the account.
Depositors can get FDIC coverage beyond the usual $100,000 per account by opening joint accounts and trust accounts. The FDIC has said that in addition to fully paying out insured IndyMac deposits, it will immediately pay half of uninsured IndyMac deposits.
Several depositors, though, complained Tuesday that the FDIC was failing to properly calculate interest and accused IndyMac employees of providing erroneous information about deposit insurance.
Todd Bash, a 43-year-old teacher from San Gabriel, was worried about IndyMac's viability after reading about its woes in the media, so he had gone into his branch in West Covina on July 8 -- three days before regulators seized the bank. He had two certificates of deposit, a savings account and a checking account, totaling more than $180,000.
Bash said he had been ready to pull his funds, but the teller told him that he could add beneficiaries to get extra insurance. He added his mother to one account and his sister to another.
But after IndyMac was seized, an FDIC hotline operator said the extra insurance wasn't necessarily valid, Bash said. That landed him in line Monday. After eight hours, the bank closed and he went home.
He went on the FDIC website again and used the system's deposit insurance calculator, which said all of his deposits were fully covered.
Bash returned to the bank Tuesday more confident, but when he finally talked to a teller, she showed him that more than $80,000 was missing from one account. Why? The teller didn't know. She referred him to an FDIC official in the branch, who also couldn't tell him what happened, he said.
"One person finally suggested that maybe there was a hold on my account, but when I asked if it was a hold, why wouldn't they just say there was a hold? . . . Nobody could give me any answers," he said.
FDIC spokesman David Barr said most of the problems stemmed from trust accounts that have been put on hold until the agency determines that beneficiaries have been properly named. In most cases, those funds will be released in full after the depositor confers in person with the FDIC, he said.