IndyMac Bank sold to IMB Management Holdings

Private investors closed a deal Friday to buy Pasadena's IndyMac Bank from regulators, promising to make the 33-branch thrift a "healthy banking institution" again.

How exactly do they plan to accomplish that? So far, no one's saying.

IndyMac collapsed July 11, 2008, the victim of an ill-fated strategy of using high-interest deposits to fund mortgage loans to borrowers who often weren't asked to document their earnings or assets.

Its new owners are led by Steven Mnuchin, chairman of Dune Capital Management, who will serve as chief executive of an IndyMac holding company. Other investors include bank buyout expert J. Christopher Flowers, hedge-fund operators John Paulson and George Soros, and a firm that manages money for computer mogul Michael S. Dell.

Terry McLaughlin, a veteran banker, is to be president and chief executive of the bank.

The new owners declined to be interviewed. In a statement, Mnuchin said his group was working with regulators "to structure a mutually beneficial transaction to restore IndyMac as a healthy banking institution. At closing, we will inject significant private capital into IndyMac so that it can once again effectively serve its customers and communities."

Mnuchin didn't offer any details. Officials with the Federal Deposit Insurance Corp., which seized the bank last summer, also declined to discuss how the new team might revive the bank now that the market for high-risk mortgage loans has evaporated.

FDIC spokesman David Barr said overseeing the business of the reborn bank would be the responsibility of the U.S. Office of Thrift Supervision.

In a statement, the OTS said: "The business model for the new institution would focus on home mortgage lending and mortgage loan [customer] servicing." A spokesman declined to elaborate.

The new game plan is key for IndyMac. After delinquencies soared on its loans in 2007, the thrift attempted to shift to making old-fashioned, fully documented loans of the kind that mortgage giants Fannie Mae and Freddie Mac traditionally bought. But it was unable to make any money in that business, and now its only new loans are reverse mortgages, which allow older people to extract equity from their homes.

The FDIC's announcement said it had agreed to sell what was being called the New IndyMac to the investors group for $13.9 billion.