by admin on July 12, 2008
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Federal regulator has seized the assets of American mortgage bank IndyMac
The assets of American mortgage bank IndyMac have been seized by federal regulators after an unprecedented run on its funds, making it one of the largest US banking failures in history.
The California-based bank, which has approximately $32bn (£16bn) of assets, was last night taken over by the Federal Deposit Insurance Corporation (FDIC), the US regulator charged with protecting savings banks.
It follows days of uncertainty at the bank, which earlier this week said it was shutting down its lending operations and axing half its workforce.
But the statement, which was designed to stave off any capital problems, only heightened its troubles with savers attempting to withdraw money with increased alacrity.
IndyMac was America’s ninth largest mortgage lender last year, and specialised in so-called Alt-A mortgages, offered to borrowers who couldn’t certify their income or assets. Its finances had deteriorated in recent months as borrowers began to default on their loans, leading to sizeable losses and write-downs for the ultimately doomed bank.
Regulators said “the immediate cause” of the bank’s failure was because of statements made by Democratic Senator Charles Schumer, who had raised concerns about its solvency on a number of occasions.