Dedicated to Deposits: Deals, Data, and Discussion

Fewer Uninsured Deposits at IndyMac and the Future Sale of IndyMac

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This LA Times article reports that the FDIC official running IndyMac Federal Bank has lowered the estimate of uninsured deposits when IndyMac Bank closed to $600 million (down from $1 billion). It appears the new estimate includes the work the FDIC has done in the last month to verify accounts that had over $100K but were structured to stay within the FDIC limits through trusts.

I'm glad to see that the uninsured deposits weren't as high as first reported. Several readers have reported having over $100K at IndyMac through the use of trust accounts. I believe all have been able to get back their insured deposits, although they did experience delays and some hassles. Due to the extra time and hassles, many have said they'll keep below $100K in the future. I have more details about one of my reader's experience at the bottom of this post about extending FDIC insurance past $100K.

One strange thing mentioned in the LA Times article is that the FDIC is seeking to transfer only $7 billion out of the $19 billion of IndyMac deposits to a future buyer of the bank. According to the article:
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.

I suppose many of these deposits were brokered deposits, but what about internet deposits? IndyMac Federal Bank is still offering some high CD and money market internet rates. In addition, many readers have been able to get IndyMac to match very high rates from WaMu and from other banks. Perhaps internet deposits are considered attractive to potential bank buyers?

To review all of my recent IndyMac posts, please refer to this page.

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Comments
7 comments.
Comment #1 by Alex Moskalyuk (anonymous) posted on
Alex Moskalyuk
They meant potential buyers of the bank, not potential buyers of CDs. Thew higher the APY on CDs, the more liabilities the bank has on its statement.

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Comment #2 by Banking Guy (anonymous) posted on
Banking Guy
Yes, when I said "Perhaps internet deposits are considered attractive to potential buyers?" I meant bank buyers. I just updated the sentence.

Based on the high internet CD and savings account rates that they are still offering, you would think these deposits must be beneficial for a future sale. But based on the article, that doesn't seem to be the case.

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Comment #3 by James (anonymous) posted on
James
I'm one of those tortured souls who had more than $100k ($103.5k, to be exact, as I forgot to trim down a CD when I let it renew) with Indymac Bank when it failed on 7/11/08. Took the FDIC until 8/8/08 to call me and confirm that I was 100% insured due to, thankfully, my use of a trust with four beneficiaries in it. And that came only after Indy's CEO sent out this poorly worded, vague form letter to all depositors requiring them to write Indy to confirm account ownership (I did this the very next day). Anyway, for trusts remember to consult the FDIC's website for details on what types of trusts qualify for plus-$100k coverage (it can be tricky).

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Comment #4 by Banking Guy (anonymous) posted on
Banking Guy
James, thanks for the info. Did you have to send the FDIC any documents?

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Comment #5 by James (anonymous) posted on
James
No, just write them a letter and exercise one of the ownership-confirming options set forth in the form letter. I pointed out to IndyMac (since I'm a gov't official myself and thus used to poor writing), however, that its CEO's form letter failed to tell its recipients WHERE they were supposed to reply (like, to IndyMac at its HQ address, or some special FDIC address?). I also found it odd that an FDIC `crat called me to confirm 100% coverage (one would think that so important a determination would come in writing). BTW, this is the second bank to fail on me (lost no money the last time, circa 1989, when Columbia Savings and Loan failed, except that it'd been paying me 8.75% APY at the time and, unlike the case here with IndyMac, there was no option to keep the CD going; instead, I received a straight-up liquidation/refund within 3 days' of that S&L's failure).

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Comment #6 by Anonymous posted on
Anonymous
We have 2 (insured)CD's at Indymac and had planned to leave them there until they mature in 2009. If I can get a live person on the phone, he/she is a moron who knows nothing and can't answer any question. Now our interest checks are 3 weeks and I finally found one person to wait a while before askng for a replacement because everything went out late. I am disgustd that the FDIC can't handle things better than this. I may take the CDE's out but doubt if they would get around to handling things.

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Comment #7 by Anonymous posted on
Anonymous
I am one of the 10000"uninsured depositers of indymac bank.
Fdic limits have changed to $250,000.

Most of us were misinformed by IndyMac bank representatives.

WE ARE BEING IGNORED.

Any ideas on how we can get help??

anyone else out there win the same boat?

I will check back for contacts.

Thank you.

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