Quotes Of The Day
"If OTS had done its job as regulator and not let IndyMac's poor and loose lending practices continue, we wouldn't be where we are today." - Senator Charles Schumer responding to criticism by the director of the Office of Thrift Supervision, John Reich. Reich blamed IndyMac’s failure on Senator Schumer’s publication of a letter Schumer sent to the regulators raising concerns about IndyMac’s solvency. Reich says it gave the bank a “heart attack” and spooked depositors into a run on the bank. (Wall St. Journal, July 12th)
“Everybody is drawing up lists, trying to figure out who the next bank is, No. 1, and No. 2, how many of them are there, and No. 3, from the standpoint of Washington, how badly is it going to affect the economy?” - Richard X. Bove, banking analyst with Ladenburg Thalmann, who released a list of troubled banks over the weekend, on investor concerns over rising bank failures in the wake of IndyMac’s failure this weekend. (NY Times, July 14th)
FDIC Says Overwhelming Majority Of U.S. Banks Are Safe. “Sheila Bair, head of the Federal Deposit Insurance Corp.: "All bank depositors should understand that their insured deposits are safe. The chance that your own bank will be taken over by the FDIC is extremely remote. And if that does happen, you will continue to have virtually uninterrupted access to your insured deposits. No bank depositor has ever lost a penny of insured deposits. The overwhelming majority of banks in this country are safe and sound." FDIC: More than 200,000 IndyMac customers had roughly $18 billion of fully-insured deposits. About 10,000 customers had roughly $1B of potentially uninsured deposits... The agency hopes to sell IndyMac within 90 days.” (Reuters
Analysts Say More Banks Will Fail. “The nation’s banks are in far less danger than they were in the late 1980s and early 1990s, when more than 1,000 federally insured institutions went under during the savings-and-loan crisis. The debacle, the greatest collapse of American financial institutions since the Depression, prompted a government bailout that cost taxpayers about $125 billion. But the troubles are growing so rapidly at some small and midsize banks that as many as 150 out of the 7,500 banks nationwide could fail over the next 12 to 18 months, analysts say. Other lenders are likely to shut branches or seek mergers.” (NY Times, July 14th)
A Wake-Up Call For Depositors. “Are your bank deposits insured? If your account is under the $100,000 Federal Deposit Insurance Corp. insurance limit, Friday's failure of IndyMac Bank… shouldn't make you lose any sleep. But if your deposits are above the $100,000-per-person insured limit, this should be a wake-up call.
Crisis Deepens as Big Bank Fails. “IndyMac Bank, a prolific mortgage specialist that helped fuel the housing boom, was seized Friday by federal regulators, in the third-largest bank failure in
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