Monday, July 14, 2008

A slow motion timetable of a bank failure 

I thought it would help to have a tick-tock of the closing of IndyMac. This is purely a dump of Google looking for reported troubles at the bank, and I wouldn't call it exhaustive. The company maintained a corporate blog which has helped with some documentation, but I invite you to read it to find more nuggets.
So by this time we know they have a problem, and that their response has been to continue confidence in the sector, continued expansion, while raising capital and cutting the dividend. It will soon release a very bad fourth quarter. So...
Schumer and the CRL report certainly helped precipitate the liquidity drain, but this was not a bank in good shape whatsoever. It seems evident that up to late fall IndyMac was using a model that suggested the problems of other banks would not spread to their balance sheets, and even as late as January they believed there to be hope. An April purchase of jumbo mortgages from IndyMac by Fannie Mae might have led it to believe the worst was behind it. Tought to judge now with hindsight, but a case can be made that the bank's management was deluded. Mark McQueen is more forgiving of Schumer than I might be but you cannot put the blame ONLY on the senator.

Labels: ,