Feds Seize Failed IndyMac Bank

Senator's comments led to takeover, regulator says
By Harry Kimball,  Newser Staff
Posted Jul 11, 2008 7:03 PM CDT
A bicyclist waits for the light in front of an IndyMac Bank location.   (AP Photo)
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(Newser) – As mortgage lenders Freddie Mac and Fannie Mae crowded the headlines today, Washington snatched up IndyMac Bank in the second-largest US bank failure in history, the Wall Street Journal reports. The Pasadena, Calif. savings and loan, which owns about $32 billion in assets, saw stocks fall from $45 last year to 28 cents this week as mortgage defaults piled up. It will reopen Monday under federal supervision.

One federal regulator blamed New York Senator Chuck Schumer for causing the downfall by questioning the bank's solvency last month. "Although this institution was already in distress, I am troubled by any interference in the regulatory process," the regulator said. The company tried to stave off ruin this week by pledging to ax more than half its workforce and shutter lending operations.