FDIC Close To Finding A Buyer For IndyMac Bank
At $9 billion, IndyMac’s collapse from the weight of the subprime crisis is one of the costliest bank failures in United States history. Now it looks like the Federal Deposit Insurance Corp. (FDIC) may have finally found a buyer for the failed savings and loan. Three private equity and hedge fund firms consisting of J.C. Flowers & Co., Dune Capital Management and Paulson & Co. reportedly are in talks with the FDIC to buy the bank.
If the deal comes to fruition, it will mark one of the first times unregulated private equity firms acquire a majority stake in a bank holding company.
Before its seizure by federal authorities on the evening of July 11, Pasadena-based IndyMac specialized in Alt-A mortgages, or liar’s loans - a type of mortgage that didn’t require borrowers to provide income documentation.
Meanwhile, new information regarding IndyMac’s financial statements reveals that the mortgage lender intentionally delayed the disclosure of its problems prior to its collapse in July. As reported Dec. 23, 2008, in the Los Angeles Times, Darrel W. Dochow, the Western regional director of the federal Office of Thrift Supervision, agreed to allow IndyMac to record a $50-million capital infusion received on May 9 from its parent company as if the lender had received the funds before March 31.
The backdating allowed IndyMac to report that it was “well capitalized” at the end of the first quarter, sending a message to shareholders and customers that its fiscal health was in solid shape.
A short time later, on July 11, the savings and loan collapsed at a cost of $9 billion to the federal deposit insurance fund.
Dochow has since been relived of his duties.
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