IndyMac & Runs On The Banks

[OKCTalker]

Many here will remember 20+ years ago when - like clockwork - a bank would be closed every Thursday afternoon, only to reopen Monday morning under FDIC management. No depositor losses. No problems using ATM cards. We didn't even have to order new checks or change our account numbers.

Yet today's national news coverage of the IndyMac closure is wall-to-wall with interviews of foolish, panicked customers lining up to get their "money," which only fuels additional misinformation and more panic. I place money in quotations because God help these people if they're truly closing their accounts and walking out with bags of currency.

Do these people truly not understanding banking? Have they forgotten our weekly bank closures two decades ago, and that after a little while they became non-events? Or have they been watching so much negative media attention on the economy that they think we're one commercial bank liquidation away from 1929? Which prompted FDR to eventually remind people that they had nothing to fear but fear itself.

George Bailey, call your office.

[thanksarthur]

I actually have a T-Shirt referencing the Penn Square Bank Closing. It says I survived the FDIC Invasion.

[Pete]

This hasn't happened in California very often and people are just panicking.

I wish IndyMac would completely fold, as they hold my mortgage.

[Karried]

lol... I wonder how that would work, write a check and it gets returned to you. oh happy day. If it were only that simple.

[mmonroe]

Is it too late to get a mortgage there? lol. just kidding.

[Oh GAWD the Smell!]

I wish I were a mugger and knew where the next one was going to be.

[brianinok]

Indymac was not a bank and I wish the media would quit reporting it as such. It was a thrift. It had much looser standards than a bank has.

[solitude]

Indymac was not a bank and I wish the media would quit reporting it as such. It was a thrift. It had much looser standards than a bank has.

The media also refers to "Countrywide Bank" because - it is a bank!

IndyMac has always been called "IndyMac Bank." I had a CD there that matured about six months ago and every bit of the paperwork said, "IndyMac Bank." (It's now known as "IndyMac Federal Bank.") IndyMac is a Federal Savings Bank and hence the use of the name "IndyMac Bank, FSB" It's perfectly okay to call a FSB a "bank." Countrywide Bank, recently picked up by BofA, is still known as a "bank," as is USAA Federal Savings Bank and many others.

In other words, the media is reporting what an FSB is (by definition) - a bank!

[brianinok]

It is still not technically a bank like you think of as a bank. They do not have as strict of regulatory requirements as regular banks have. If a "bank" is regulated by the FDIC or the Federal Reserve, it is a real bank. If a "bank" is regulated by the Office of Thrift Supervision, it is a thrift. Indymac was a thrift.

[solitude]

It is still not technically a bank like you think of as a bank. They do not have as strict of regulatory requirements as regular banks have. If a "bank" is regulated by the FDIC or the Federal Reserve, it is a real bank. If a "bank" is regulated by the Office of Thrift Supervision, it is a thrift. Indymac was a thrift.

But, Brian, you were saying you wished the media would quit calling them a bank. The government calls them a 'bank'! That's the term that is used. They may not be a bank in the traditional sense and you may think the decision back in the eighties to allow for use of the term 'bank' was a mistake - but you can't blame the media for using the term that they are legally known by.

[Martin]

actually... aren't both of you right? indymac was a thrift and is now a bank.

-M

[solitude]

actually... aren't both of you right? indymac was a thrift and is now a bank.

-M

Actually, nothing has changed. They were known as "IndyMac Bank" as a Federal Savings Bank before. Now, they are called, "IndyMac Federal Bank." They're still a Federal Savings Bank.

[blangtang]

it would be cool if there were a run on a food bank or a sperm bank. LOL!

banks these days are terrible Just In Time inventory managers. I'm going to go to my local branch tomorrow and while standing at the teller counter yell very loudly 'What do you mean you're out! I want it now" maybe I can cause a run...

I wish a food bank could let out more food than they had on hand, that would solve the hunger problem partially.

[Martin]

actually, nothing has changed. they were known as "indymac bank" as a federal savings bank before. now, they are called, "indymac federal bank." they're still a federal savings bank.

and that's where you're entirely wrong. 'indymac bank fsb' was closed by ots. fdic took control and transferred accounts to 'indymac federal bank fsb' while the process is virtually seemless to accountholders, there's alot that went on behind the scenes. well... almost seemles. it's seemless for those with accounts of $100,000 or less. 'indymac bank fsb' was a thrift regulated by ots. 'indymac federal bank fsb' is a new bank regulated by fdic. it's not just a simple change in bank stationery.

-M

[solitude]

and that's where you're entirely wrong. 'indymac bank fsb' was closed by ots. fdic took control and transferred accounts to 'indymac federal bank fsb' while the process is virtually seemless to accountholders, there's alot that went on behind the scenes. well... almost seemles. it's seemless for those with accounts of $100,000 or less. 'indymac bank fsb' was a thrift regulated by ots. 'indymac federal bank fsb' is a new bank regulated by fdic. it's not just a simple change in bank stationery.

-M

You misunderstood me. When I said, "Nothing has changed," I meant that they are what they have always been - a federal savings bank. FSB. You said, "they were a thrift before and now they're a bank." I was responding to that. They were an FSB before and nothing has changed, they're still an FSB. This really isn't that difficult. Brian was upset the media calls them a 'bank'. That's what the government has allowed them to be called since the eighties - why blame the media on calling them by their legal name? That's all I was trying to say.

Oh, FDIC insured the old bank and insures the deposits of the new bank as well, which is just a bridge (temporary federally-run) bank. All FSB's are regulated by Office of Thrift Supervision.

[okiebadger]

I can be as pedantic as the next guy, but this is ridiculous.

[Martin]

yeah, this is getting out of hand.

i was wrong about indymac currently being a bank, though... the new organization is also a thrift. my bad.

as per brian's comments, i believe that he is under the impression that thrifts (which fsb's are a type of thrift) are less regulated than commercial banks and should therefore be trusted less with your money. while i don't know what's going on in brian's mind, this is the most common argument i've heard from people who have a beef with thrifts. if one assumes that this claim is true, then it would follow that the media should help make the distinction apparent to the public in an effort to protect consumer rights.

personally, i think the negative portrayal is kept alive in part by commercial banks that want to hold on to their piece of the banking industry. -M

[solitude]

I don't think anyone is trying to be pedantic. I'm only explaining why it's okay for the media to call a thrift a bank. I was told I was wrong that they were a thrift before, but are only now a bank. They were BOTH thrifts - BOTH federal savings banks and it's perfectly okay and acceptable for the media to call them BOTH (before and after) what the government calls them - a bank!

Sometimes Internet discussions require some back and forth so everyone is on the same page and nobody is left with bad information. Facts aren't opinions to be debated. Brian wrote his post making it sound like the media was doing something wrong with calling them a bank - as if they were wrong because IndyMac was somehow not a bank in any sense of the word. IndyMac IS a thrift, but it's called "IndyMac Bank" because since the eighties certain types of thrifts are "FSB's" and can - and are all the time - called banks.

Whew! I think I may see what you mean, Badger. Sometimes I hate the Internet.

[brianinok]

I understand that the government allows thrifts to have "bank" in their name. IMO, this was a mistake. I was too young to remember, but they may have done this to keep more of them from failing in the 80's as people were less apt to "run" a "bank." But, that is just a guess.

But, like I have said before, allowing them to be called a "bank" does not mean they have the same standards as a bank that is regulated by the FDIC or the Fed. The media has every right to call them by their name, which is Indymac Bank. But, when they talk about "banks failing" I wish they would mention the difference between banks and thrifts. While both banks and thrifts can be insured by the FDIC, that does not necessarily make them equal. This is why you will see more thrifts (whether they have "bank" in their name or not) fail over the next few months than banks.

If I had more than $100k to put in a bank, I would definitely put it in a bank that is regulated by the FDIC or Fed over a thrift.

[Easy180]

Wife works at a bank and said she has had numerous people come in and withdraw down to $100K recently...Any time things like this happen the older rich folks come pouring in on the advice of their grandkids and hair stylists

Hope they enjoy getting statements and trying to keep track of accounts with 15 different banks trying to spread their money around

[Oh GAWD the Smell!]

Hope they enjoy getting statements and trying to keep track of accounts with 15 different banks trying to spread their money around

That's a problem I wish I had!

[okiebadger]

As long as it has FDIC insurance, what's in a name? If I had $100,000 in each of 15 banks, I would consider myself fortunate.