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Worried customers flood IndyMac branches

July 15, 2008 12:00:00 AM PDT
Worried customers continue to flood IndyMac branches to close their accounts.The federal government took over the bank on Friday, but a lot of customers don't want to take any chances with their money and stood in lines for hours.

Click in the Eyewitness News Story Window above to watch Melissa MacBride's report from the scene.

IndyMac opened at 8 a.m. instead of 9 a.m. Tuesday to give customers an extra hour to try to get through doors. The company also provided 100 additional employees at its 33 branches and will be open until 6 p.m.

While the Burbank branch did not see any problems, police at a branch in Encino had to control a crowd of upset customers. Customers had lined up outside the branch thinking they'd be the first ones in the door, but there was actually a waiting list that had started Monday, and those were the first customers to be first. Police had to tell people to calm down. There have been police at all locations to ensure everything will go smoothly.

The FDIC assured customers that the bank was sound, but still, long lines awaited bank representatives with customers wanting to close their accounts or ask questions about IndyMac's future.

People with less than $100,000 are fully insured by the FDIC, which is about 265,000 people with $18 billion in deposits.

However, about 10,000 people, about 5 percent of IndyMac customers, with deposits totaling $1 billion are not fully insured because their accounts exceed $100,000. Those customers can only access 50 percent of their funds.

"That's why I'm concerned, you know, I have well over $300,000 there so I'm like concerned, you know. That's why I rushed down here," said customer John Rasch.

FDIC Chief Operating Officer John Bovenzi said people like Rasch are in limbo.

"It'll depend, at the end of the day, of how much we get when we sell this bank, and so, we're going to preserve its value and market it, and then return as much of that money as we can to those uninsured depositors," he said Monday.

Bovenzi said even if a large number of people go and withdraw their money, the bank will still be sound because it has the backing of the federal government.

The FDIC has also put a freeze on foreclosure proceedings on the mortgages owned by IndyMac, and those mortgages total about $15 billion in loans.

According to the Wall Street Journal, IndyMac specialized in Alt-A loans, where some borrowers didn't fully document their incomes, and that led to IndyMac's financial troubles.

Any IndyMac customers with questions can call the FDIC hotline at (866) 806-5919.

 

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