However, a troubled but still functioning IndyMac failed immediately after a run caused by New York Senator Charles Schumer's highly unethical remarks (which directly benefited IndyMac's New York based competitors) but it appears Schumer will escape any legal consequences for his actions.
The bad news/good news of the proposed take over, which could be announced as soon as Monday, is that the buyers were constituents of Senator Schumer (surprise, surprise) - but the good news is that the buyers are not another bank - but a consortium of private equity and hedge funds.
This means that at least for the short term, the headquarters should remain in the Los Angeles area (it is presently headquartered in Pasadena) and there is at least a possibility, slim although it may be - that IndyMac could either remain locally headquartered or - more likely - when it is acquired - there is still a possibility a local firm or local investors will be able to acquire it. More likely, though, an out of state bank will gobble it up for its extensive local branch network - and its huge loan serving portfolio.
But whatever happens - hopefully - both local officials and the governor will do everything they can to keep the bank locally based. After all - there is a first time for everything....
IndyMac Is Set to Be Sold to Private Investors
December 27, 2008, 8:31 pm
IndyMac Bancorp, one of the largest banks to fail as a result of the subprime mortgage crisis, is close to being sold to a consortium of private equity and hedge fund firms, people briefed on the matter told DealBook.
The Federal Deposit Insurance Corporation, along with a team of former Lehman Brothers bankers who are now with Deutsche Bank, have been engaged in the sale process since federal regulators declared IndyMac insolvent in July and seized the company. The deal could be announced as soon as Monday, these people said.
The buyers include private equity firms J.C. Flowers & Company and Dune Capital Management and the hedge fund firm Paulson & Company, these people said.
The consortium would buy the entire bank, including its 33 branches, reverse-mortgage unit and $176 billion loan-servicing portfolio.
The deal is a coup for Dune Capital, founded in 2004 by ex-Goldman Sachs partners Steven Mnuchin and Daniel Niedich, and the other partners because they are picking up a solid bank on the cheap.
J.C. Flowers, led by former Goldman partner J. Christopher Flowers, focuses on financial firms, having attempted to acquire student lender Sallie Mae last year. But the firm has struck few deals so far amid the banking crisis.
Paulson & Company, led by John Paulson, has been one of the biggest winners in the subprime mortgage meltdown, having reaped billions of dollars by betting against risky home loans. Mr. Paulson recently indicated to investors in his hedge funds that he is prepared to start buying up low-priced debt like prime mortgages and investing in financial institutions.
When Indymac failed, more than 130 F.D.I.C. employees swooped in on the bank to prepare it to reopen under government supervision. The bank was founded in 1985 by Angelo Mozilo and David Loeb, who also founded Countrywide Financial. IndyMac once specialized in “Alt-A” home loans, which often didn’t require borrowers to fully document income or assets.
It collapsed after defaults mounted and as tight capital markets caused losses on mortgages it couldn’t sell.
The seizure came after panicked customers withdrew more than $1.3 billion of deposits over 11 business days. The withdrawals followed comments in late June by Charles Schumer, the Democratic senator from New York, questioning IndyMac’s survival.