Failed IndyMac Bank under investigation for lending fraud

On July 11, IndyMac, with assets of $32 billon, was shut down by the Office of Thrift Supervision and its assets were seized by the Federal Deposit Insurance Corporation. The FDIC move only partially protects depositors at the institutions 33 branches. According to one estimate, $500 million in depositors money stands to be lost as a result of the bank failurethe third largest in US history.

Left in the cold are thousands of past and current employees, many of whom were laid off in the weeks before the bank failure. The wages and commissions of many of the remaining employees are uncertain.

The federal takeover occurred three days after IndyMac slashed its workforce in half, leaving 38,000 employees on the street, and sold its mortgage division to Providence, an Alaska-based mortgage company.

Despite government assurances to depositors with $100,000 or less in the bank that their money is guaranteed, some banks are refusing to honor IndyMac checks. An employee of the San Marino, California Washington Mutual Bank branch is quoted by MSNBC as saying the banks policy is not to accept IndyMac checks. If people insist, they are told that there is an eight week delay until the money becomes available to them.

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