Bank regulators seized California-based mortgage lender IndyMac Bancorp Inc. on Friday afternoon after panicky depositors began withdrawing their money, leaving the institution short on cash.
IndyMac customers with funds in the bank will be limited to taking out money over the weekend through automated teller machines, debit card transactions or cheques, regulators said.
The bank will reopen on Monday as IndyMac Federal Bank under the supervision of the Federal Deposit Insurance Corp., the FDIC said.
David Barr, a spokesperson for the FDIC , which insures deposits in American banks, said the insurance agency is trying to find a buyer for IndyMac.
"This bank is now being operated by the FDIC. IndyMac is the second largest federally insured financial company to be seized by regulators.
Federal regulators seized IndyMac Bancorp on Friday evening, marking one of the largest bank failures in American history.
The closure followed a frenzied week during which IndyMac’s executives tried to bolster the ailing bank. Most of IndyMac’s deposits are guaranteed by the Federal Deposit Insurance Corporation, which will operate the bank and try to sell it.
The run on the bank came after a critical letter about the bank from Senator Charles E. Schumer, Democrat of New York. Before Mr. Schumer’s letter, the bank had been receiving net inflows of money from depositors, Mr. Reich said.
IndyMac held $32 billion in assets as of late March, according to the government release.
The largest bank failure on record was in 1984 when Continental Illinois National Bank and Trust in
Bank failures so far pale against the 3,000 bank failures in the 1980s, he said.