And now a bank run, page 1

This is no surprise to me but Indymac Bank in California is experiencing a bank run.

IndyMac, a mortgage specialist with about $18 billion of deposits, said on Tuesday it faced "elevated" levels of withdrawals.

From Rueters

IndyMac reported $17.3 billion of its deposits were insured by the Federal Deposit Insurance Corp. The FDIC has $52.8 billion in its insurance fund to cover bank failures.

From Yahoo

Indymac (ticker symbol IMB) has been on my list of the doomed for a while now. Their 52 week trading range is a high of $30.77 to today's low of $0.34. They reported yesterday that they were unable to raise additional capital and would be firing half their employees. A letter from Sen. Schumer (D, NY) last week to regulators questioning adequacy of IMB's reserves was simply the final nail in the coffin. We're just waiting on the funeral with the part of the reverend being played by the FDIC.

One of the more interesting (and conspiratorial) thoughts I've heard in multiple places is that FDIC may have chosen to do "stealth seizures". Typically when FDIC siezes a bank they come in Friday evening at close of business and examiners begin looking at accounts to see what is covered and what isn't. The idea behind stealth seizures is to a) Not spook the market b) make it look like whoever assumes the accounts bought them from the failed institution c) make it look like the bank sold out or merged with another bank rather than being assumed by FDIC. Interesting theory and given the shenanigans going on in the world of finance right now it is plausible.

There are a couple of similar sized banks that are in much the same shape as IMB, and I expect a similar fate to befall them shortly. There are also a couple of large regionals I'm very worried about right now as well though I think that they may find a buyer eventually.I'll not name names at the moment because it may actually be illegal to say a specific bank is in danger of failing.

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MOD EDIT:
UPDATE!!!

[edit on 11-7-2008 by DontTreadOnMe]

Hi JW, Great post. These knuckle-heads have been in the for a while now. Much can be gleaned from their performance" here

If one needs more "financial education" they should seek it Here

Or even here

We, as a civilization, are headed for a decline. Fasten your seatbelts and store some food... or not......

California foreclosures

Florida Foreclosures

Welcome to the "brave new world" everyone!

Bring your silver and gold.

Edit for T&C circumvention by spiderj




[edit on 7/9/2008 by Spiderj]

And so it begins.
Actually this is the second or third bank run in the US isn't it? (if you count Bear Stearns and that internet based bank in California)

The FDIC has been in preparation mode since at least February: FDIC to Add Staff as Bank Failures Loom

Something else that is an ominous sign is the latest report by the BIS:

The Unsustainable Has Run Its Course

After a number of years of strong global growth, low inflation and stable financial markets, the situation deteriorated rapidly in the period under review. Most notable was the onset of turmoil in the US market for subprime mortgages, which rapidly affected many other financial markets and eventually called into question the adequacy of capital at a number of large US and European banks. At the same time, US growth slowed markedly, reflecting setbacks in the housing market, while global inflation rose significantly under the particular influence of higher commodity prices.

...the sudden deterioration in both financial and macroeconomic conditions looked more like a typical “bust” after a credit “boom”. Indeed, several factors seem to support this ...

The "period under review" is this past year 07/08 (to June 30/08).

The next 6-12 months are going to be very rough.
.

[edit on 7/8/2008 by Gools]

Dear friends;

Three words: "Fractional Reserve Lending"

This is what it leads to - the Central Banks (the Fed) are supposed to 'support' Banks in these cases. Where are they now? Bear Stearns must have used up all the available bailout money.

Poor citizens, they thought there money was actually 'in the bank'!



((Edit to add background on "Fractional Reserve Banking"))

I must point out that the Wiki article is 'Banking" sanitized and tends to represent the truth in a less than factual manner; phrases such as;

The fact that banks are required to keep on hand only a fraction of the funds deposited with them is a function of the banking business.

Make it seem as if the funds exist elsewhere, when in actually the funds aren't kept on hand because they don't actually exist!

Also, the example posted there shows a fractional amount that is a laughable lie (20%), they fraction they are required to 'represent' is devoid of regulation and in some cases may not exist at all (5% - 0%)!



[edit on 9-7-2008 by Maxmars]

reply to post by jefwane

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Yeah I used to play around with it also in 2006 but just happened to glance over last week and see its final death spiral into the "empty pool" as you like to put it. Im looking very strongly at citibank though. When the next big shoe drops Im in. Citi is one of our first banks founded in 1812. This bank will not be allowed to go under. if it hits $12 a share im in and riding it for 5 to 10 years if I have to. When all this cheap borrowed money starts flooding the market it could potentially be a $100 stock.

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