Customers furious in Day 2 of fed takeover IndyMac

[endarkenment]

Source: The Associated Press

Article Launched: 07/15/2008 08:24:12 AM PDT

LOS ANGELES—Police have been called in to tame an angry throng of IndyMac Bank customers trying to pull money out of the Encino branch on Day 2 of a federal bank takeover.
At least three police squad cars showed up early Tuesday as tensions got heated outside the San Fernando Valley branch of Pasadena-based IndyMac.

...

People stood in line outside the bank for hours on Monday to withdraw money from their accounts. When it was clear they wouldn't get in before closing, FDIC employees apparently took down names and told them to return Tuesday.

Other customers began lining up at 1:30 a.m. Tuesday and by dawn tensions escalated because people on the list were getting priority.



Read more: http://www.mercurynews.com/news/ci_9887096

---

Nothing to see here. Move along.

[sharp_stick]

1. Don't people understand FDIC coverage?

I'm always amazed at herd mentality whether it's lineups at gas stations at the mere rumor of a shortage or an expected increase of 5 cents on toilet paper.

[mikeytherat]

2. Do people TRUST FDIC coverage?

The answer appears to be "No."

mikey_the_rat

[Megahurtz]

26. Yes!

Always trust your Government! :sarcasm:

[roguevalley]

35. The depression left an indelible impression. Frankly, I don't blame them.

[DBoon]

59. I trust FDIC like I trust FEMA

You might ask people in New Orleans how well the federal government (and private insurance) worked for them.

[Kittycat]

4. FDIC only insures up to $100K

Given that some people may be concerned about their lifetime retirement savings going up in smoke - I'd be concerned as well.

I might not have $100K in my bank account, but my husband and I heavily invest in 401K and mutual funds for future retirement. There will be a day that some of that is converted in to savings accounts for our actual retirement. And then what? If some people relied on a single account for their savings - Yeah, I can understand the concern.

[high density]

50. You can keep the money in something like a money market fund

E.g. Vanguard Prime Money Market fund. If shit hits the fan and causes the fund to get near the point where it "breaks" a $1.00, they'll just close the fund and refund everybody their money. If something like that happens though our currency is likely to be worthless anyway.

By the way, IRAs at an FDIC-insured bank are insured up to $250k per institution. Some banks offer a service called CDARS which are CDs of up to $50 million that get split around different FDIC-insured banks so the entire amount is insured.

[Lucky 13]

8. I worked for a bank and I don't understand FDIC coverage fully.

People see their bank tanking. They see the economy tanking. People don't trust banks OR the government... so why shouldn't they be freaked out?

I understand why people are nervous and can't say if I had a bundle saved with them that I wouldn't be doing the same thing. And I don't expect this to the the first and only time this happens in the near future.

[endarkenment]

20. Lets all blame the victims!

After all, if you are getting 0.50 on the dollar for deposits over 100,000 you are too rich and stupid for any sympathy here.

I find it fascinating how people react to 'interesting times'.

[Javaman]

27. It seems to be the popular anthem these days, doesn't it?

Let's blame the people who no longer trust our financial institutions.

[kirby]

31. Small correction...

50 cents on the dollar for amounts the uninsured amount over the $100,000 is the initial immediate payout. After the bank assets are liquidated, those proceeds will be used to pay more than the 50 cents on the dollar. However those people will probably not be made whole. The might end up with 75 cents on the dollar for the uninsured over $100,000 amount when its all over.

[DBoon]

57. Always blame the ones with the least power

When something goes wrong, always blame the people who have the least control over the situation, and the fewest resources to tough it out.

It's not the fault of the regulators or the banks - it's those stupid depositors for not knowing better.

Dilbert did it best in "Give me the head of Willie the Mail Boy".

[BearSquirrel2]

11. When ???

If you've got a 90,000 sum in one bank and a 30,000 sum in another, chances are you can wait for your FDIC claim to be processed.

If you're living paycheck to paycheck, you cannot afford any interruption and you need to get those assets into a safe institution ASAP.

Isn't great how GW Bush is the first since the Great Depression to suffer a run on bank? BTW, this is all a result of lazzie faire deregulation policies. The Keyensian guys told the Voodoo Economic priests EXACTLY what would happen as a result of their policies and it has come to pass.

[HamdenRice]

22. "first since the Great Depression to suffer a run on bank" -- Nope. Bush the First had bank runs too

I distinctly remember during the savings and loans crisis of the late 80s walking down a street in Manhattan and seeing a "run" on a bank -- people lined up outside trying to withdraw all their money from a failing institution. In fact, it was quite common during Bush the First's reign.

Funny how only Bushes manage to create such appalling financial conditions that there are runs on banks.

[formercia]

38. They just want their money so they can convert it

into something of value before all it is good for is toilet paper. The longer it takes, the less it's worth.

[tbyg52]

51. They'll get their FDIC insurance money, no doubt

Because the government is just printing more. Bring your wheelbarrows.....

[DBoon]

58. FDIC may cover the funds

but I would worry about WHEN I would get to see that money.

Better to try to get it out now than wait months for the regulators to deal with it

[Mojorabbit]

62. My mother lives off the interest

from the life insurance settlement she got when my pop passed away. I don't blame these people in the least.

[MidwestTransplant]

3. If I had less than 100K there, I would just assume be the last to show up and not wait in line.

[sabbat hunter]

5. Yeah because

the people that work at IndyMac don't need to go home and sleep, eat and see their families or anything like that. They should just stay open 24hours/7days until everyone has the money they want to take out.

:eyes:

[slackmaster]

6. An old iconic image comes to mind

[FSogol]

7. Perfect. Starring Dick Cheney as Mr. Potter. n/t

[slackmaster]

10. That is too perfect for words

Cheneyville.

[AwakeAtLast]

Find someone who can photoshop Cheney's face on Potter's body

That is a pic worth 1000 words.

[Pastiche423]

40. Deadeye Dick Potter...

[slackmaster]

42. Ha!

:rofl:

[AwakeAtLast]

43. Outstanding!

This will be useful in the future, unfortunately.

[Pastiche423]

44. No need to wait for the future

It's applicable now.

Thanks, btw.

[slackmaster]

9. It was handled very differently when they took over an S&L I was consulting for in 1990

Far West Savings in Costa Mesa, California.

Feds showed up about 4:00 PM on a Friday. We (IT department) had already prepared things like trial balance reports at their request. They formally marched into the offices of the CEO and CFO, dismissed them, then set up a printer with continuous-feed check forms.

They worked all weekend, day and night. The institution was closed all day Monday, but there was a phone bank to answer questions.

I had a CD with about $10,000 in it (mainly so I could "become one with the client"). I received a check in the mail at my home on Tuesday, for principle and interest earned. All customer accounts had been settled by 5 PM on Monday.

With a larger institution the process could be the same, but it would require more people and more equipment to get it done as quickly. The Resolution Trust Corporation (enforcement arm of the FDIC at the time) was well-organized. I get the impression the people shutting down IndyMac are not as experienced or properly managed.

[W T F]

12. One big Question!

The Federal Government does insure The Federal Reserve by $100,000 per account but......
Who insures The Federal Government? which is already running huge deficits and going broke.
The truth is....The Feds don't have any money to back up the insurance.

I for one, am going to put my money into a safer institution.....UNDER MY MATTRESS!

:banghead:

[slackmaster]

23. Ultimately it falls on the shoulders of the taxpayers

:nuke:

[harmonicon]

36. the federal government doesn't need to insure their money...

they can just print more! The dollar is going lower and lower, and no one seems to be trying to stop it, only helping it along.

[Paula Sims]

45. It's the FDIC not the Fed that does the insurance

and banks need to keep a certain amount in Reserves -- an amount that was relaxed last in 2006. Here's an interesting link (yes, it's to the NY Fed but it's still interesting)
http://www.newyorkfed.org/aboutthefed/fedpoint/fed45.html

And I would agree with you about the mattress but I'm too worried about fires!

[kestrel91316]

13. They had this on the morning TV news and I have some comments.

There was ONE WOMAN in particular, a very loud, abrasive woman (typical Encino wifey) who was bitching endlessly and shrilly about how there was a list (of people in line from the night before) and there wasn't supposed to be a list and now there are two lines and the FDIC lied about lists and blahblahblah. Then she made pointed comments about how she has lots of money in other banks and lots of equity in real estate but she just wanted to put her money someplace safe.

If I had been there I would have slapped her silly. She was stirring up the pot bigtime and getting everybody else all worked up. They could have arrested her for inciting a riot and I would have cheered. What a psycho bitch.

WTF about FDIC insurance do people not get? Accounts are insured up to $100k, and yet it appeared most the people there were under the limit and had no need to withdraw their money.

Argh.

[yardwork]

17. I would bet anything that she is a Republican who voted Bush in 2000 and 2004.

Bush's base have been used to having things all their way for the past seven years. Now it's starting to bite them in the butt, and they're all outraged.

[kestrel91316]

30. I know the type. I live in the neighborhood, lol. I guarantee you

she's a RWer.

Anyone with half a brain would know her money is sitting in that account and will continue to do so. This isn't the only bank to ever have failed, lol. All they did was throw out the management and put in FDIC managers. And if the bank vault doesn't have the frickin- cash, FDIC covers it up to the limit. Dumbasses.

[DBoon]

60. Republicans have an incredible sense of entitlement

They are always for gutting government programs, except when THEY need help, in which case they expect to be waited on like royalty

[endarkenment]

21. So an example of exactly what Gramm was talking about. then.

It is the whiners that are the problem. Just 'slap silly'. Charming.

[kestrel91316]

32. She wasn't bitching about bad money management, she was bitching because

some bureaucrat changed their mind about keeping a list of who was in line and being as she was more imprtant than everybody else, she shouldn't have to stand in line. She needed slapped. We have an epidemic of "Get Out Of My Way, I'm In A Hurry And I'm More Important Than You" disease in this town and she's the epitome.

There were people there who actually DID lose money because they had more than the limit on deposit in a single account.

[Auggie]

14. I wonder if this is seven years of frustration boiling over too

[Trillo]

15. But *BUSH says not to worry ! Recommended.

Recommended not because it's a good story, but because it's an important story.

[Stuart G]

16. They would feel a hell of a lot more furious if..

there was no FDIC.. a program passed by a Democratic Congress and proposed by a Democratic President.

[AnneD]

33. Funny how....

they are very selective about what Roosevelt Programs they want to overturn.

[intheflow]

18. Runs on banks.

Welcome to 1929 Redux. Thank you, Mr. Bush. x(

[DemReadingDU]

19. any videos? n/t

[Xithras]

24. Here's a suggestion for anyone who's bank may be teetering.

This is the 21st century. If you hear that your bank may be next, don't bother running down to fight the crowds. Jump on their website and WIRE your money somewhere else. The transaction only takes a few seconds.

I bank with two institutions and am already familiar with the online tools available at each. Should either run into any trouble, it's nice to know that I can shift my balances between banks in a matter of seconds. If you aren't familiar with the tools at your bank, log on now and learn them.

[endarkenment]

25. intersting point that cuts in two directions

bank runs can no longer be gaited by the bank door. The potential for a total wipeout within minutes now exists.

[Xithras]

28. Very, very true

I use BofA as my primary checking account servicer, and have a savings account and secondary checking with a regional credit union. Because my paychecks are deposited into the credit union, I actually have a shortcut on my cellphone that will allow me to transfer funds to BofA in a matter of seconds. It's very cool. Transferring the other way requires access to a PC, but those are ubiquitous nowadays.

I'd imagine that the banks have already thought of this and probably have some kind of protection in place. If a bank like BofA announced that they were going under, they'd probably have a million visits on their website in the first hour. They'd be cleaned out.

[CK_John]

41. When the Fed took over Fri., ATM and Web access was shut down. Don't wait until it happens

be proactive, if your accounts exceed 100k, move your excess to another "bank". (a different branch of the same bank is still your bank).

Do not rely on bank personnel for good info, many don't know and some will lie.

[JDPriestly]

29. This is why the Bush administration has prepared for police/military type rule

in this country.

I have a friend who had money in that bank. Fortunately, it was only a small amount. If you go to Yahoo, Finance or some other similar page you can look at the charts that show the downward trajectory of the stocks in most of the big banks in the U.S. It's pretty startling.

There is a blank space in the upper left hand corner. Just type in the name of the bank like Wachovia, Bank of American, Citibank, etc. Just type in one at a time. The first chart you see will be just for today. Below that chart there is a line of text and numbers that allows you to click on 5day, 14day, and various lengths of time. Click on 1 or 2 years and watch the line in the actual chart descend. A couple of banks are doing better than others, but it is pretty scary. If you can figure out how, you can click on compare, type in the stock symbols for various banks and get several charts on one graph. You will see what is happening, and you can see what investors think about your bank. Act accordingly.

Of course, there is a lot of manipulation and speculation on the market right now. Many people know how to make money in this kind of market by buying options (like placing a bet) that certain stocks will go down. To what extent speculation and playing the market are behind the freefall and to what extent the it is caused by fundamental failures in the system is the subject of argument.

Regardless of which view you espouse about the cause of our economic problems, it is up to us to prevent chaos. And by us, I mean progressives.

We progressives need lead by keeping calm and developing even more our sense of community with the people we see and reach in our daily lives. The worst is yet to come as far as the economy is concerned. Lots more people will become jobless and homeless in the coming weeks and months. Very few of us have the financial means to help our friends and neighbors in a meaningful way in terms of money, but we use what we have which is our compassion and empathy and our belief that when united people can achieve anything, face any difficulty. We can reach out to encourage those who are suffering and provide them with at least acceptance and love.

The most important thing now is nonviolence. Yes, we all feel angry, but as in a family, we need to forget our anger and be supportive. This crisis is the inevitable outcome of the me first Republican philosophy. The cure is the progressive together we can achieve anything philosophy.

Ironically, those who have voted Republican because they so fear giving up a tiny bit of what they consider to be their property, are going to lose the most. Those of us who believe in true property rights, rights that are based on human rights, rights that exist because the society in which they are held is fair, honest, loving and respects the rights of both rich and poor need to stick to our values.

On a practical note, I feel so sorry for those who are panicking right now because they cannot withdraw their money from this bank. I think that the FDIC has handled this bank closure very poorly. This should have been managed so as to reassure people. Instead, it has been rushed so as to unsettle and frighten people. I cannot believe that even the Bush government or the FDIC could have mismanaged this bank closure so badly. This mismanagement may have been intentional. If not, it has certainly been irresponsible. I bet that a lot of these people who are so frightened are elderly and depend on what little cash they have in the bank to supplement Social Security just to keep alive. Don't even think about getting a job that doesn't exhaust you and pays more than minimum wage once you are 65. Ain't gonna happen no matter how well educated or capable you are. So, look out for elderly people around you. They probably need your emotional support and understanding the most.

[Yavin4]

34. Why Keep One Account Over $100K?

Let's say you had one account with $200K in it. Why not open several accounts? Say, 5 accounts at $40K each? This way, each account would be insured by the FDIC.

Am I missing something here?

[harmonicon]

37. compound interest

You'll do better compounding interest on a large amount, especially because you'll probably get a better interest rate having a large amount in one account.

[endarkenment]

39. How easy it is to be wrong.

The accounts each have to be in separate institutions, for some value of institution. How about my current bank is an amalgamation of about 6 different banks in my region over the last 15 years, and that is just my region, it doesn't count its other acquisitions elsewhere that I paid no attention to.

You have to open separate accounts in separate institutions, and monitor them in order to take protective action when total amounts in any one institution exceed FDIC limits due to increased value or merger mania.

[Paula Sims]

46. With inter-state bank mergers, it's a roulette game

And I agree with you it's difficult. The other thing that one has to watch for is whether or not the insuring agency IS the FDIC. My (former) Credit Union voted for State insurance rather than FDIC and I pulled all my money (including breaking CD's). Just what I want -- private insurance. That's what started the S&L mess in Ohio & Texas.

[reclinerhead]

55. I agree - good advice.

I read the entire article and was dumbfounded at this woman:

"Noelle Gabay of Northridge, a budget analyst for the state of California, said FDIC officials acknowledged that she was owed $213,500 but provided her access only to $99,000." "My trust in the FDIC is gone," said Gabay, 49. "The question is now, where do we put our money? Do we buy a bigger mattress?"

How come a budget analyst working for my state government was so clueless about this?

[slackmaster]

47. Married couples and families can get a lot more than $100 K insured per bank

http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=389&topic_id=3621642&mesg_id=3623170

[alfredo]

48. Ben Sargent

[high density]

49. WTF are they lining up for?

Their money is not going anywhere! People are so crazy.

[Igel]

52. The old phrase is apt.

It's a "bank panic". They're panicked.

[lonestarnot]

56. Social expediency, practicing for the soup lines.

:P

[Quakerfriend]

53. It was interesting to watch the CNN coverage of the lines

at Indy on Mon- people smiling, looking relaxed and almost jovial vs. Tues.

I, personally, feel that FDIC insuring 100K accts will simply NOT happen, as we see more and more bank failures and the US economy collapsing like never before. FDIC insurance will become a joke. This economy simply cannot be propped up very much longer, imo.

I have begun to notice a real reluctance on the part of the banks to give me my money.

Several months ago, I went in to my local branch and asked for 20K in cash from my acct.
They told me that it would take 'at least ten days'. So, I hopped in my car and drove around to several other local branches and systematically withdrew 3K allotments until I had what I initially asked for.:rofl:

Indymac should be a real wake up call for all of us.

[DemReadingDU]

54. Finally found a video!

Hope you can watch this video link, if not, click on the link in the article.

7/15/08 video - Customers grow furious outside Encino IndyMac branch
http://www.latimes.com/video/?slug=la-fi-indymac16-2008jul16-ktla
video, about 6 minutes

7/15/08 Police show up at IndyMac Branches in Encino, Northridge as waiting customers clash
http://www.latimes.com/business/la-fi-indymac16-2008jul16,1,2521386.story

[Mojorabbit]

61. I just watched

the first video and it looks like a clusterfuck all the way around.

[MetaTrope]

63. Soon it'll probably double as a soup line

So how's Governor Ahnuld working out for you, California?