Feds seize assets of IndyMac Bank

LOS ANGELES - IndyMac Bank's assets were seized by federal regulators yesterday after succumbing to tighter credit, tumbling home prices and rising foreclosures.

The Office of Thrift Supervision said it transferred IndyMac's operations to the Federal Deposit Insurance Corp. because it did not think the lender could meet its depositors' demands.

IndyMac customers with funds in the bank were limited to taking out money via automated teller machines over the weekend, debit-card transactions or checks, regulators said. Services such as online and phone banking were scheduled to be made available Monday, when the bank is to reopen as IndyMac Federal Bank, FSB.

The bank is the largest regulated thrift to fail and the second-largest financial institution to close in U.S. history, behind Continental Illinois in 1984, regulators said.

IndyMac had $32.01 billion in assets as of March 31.

Pasadena, Calif.-based IndyMac Bancorp Inc., the holding company for IndyMac Bank, has been struggling to raise capital as the housing slump deepens. The bank specialized in so-called Alt-A mortgages, which didn't require borrowers to provide documentation on their incomes.

A spokesman for the lender did not immediately return a request for comment.

The banking regulator said it closed IndyMac after customers began a run on the lender after the June 26 release of a letter by Sen. Charles E. Schumer (D., N.Y.) urging several bank regulatory agencies to take steps to prevent IndyMac's collapse.

In the 11 days that followed the letter's release, depositors took out more than $1.3 billion, regulators said.