Indymac Customers May Get Deposits Back

June 14, 2010 No Comments »

refund

Finally some good news for former Indymac customers.

A proposal offered up by House lawmakers under the wider financial-overhaul bill would see former Indymac banking customers recoup a portion of the $265 million in lost deposits after the mortgage lender and thrift collapsed back in 2008.

It would make the temporarily increased FDIC-insured deposit limit of $250,000 permanent and retroactive back to January 1, 2008, just months before the bank collapsed.

At the time, customers were only insured for up to $100,000 on individual accounts, so some high net-worth clients were left out in the cold.

It would mean sizable refunds for those who weren’t able to pull their money out in time, paid for by the FDIC’s deposit-insurance fund.

The Office of Thrift Supervision noted that customers withdrew more than $1.3 billion in deposits in just 11 days after a letter written by Senator Charles Schumer regarding the bank’s (in)stability was made public – they also attributed it to the bank’s subsequent failure.

Indymac got into trouble after delinquencies skyrocketed on the many Alt-A and subprime mortgages the company specialized in hard-hit states like California.

After being acquired by the FDIC, Indymac morphed into Indymac Federal bank, and eventually became OneWest Bank, a company that seems to be flourishing.

Deposits lost at other banks between January 1, 2008 and October 2008, when the FDIC deposit limit was increased, would be eligible for refunds as well.

If the proposal doesn’t fly, the standard insurance amount will return to $100,000 per depositor for all account categories except certain retirement accounts, on January 1, 2014.

Remember when: Indymac bank run photos.

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