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| Key US mortgage lender collapses | |
| (4 days later) | |
| One of the largest US mortgage lenders, the California-based IndyMac Bank, has collapsed amid a growing credit crisis. | One of the largest US mortgage lenders, the California-based IndyMac Bank, has collapsed amid a growing credit crisis. |
| Federal regulators seized the bank's assets, fearing it might not be able to meet withdrawals by depositors. | Federal regulators seized the bank's assets, fearing it might not be able to meet withdrawals by depositors. |
| It is the second-largest financial institution to fail in US history, regulators say. | It is the second-largest financial institution to fail in US history, regulators say. |
| The failure came on a day when shares in the two biggest US home loan institutions - Freddie Mac and Fannie Mae - fell at one stage by almost 50%. | The failure came on a day when shares in the two biggest US home loan institutions - Freddie Mac and Fannie Mae - fell at one stage by almost 50%. |
| IndyMac had been struggling to raise funds and stay in business in one of the states worst hit by the US housing market slump. | IndyMac had been struggling to raise funds and stay in business in one of the states worst hit by the US housing market slump. |
| The bank's primary regulator, the Office of Thrift Supervision (OTS), said depositors had withdrawn more than $1.3bn in the past 11 days. | The bank's primary regulator, the Office of Thrift Supervision (OTS), said depositors had withdrawn more than $1.3bn in the past 11 days. |
| "This institution failed today due to a liquidity crisis," OTS Director John Reich said. | "This institution failed today due to a liquidity crisis," OTS Director John Reich said. |
| I'm very angry, very upset about this. I wanted to withdraw my money Steve KnieereinIndyMac customer | I'm very angry, very upset about this. I wanted to withdraw my money Steve KnieereinIndyMac customer |
| The OTS believed IndyMac was unlikely to meet its depositors' demands and transferred its operations to the Federal Deposit Insurance Corporation (FDIC), which will seek a buyer. | The OTS believed IndyMac was unlikely to meet its depositors' demands and transferred its operations to the Federal Deposit Insurance Corporation (FDIC), which will seek a buyer. |
| IndyMac customer Steve Knieerein told ABC television: "I'm very angry, very upset about this. I wanted to withdraw my money." | IndyMac customer Steve Knieerein told ABC television: "I'm very angry, very upset about this. I wanted to withdraw my money." |
| People with deposits of up to $100,000 each are covered by insurers. | People with deposits of up to $100,000 each are covered by insurers. |
| But about 10,000 people had uninsured funds over that limit with IndyMac - worth a total $1bn at the time of closing. | But about 10,000 people had uninsured funds over that limit with IndyMac - worth a total $1bn at the time of closing. |
| The FDIC said it would pay those people an advance dividend equal to half of their uninsured deposit. | The FDIC said it would pay those people an advance dividend equal to half of their uninsured deposit. |
| It is the fifth US financial institution this year to succumb amid a credit crunch, falling house prices and rising foreclosures. | It is the fifth US financial institution this year to succumb amid a credit crunch, falling house prices and rising foreclosures. |
| The move came after rollercoaster trading on Friday for Freddie Mac and Fannie Mae - which are behind half of all US mortgages. | The move came after rollercoaster trading on Friday for Freddie Mac and Fannie Mae - which are behind half of all US mortgages. |
| They play an important role in the financial markets in providing funding for home loans by buying up mortgages and packaging them as investments. | They play an important role in the financial markets in providing funding for home loans by buying up mortgages and packaging them as investments. |
| 'Important mission' | 'Important mission' |
| As mortgage backers, the companies have had to pay out when homeowners have defaulted on their loans. | As mortgage backers, the companies have had to pay out when homeowners have defaulted on their loans. |
| Both firms defended their finances, saying they had enough capital to weather the housing slump. | Both firms defended their finances, saying they had enough capital to weather the housing slump. |
| Today our primary focus is supporting Fannie Mae and Freddie Mac in their current form as they carry out their important mission Treasury Secretary Henry Paulson Q&A: Freddie Mac and Fannie Mae | Today our primary focus is supporting Fannie Mae and Freddie Mac in their current form as they carry out their important mission Treasury Secretary Henry Paulson Q&A: Freddie Mac and Fannie Mae |
| Shares in the two firms recovered after US Treasury Secretary Henry Paulson signalled he was not on the verge of taking Fannie Mae and Freddie Mac into public hands. | Shares in the two firms recovered after US Treasury Secretary Henry Paulson signalled he was not on the verge of taking Fannie Mae and Freddie Mac into public hands. |
| "Our primary focus is supporting Fannie Mae and Freddie Mac in their current form as they carry out their important mission," he said. | "Our primary focus is supporting Fannie Mae and Freddie Mac in their current form as they carry out their important mission," he said. |
| President George W Bush was briefed on Fannie Mae and Freddie Mac earlier on Friday. | President George W Bush was briefed on Fannie Mae and Freddie Mac earlier on Friday. |
| Mr Bush said Mr Paulson assured him he and Federal Reserve Chairman Ben Bernanke "will be working this issue very hard". | Mr Bush said Mr Paulson assured him he and Federal Reserve Chairman Ben Bernanke "will be working this issue very hard". |
| After a volatile trading session, Freddie Mac shares closed down 3.1% at $7.75. | After a volatile trading session, Freddie Mac shares closed down 3.1% at $7.75. |
| Shares of Fannie Mae ended the day down 22.4% at $10.25 after sliding as much as 49% to a 19-year low of $6.68. | Shares of Fannie Mae ended the day down 22.4% at $10.25 after sliding as much as 49% to a 19-year low of $6.68. |
| US Senator Christopher Dodd said the Federal Reserve was considering allowing Fannie Mae and Freddie Mac to borrow directly from the central bank, which also helped the shares to recover. | US Senator Christopher Dodd said the Federal Reserve was considering allowing Fannie Mae and Freddie Mac to borrow directly from the central bank, which also helped the shares to recover. |
| Some media reported the Treasury was planning some kind of government-led rescue but Mr Paulson said only that they were "maintaining a dialogue with regulators and with the companies". | Some media reported the Treasury was planning some kind of government-led rescue but Mr Paulson said only that they were "maintaining a dialogue with regulators and with the companies". |
Are you affected by the issues in this story? Are you an employee? Have you deposited money with IndyMac? Send us your comments using the form below. | |