Is that an Apple Store or a bank? Despite reassurances from government officials, Indymac Bank customters are lining up by the hundred to pull out as much money as they can. The Associated Press brings us the story of a certain Charles Tengeri, identified as a retired school teacher. Tengeri was the first customer to get his cash out of the Pasadena headquarters of the Indymac.
"He held a check for $171,000 -- an amount that he said represented most of his savings," the Associated Press reports. Uhm, guy? Mr. Tengeri? You might not want to take checks from failing banks. Get cash. Better yet, Euros.
Update: Reuters has a huge slide show of the chaos at Indymac today.
Customers wait at IndyMac to withdraw money [Associated Press]
Posted by guest , Jul 14, 2008 3:44PM
Jesus, we are seriously heading for a depression. This is insane.
Posted by guest , Jul 14, 2008 3:51PM
Help!
I'm working on a poem, does anybody know a word that rhymes with Washington Mutual?
Posted by guest , Jul 14, 2008 3:53PM
Mr. Tangeri,
I am Tibaku, an ex-crown prince of the royalty of Mizaku in Nigeria and I got your contact from IndyMac Bank. Given that I also have about $579 MM in my checking account in IndyMac and am unable to travel to the US due to prior commitments, I would like to do some business with you for which I am willing to give you 10% of my funds. Please contact me as soon as possible.
Thanks.
Tibaku Mmdjzzti
Posted by MGR , Jul 14, 2008 3:59PM
@3:51 - Use WaMu instead. It significantly increases how many other words you can use to rhyme.
Posted by StMarc , Jul 14, 2008 4:01PM
"Uhm, guy? Mr. Tengeri? You might not want to take checks from failing banks."
Genius.
Even though the check probably is drawn on the new Fed-created bank which is, presumably, liquid, still genius.
M
Posted by guest , Jul 14, 2008 4:03PM
The insane part is, they aren't even lining up at IndyMac branches....
Posted by guest , Jul 14, 2008 4:03PM
The insane part is, they aren't even lining up at IndyMac branches....
Posted by StMarc , Jul 14, 2008 4:07PM
From the Reuters story:
"John Bovenzi, an FDIC official working as IndyMac Federal's chief executive, talked with customers as they waited for the doors to open, assuring one that "this bank is as safe and as sound as any bank in the country right now.""
Irony... shields... failing! Can't... go... on! Talking... like... Shatner!
M
Posted by guest , Jul 14, 2008 4:10PM
Sooo....if you're a computer-shy retiree and you want to pull funds from one of the banks on Bove's list but you don't have online banking, a wire transfer is the only prudent way to go, right? Unfortunate that CNN and Suze Orman aren't getting into that level of detail...
Posted by guest , Jul 14, 2008 4:19PM
that is, in fact, and Apple store.
Posted by Anal_yst , Jul 14, 2008 4:43PM
@ M/4:07
AHAHAHAHAH I almost just snarfed all over my monitor (assuming you also had not just Shatner's inflections but mannerisms as well, of course)
Posted by guest , Jul 14, 2008 4:43PM
@ 4:19
"an"
Posted by guest , Jul 14, 2008 4:44PM
@ 4:19
"an"
Posted by guest , Jul 14, 2008 5:39PM
Landlords and power whores
On my people they took turns
Dispute the suits I ignite
And then watch 'em burn
Burn, burn, yes ya gonna burn
Burn, burn, yes ya gonna burn
Posted by guest , Jul 14, 2008 5:46PM
@4:07 - since "this bank" is now being run by the FDIC and insured deposits are backed by the full faith and credit of the United States, I fail to detect the irony.
It would have been different if the quote was attributed to the CEO of IndyMac last week, but now it's IndyMac Federal Bank, and deposits at IndyMac Federal Bank are in fact just as safe if not safer than at any other bank in the country.
Posted by guest , Jul 14, 2008 6:19PM
Would you be secured any differently if you had deposits of <$100k in a bank or if you had a check for the same amount from that bank when it failed?
Posted by StMarc , Jul 14, 2008 7:23PM
@5:46 - You are an enemy of Art and I pity your ignorance. He was standing on the steps of an IndyMac branch. The irony was that while "this bank" probably does mean IndyMac FSB, he was on the property and talking to the customers of the former IndyMac while they were waiting to find out if they were ABOUT TO LOSE MOST OF THEIR LIFE'S SAVINGS. If you don't like "irony," would you prefer "chutzpah" to describe this statement?
@6:19 - Do you mean a check drawn on an account at the bank or a check from the bank itself?
Assuming you mean the former, what you have is a negotiable instrument drawn on the bank, not a deposit account. No deposit account = No deposit insurance. Basically it's a race to the bank to see which order the instruments clear in. The FDIC may have prioritization/allocation rules for this like a bankruptcy court - I honestly don't know. Absent that, I'd guess that checks will clear along with other withdrawls until you hit the limit and then you're a creditor with a breach of contract suit against the drafter of the instrument.
Obviously bank failure is a defense against check fraud, etc, but if he owed you the money and paid you with a check that's no good, he still owes you the money even if he's lost it in the bank failure.
I freely admit that it has been a while on some of these finer points, I could be wrong.
M
Posted by guest , Jul 14, 2008 8:04PM
@4:43 and 4:44
You're a punk, get a life, hug a hippie.
Posted by guest , Jul 15, 2008 12:59PM
@7:23 - That's a helpful explanation. So Mr. Tengeri in the article above would have been better off simply leaving his money in a deposit account at a failed bank rather than receiving his withdrawal in the form of a check from that bank (assume for this example that his account was worth <$100k, which I think is the FDIC insurance limit)? Because in the former case his account is insured against loss, but in the latter he essentially becomes a creditor in a bankruptcy.
I'm sort of trying to determine the personal application of this story (i.e. if I think my bank is going to fail imminently, what should I do?)
Posted by guest , Jul 16, 2008 7:39AM
@5:46 - "deposits at IndyMac Federal Bank are in fact just as safe if not safer than at any other bank in the country".
Well, funny that there was a $100.000 withdrawal limit atIndymax then. I thought "any other bank in the country" had higher limits.
But maybe I'm wrong and you're right - maybe there is already a $100.000 limit in effect all over the line. Time alone will tell.
Posted by StMarc , Jul 16, 2008 8:21AM
7:23 - Not quite. I'm guessing the check was a cashier's check for the limit of his insured withdrawals. It was probably drawn on a clearing account at the *new* bank, funded by transferring his insured funds to that clearing account. As Mr. No-sense-of-irony pointed out (after I did, heh heh) if that's the case the check is perfectly good.
He could just as easily have written a check to himself, or another bank, for a hundred grand, and the Feds would probably have honored it. However, he may have had multiple accounts and/or accounts without drafting privileges and so there are any number of reasons why he might have had to go in and get a check from the bank.
M
Posted by StMarc , Jul 16, 2008 11:02AM
@7:39 - 5:46 does have a point. IndyMac Federal only HAS the deposits which are after-made or which were transferred as insured payment/transfers by the FDIC. They're quite safe, and there's no withdrawl limits on cumulative deposits.
Say I had an account at the old IndyMac (OIM.) The way this works, if I understand it correctly, is that I now have an account at IndyMac Federal (NIM) with the same account numbers and so forth. Say also that I had exactly a hundred grand in one demand deposit account (a fancy way to say a checking account) at OIM. That got transferred by the FDIC to my NIM account last Friday or over the weekend or whatever.
Now assume I got paid by direct deposit yesterday, and my $10K salary was deposited to my account at NIM. (I'm assuming they've autoforwarded OIM's ACH numbers to NIM.) I now have $110K in my NIM account. I can withdraw any or all of that at any time. That money's perfectly safe.
If I'd had $150K in my OIM account, I'd be in exactly the same condition regarding my salary, but I'd be light the $50K overage until they get it straightened out, and I'll probably lose some of it. (Right now they're paying 50% in advance and will pay the rest with proceeds of sale.)
M