IndyMac bankruptcy

California mortgage bank IndyMac Bancorp faced a run in connection with the subprime crisis in July 2008. Frightened customers withdrew USD 1.3 billion within eleven days, causing the institution’s insolvency. The Federal Deposit Insurance Corporation, FDIC, the government guarantee fund for U.S. banks, had to stand in for the claims against the bank. – This triggered a heated discussion outside the U.S. as well, because IndyMac Bancorp was seen as an example of how trust in a bank can be wantonly destroyed. For years, the institution had pursued an irresponsible lending policy; loans were granted to almost anyone without proof of income and assets. The supervisory authority also came under fire. It was discussed to what extent the supervisory authority was entitled or even obliged to intervene against a bank in the event of reckless business practices. As in later insolvency cases in the wake of the subprime crisis, the fundamental question of whether bank failures should be permitted also arose again. – See bail-out, bank failure, Bradford nationalization, deposit insurance, Elizabeth question, Fortis rescue, maturity transformation risk, moneylender of last resort, Hypo Real Estate rescue, market discipline, Northern Rock debacle, refinancing risk, risk enhancement, subjective, blowback effect, soul massage, deadwood, triple A, turnover brake, accident refugee, trust.

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University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec.
Professor Dr. Eckehard Krah, Dipl.rer.pol.
E-mail address: info@ekrah.com
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https://www.gerhardmerk.de/