Jul 15, 2008 11:30 am US/Eastern
Angry IndyMac Customers Prompt Police Response
LOS ANGELES (AP) ―
Like dozens of others waiting in line with her, Joan Rubin said she was drawn to IndyMac Bank by the high interest rates it paid and the friendly service her local branch provided.
All that was a memory on Tuesday, however, as Rubin and about 200 other anxious, embittered and sometimes angry customers swarmed an IndyMac bank branch in the San Fernando Valley, creating a Depression Era-like scene as they demanded their money just four days after the failing bank was seized by federal regulators.
"I've already lost three nights of sleep and three days of eating; now I'm done," Rubin, 52, said as she sat in a beach chair on the sidewalk in stifling heat. She planned to empty her account following the failure of the Pasadena-based bank, which has 33 branches, all in Southern California.
"It's a very sad day in America," Rubin said.
At one point police had to be called to the branch in the city's normally quiet Encino neighborhood. Tempers grew short when customers who had arrived before dawn accused others of cutting in line.
Some of the line jumpers had been turned away the day before but were given vouchers granting priority by bank employees.
Police quickly restored order without arrests, and as the day progressed people were divided into two lines that together stretched for nearly an entire block. People wanting to close accounts were let in, in groups of five.
Customer Ann Collier, 67, a retired secretary, also chose IndyMac as her bank because of its high interest rates.
Depositors waiting to withdraw their money said IndyMac had offered rates at least 0.75 percent higher than other banks' rates.
Initially, she was careful to deposit less than $100,000 in her account so it would be fully insured by the Federal Deposit Insurance Corp. But over time, her money grew beyond the limit.
She declined to say how much she now might lose.
"I have to live off this money for a long time," she said while waiting in line late Monday outside the Pasadena office.
Lillian Krasn said she had a strange feeling something was wrong when she arrived at the Encino branch a week ago to renew her certificate of deposit, but she went ahead anyway. She came back Tuesday to cash it in and take the money elsewhere -- although exactly where, she hadn't decided.
"Where do you go from here?" the 78-year-old retiree asked. "Under your mattress?"
Shortly before noon, two employees of rival Comerica bank arrived to hand out water bottles with their business cards taped to them. They said they hoped to scoop up some former IndyMac customers like Krasn.
"One man's loss is another man's treasure -- or something like that," said Comerica banker Danny Sobrino.
Meanwhile, as the wait stretched into hours, people donned baseball caps or carried umbrellas to shield themselves from the sun. Some fanned themselves with their bank documents as they sweated in temperatures that were already in the 80s by midmorning.
The Office of Thrift Supervision transferred control of the bank to the FDIC on Friday because it didn't think IndyMac could meet depositor demand.
Over the weekend, it became IndyMac Federal Bank, FSB, and by Monday morning the scramble by bank customers to recover their money was on.
Most depositors were given immediate access to up to $100,000 in their accounts and 50 percent of any money beyond that threshold, although depositors with joint accounts or retirement accounts could immediately withdraw greater sums, said David Barr, a spokesman for the FDIC, which is now operating the bank.
Depositors were given receivership certificates for any money they couldn't immediately withdraw and may be able to receive some of that money after the bank's assets are sold off, he said.
About 10,000 of IndyMac's 275,000 accounts contained uninsured sums, and uninsured money made up about $1 billion of the bank's $19 billion in deposits, Barr said.
Shortly before noon Tuesday, the bank provided folding chairs for those who hadn't brought their own, and the line decreased to about 100 as some people were persuaded to schedule appointments and return later.
A few people, such as Aliki Deffam, visited the bank to make deposits or loan payments. For them, there was no waiting to get inside.
The FDIC also announced Tuesday that IndyMac had halted proceedings on loans in foreclosure. Barr did not know how many loans the bank had in foreclosure or how much they were worth.
Deffam, a real estate agent who was adding to her IndyMac savings account, said she believed the FDIC, which is now operating the bank, when it announced that all IndyMac deposits were fully insured up to $100,000.
"I feel very safe," said Deffam, 42. "I don't think that my money is going to disappear."
Many others, however, weren't willing to take that chance -- or to leave until they had their money in hand.
"I just can't take their word for it," said Ismelda Quintos, an accountant. "I want to get my money out so I can sleep at night. It's hard-earned money, and I'm not rich, so it's a big deal for me."
(© 2008 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.)
