Schumer letters make Indymac depositors edgy
In an attempt to reassure depositors that the company is not near collapse, officials with the parent company of Indymac Bank on Monday issued a response to letters Sen. Charles Schumer, D-N.Y., sent to federal bank regulators last week. In the letters, Schumer voiced concern that "Indymac’s financial deterioration poses significant risks to both taxpayers and borrowers." Indymac said Schumer’s letters to the Federal Deposit Insurance Corp., the Office of Thrift Supervision and the Federal Home Loan Bank of San Francisco "leave the wrong impression" about the bank’s past and present practices. The letters prompted depositors to withdraw about $100 million on Friday and Saturday, Indymac officials said, "despite the fact that over 96 percent of our … $19 billion in deposits are fully insured" by the FDIC.
Indymac Bank is working on a plan with regulators to improve the safety and soundness of the bank, and that the Federal Home Loan Bank (FHLB) of San Francisco "has been diligent in protecting its financial position" by increasing margin requirements on mortgage loans and mortgage securities it’s financed for all financial institutions, including Indymac. The Center for Responsible Lending issued a report Monday claiming that interviews with former employees and lawsuits in 10 states show Indymac pushed through loans based on bogus appraisals, worked closely with mortgage brokers who misled borrowers about their rates and fees, and often treated elderly and minority consumers unfairly. While Schumer claimed Indymac used brokered deposits to "finance rapid and … irresponsible growth," Indymac said those deposits "lowered the risk for Indymac Bank and improved our safety and soundness during this turbulent period."
LandAmerica merging Transnation, Lawyers Title
In a cost-cutting measure, LandAmerica Financial Group Inc. is merging the smallest of its three title insurance underwriting subsidiaries, Transnation Title Insurance Co., into Lawyers Title Insurance Corp. The merger eliminates the capital requirements of maintaining Transnation as a separate entity, LandAmerica officials said, while creating additional surplus for the combined operations.
LandAmerica posted a $24.2 million first-quarter loss as revenue fell 27.6 percent to $686.4 million and has laid off the equivalent of 3,600 full-time employees since the beginning of 2007. The company announced in May that it would combine its residential and lender services channel (see story).
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