The Motley Fool: Lessons From IndyMac. Last week, we learned that California-based IndyMac was seized by the FDIC. In the aftermath, customers made a run on the bank, pulling more than $1.3 billion from the vault.
Uh oh. The subprime crisis has claimed another victim. Although some commentators assert that certain banks are too large to fail, the reality is that it only takes a percentage of depositors seeking to close out their accounts to take down a bank. And, seeing how the IndyMac situation has unwound itself, all banking clients should feel a little nervous now. While those holding over $100,000 in an account will be most impacted, smaller clients aren’t out of the woods. In fact, some that have attempted to deposit IndyMac cashier’s checks with other banks have faced delays in securing access to their funds. Definitely not an ideal situation if you have bills coming due. The federal government really needs to step up at this point to smooth out the process. Else, the next rumor that hits the grapevine will spark another run on a bank. At this point, it may be prudent to track the stock price of those banks where you have funds on deposit, just as a warning signal.
I’ve added IndyMac Bancorp Inc. contracts to the site.