Schumer: concerned over IndyMac stability

A wave of IndyMac depositors withdrawing their funds could leave IndyMac "in a disastrous financial situation," Schumer said.

Schumer, who sits on the Senate Banking Committee, voiced concern in letters to the heads of the Federal Deposit Insurance Corp.; the Office of Thrift Supervision, an agency of the Treasury Department; the Federal Home Loan Bank of San Francisco; and the Federal Housing Finance Board, which regulates the system of regional home-loan banks.

Shares of Pasadena, Calif.-based IndyMac, which already have tumbled nearly 95 percent over the past year, dropped 28 cents, or 26 percent, to 79 cents in trading Thursday. They lost another cent in after-hours trading.

Gutted by losses from write-downs on mortgage-backed securities, the company warned last month that it wouldn't return to profitability this year unless the slide in U.S. housing prices slowed. IndyMac posted a loss of $184.2 million, or $2.27 a share, for the first quarter, compared with a profit of $52.4 million, or 70 cents a share, a year earlier.

"I am writing to you out of concern for the safety-and-soundness risks posed by IndyMac," Schumer told FDIC Chairman Sheila Bair; John Reich, director of the thrift agency; Richard Rosenfeld, chairman of the Federal Housing Finance Board; and Dean Schultz, president of the San Francisco FHLB. "The regulatory community may not be prepared to take measures that would help prevent the collapse of IndyMac or minimize the damage should such a failure occur."

He asked what steps the agencies are taking.

Schumer asked, for example, whether the FDIC has considered ordering IndyMac to reduce its reliance on brokered deposits, sold by securities firms to customers outside of a bank's local area, which can carry higher interest rates but also can be riskier than traditional deposit accounts because they may not fall within the federal insurance limit. Brokered deposits make up more than 37 percent of IndyMac's total deposits, according to Schumer's letter.

OTS spokesman William Ruberry declined to comment, other than to say that the agency is reviewing Schumer's concerns. FDIC spokesman Andrew Gray said the agency "does not comment on open and operating institutions."

Michael DiVirgilio, a spokesman for IndyMac, said the company was reviewing Schumer's letters and had no immediate comment.