FDIC sheds light on closing of IndyMac Bank
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Uninsured deposits
Bankrate: So will people receive checks for the remainder of their uninsured deposits in dribs and drabs?

Barr: Yes. It'll be a long time before they get something because we have to first make up the 50 cents we already provided them. Then once we've recouped that, as we sell more assets and receive more money, we'll make a determination as to whether we need to make another disbursement.

Customers with uninsured deposits obtain a receivership certificate and, let's say it's a $50,000 receivership certificate; if we make a 4 percent dividend payment in the future, that person would get $2,000. If they had a $500,000 claim, they'd get $20,000. It's done on a pro rata basis.

Bankrate: The $1 billion in uninsured deposits -- that's more than just individual consumers, right?

Barr: It runs the whole gamut -- consumers, businesses, some nonprofit organizations. Our initial estimate was $1 billion, but it's going to be lower than that. We haven't quite finished talking to all the people, but I know it's been running lower than anticipated. We're hopeful it'll be less than a billion dollars.

ATMs
Bankrate: In its news release announcing the closing, the Office of Thrift Supervision said customers could access funds by ATM, but some customers said the ATMs weren't working.

Barr: To my knowledge they were. Whenever a bank fails, we take the ATM offline so we can get a snapshot of what the deposits look like the day of the closing. But from the customers' standpoint, the ATM doesn't shut down. When they put their card in and take out $60, they get the money, but the transaction doesn't post to their account (right away). When we flip the switch to go back online, it picks up the weekend transactions that weren't captured. Perhaps they were using an ATM at another location, but I know the one I was at in Pasadena worked. All weekend people were putting their card in and taking their money out.

Cashiers checks
Bankrate: Why were some other banks not honoring the IndyMac cashiers checks the FDIC gave to customers?

Barr: The new chief executive officer of IndyMac called some of the larger banks in the area, and all the ones we were aware of that were putting exceptive holds on IndyMac checks, to tell them it was not fair that they were treating IndyMac customers separately and denying them services. (He told them) that the FDIC was standing behind the bank so those checks were good.

When it was still continuing the next day we set up a hot line, a bank-to-bank hot line, that we distributed to all the bank branches in the area that we knew we were having problems with to say, if you get an IndyMac check, call this number and talk to an IndyMac employee and he or she will confirm that the check is good and that the money is in the account. If there were any merchants who weren't taking checks, we gave that same phone number to the merchants to call so they could verify that the funds were available.

Friday we were still hearing stories that some of the banks in the area were not taking IndayMac checks, so we have more than made those banks' regulators aware of what was going on. We want those regulators to make sure that those banks were not in violation of any consumer regulations or laws such as the Funds Availability Act. We hope those regulators will take us seriously and if violations were made, that action is taken against those institutions.

HELOCs and loans
Bankrate: What's happening with loans?

Barr: We've temporarily frozen the HELOCs and we'll review them to see if we should continue to fund them. If a consumer had a loan to build a house, we're going to continue to fund it, so if you were putting an addition on your house or building a new house we'll continue to fund that loan. But if you're a developer and you had some business lines of credit, those have been frozen and we're going to review them on a case-by-case basis.

Bankrate: Thank you, David.

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