Bill would aid depositors at failed IndyMac Bank
Federal Deposit Insurance Corp. Chairwoman Sheila Bair last year disappointed underinsured depositors of failed IndyMac Bank when she said they would need an act of Congress to recover money lost when the mortgage lender collapsed.
Now those former IndyMac customers are hopeful after two Southern California members of Congress introduced an FDIC-backed bill to repay much of their losses.
“I am walking on a cloud,” said Gina Martelli, who lost $63,000 — money from a disability settlement — that was over the FDIC’s $100,000-per-depositor limit that was in place when IndyMac was seized July 11, 2008.
IndyMac specialized in making risky stated-income mortgages. After it collapsed in the home-loan meltdown, the Pasadena thrift became a ward of the FDIC, which eventually sold its remains to a group of wealthy investors.
About 8,800 IndyMac depositors lost a total of nearly $266 million because Congress didn’t raise the FDIC insurance limit to $250,000 until later that year.
A bill introduced Thursday by Reps. David Dreier (R-San Dimas) and Jane Harman (D-Venice) would retroactively extend the $250,000 ceiling to deposits at banks that failed beginning Jan. 1, 2008. The largest of those by far was IndyMac.
“Their losses were no less difficult and no less tragic than those that occurred later that same year,” Dreier said in a statement.
The legislation also would help depositors of five smaller banks outside California that failed earlier in 2008.
In an interview, Harman said she hoped the legislation would be added as an amendment to the massive financial overhaul bill that is nearing final passage by Congress.
A similar measure that Harman and Dreier tried to attach to the overhaul legislation in December was voted down.
A spokesman for House Financial Services Chairman Barney Frank said the Massachusetts Democrat supported the measure and had worked to help shape it with assistance from the FDIC.
The repayments would come from the deposit insurance fund, which is financed by the banking industry, not from taxpayers.
IndyMac depositors already have gotten back 50 cents for every dollar of uninsured deposits. Some underinsured IndyMac depositors say bank employees misinformed them about insurance limits and the correct way to set up multiple accounts to increase the amount of coverage.
Some customers had losses exceeding $1 million each because of accounts that were improperly established, FDIC officials said.
But the Dreier-Harman legislation would allow each depositor to recover no more than $250,000, Harman and the FDIC said.
