Hundreds of customers lined up outside IndyMac branches throughout the Southland yesterday to withdraw their money. The Federal Deposit Insurance Corporation took over IndyMac after the cut-rate mortgage lender failed under the weight of rising foreclosures, falling home prices and tighter credit. KPCC's Frank Stoltze went to the IndyMac branch in Pasadena.
Frank Stoltze: A line wound around IndyMac's Pasadena headquarters, and Linda Goddard stood near its end. She'd returned from her Northern California vacation early to withdraw $5,000 from an account in her 11-year-old daughter's name.
Linda Goddard: This is her college fund. I can't lose that.
Stoltze: The Federal Deposit Insurance Corporation would have covered Goddard's deposit. But she wasn't taking any chances.
Goddard: I'm scared. I'm very, very scared. I mean, think. If this happens. And then they got that Fannie Mae thing going on too.
Stoltze: Federal deposit insurance covers up to $100,000. Regulators interested in restoring confidence in the financial system said they'd also immediately cover 50% of IndyMac customers' uninsured deposits.
Andres Albare said he still stood to lose a substantial amount of money. He hoped regulators would find another financial institution to take over IndyMac.
Andres Albare: If they guarantee me that the other bank gonna take over the responsibility, I will leave the money in here. But I don't know. I have to still have to get inside.
Stoltze: Private security guards handed out water and sandwiches to women who stood in line holding parasols. FDIC employees answered questions.
FDIC employee: If you have a joint account with your husband, each of you is insured up to $100,000 on that account, separate from that insurance on your single account.
David Barr is a spokesman for the FDIC.
David Barr: The customer base is a tremendous asset for any financial institution out there and we would like to try and preserve as much of that as possible, because the more we can get for IndyMac when we sell it, that means there'll be more money to help pay off the uninsured depositors and other creditors of the institution.
Stoltze: One man walked out with a $16,000 check in hand. He said he'd left most of his money in his account.
Man One: I kept it in because it's absolutely safe.
Man Two: You are a very brave man.
Stoltze: Robert Buscemi's mother planned to withdraw all of her money. He wasn't so sure about his.
Robert Buscemi: Ya know, I feel a little better actually now that the FDIC has taken over. But I don't know. Probably I'll be grumpier in a couple of hours when I get in, and I might just want to get my money out too.
David Salamanyan stood ready to help him. He'd walked from his office across the street to hand out his card to people in line.
David Salamanyan: We work with New York Life, we do fixed annuities, so rolling over for retirement, financial planning, any kind of advice you guys need, right across the street, free consultation.
Stoltze: Salamanyan wasn't the only financial advisor working the crowd.