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Indymac Bancorp Files For Bankruptcy After Seizure

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Aug. 1 (Bloomberg) -- IndyMac Bancorp Inc., the second- largest independent mortgage lender in the U.S. before it was seized by federal bank regulators last month, filed for bankruptcy liquidation.

IndyMac said its liabilities are between $100 million and $500 million, according to the Chapter 7 filing yesterday in U.S. Bankruptcy Court in Los Angeles. The bank said it has fewer than 50 creditors.

IndyMac on July 11 was seized by U.S. regulators after a run by depositors left the mortgage lender strapped for cash. The Federal Deposit Insurance Corp. is running a successor institution, IndyMac Federal Bank and regulators have said they intend to sell the bank.

Pasadena, California-based IndyMac Bancorp racked up almost $900 million in losses as home prices tumbled and foreclosures climbed to a record. California ranked second among U.S. states, with one foreclosure filing for every 192 households in June, 2.6 times the national average.

It doesn't matter how few creditors you have, it's how much you owe that's the problem.

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Is this bad news or was it factored in by the markets after the seizure took place?

"William Isaac, former FDIC chairman from 1981 to 1985, said the bankruptcy was expected and won't effect the bank's operations. ``The bank was the major asset, so once the bank was seized the fate of the parent company was probably sealed,'' he said in a telephone interview."

From here: http://www.bloomberg.com/apps/news?pid=206...&refer=home

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