The FDIC signed a letter of intent last week with the group, led by Steven Mnuchin of New York-based Dune Capital Management. IndyMac would fall under a new holding company, IMB, managed by Mnuchin and Terry Laughlin, formerly chief executive of Merrill Lynch Bank & Trust, the US savings bank subsidiary of Merrill Lynch.
Salvaging IndyMac has cost the FDIC's Deposit Insurance Fund between $8.5 billion and $9.4 billion since it took the bank into conservatorship in July 2008. After the sale, which is expected to close by the end of March, it will continue to provide some support -it will share some of the losses on the bank's loan portfolio and will continue secured financing, in exchange for receiving a majority of the cashflow from a $2 billion loan portfolio. IMB has agreed to provide $1.3 billion in new capital to IndyMac after the sale is concluded.
IndyMac failed because "the bank relied heavily on higher-cost, less stable, brokered deposits, as well as secured borrowings, to fund its operations and focused on stated income and other aggressively underwritten loans in areas with rapidly escalating home prices", the FDIC said in a statement last week. It was taken over by regulators on July 11, 2008, in the second largest bank failure since the FDIC's foundation in 1934. At the time, the FDIC estimated overhauling IndyMac would cost it between $4 billion and $8 billion.