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On Friday, the Federal Deposit Insurance Corp. took over IndyMac, the Pasadena, Calif., company that ran out of funding to sustain its large mortgage business. Of its $31 billion of liabilities, about a third were loans from the Federal Home Loan Bank of San Francisco and $19 billion were deposits an unusually low percentage of deposit funding for a bank or thrift.

The loans from the Federal Home Loan Bank were secured by mortgages, assets now seized by the FDIC. But Home Loan Banks have a statutory right to be first to get their hands on the collateral, and observers said the FDIC is likely to keep or pay down the loans rather than hand over mortgages, which means the Home Loan Bank of San Francisco will feel little of IndyMac’s failure.

There might be some fallout from IndyMac, though. Cannon said that the FDIC, to make up for some of the losses from the IndyMac failure, might have to eventually increase deposit insurance fees. That would hurt bank profits, though not dramatically.

Tags: anc, business, company, crease, insurance, mortgages

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