IndyMac Bank was seized by the Federal Deposit Insurance Corporation (FDIC), under orders from the Office of Thrift Supervision (OTS). Thus the bank will open on Monday as IndyMac Federal Bank. Experts said that while it may seem dramatic at first sight, the collapse is somewhat normal as IndyMac invested heavily in mortgages. Being a mortgage crisis and all, the bank was bound to be hit hard. The collapse is the third-largest banking failure in U.S. history.

The collapse was ensured by the foolish release of several letters by Senator Charles Schumer (D-NY) on June 26. Schumer's letters urged several bank regulatory agencies to take steps to prevent IndyMac’s collapse, but the letters themselves killed the bank as depositors ran to the bank to withdraw more than $1 billion. Senator Charles Schumer was heavily criticized for his mindless act, as it is well known that the FDIC and Office of Thrift Supervision (OTS) do not publicly discuss the stability of operating banks, exactly for the reason of preventing such bank runs.

The Federal Deposit Insurance Corporation (FDIC), which insures bank accounts up to $100,000, announced that will grant a special dividend to the roughly 10,000 depositors with funds in excess of the insured amount of 50% of their uninsured funds. Strangely enough, a lot of people who withdrew their cash from IndyMac thus removing any chance of propping up the bank, apparently had less than the $100,000 limit which is insured by the FDIC. This also shows how little people know about the banking system.

IndyMac Bancorp, Inc. was founded as Countrywide Mortgage Investment in 1985 to take over Countrywide Financial loans too big to be sold to Freddie Mac and Fannie Mae. It was spun off by Countrywide in 1997 and began a quick expansion through the acquisition of several mortgage banks. At the time of the collapse, Friday, it had $32B in assets.