Private investors to pay FDIC $13.9 billion for IndyMac

A group of private investors agreed Friday to buy IndyMac Bank, the Pasadena, Calif., specialist in exotic home loans that collapsed in July and became the third-largest bank to fail since the government began insuring deposits in 1934.

The Federal Deposit Insurance Corp., which has run IndyMac since its collapse, said the bank would be purchased by IMB Management Holdings, a New York-based partnership led by buyout expert J. Christopher Flowers, hedge fund operator John Paulson and Steven Mnuchin, chairman of private-equity company Dune Capital Management.

IMB Management Holdings and the investor group will inject about $1.3 billion in capital into the emerging bank and form a new holding company that will own and operate it under a thrift charter. What is being called New IndyMac also will bring in "an experienced senior management team to run the day-to-day operations of the thrift," according to a statement issued by the FDIC.

Under the complex deal, the buyers will pay the FDIC about $13.9 billion and will share losses with the FDIC. The bank will assume the first 20 percent of losses, after which the FDIC will absorb the lion's share of losses.

FDIC officials said full details of the agreement would be withheld until the deal's expected close in late January or early February.

The agency said IndyMac's cost to the federal deposit insurance fund would be $8.5 billion to $9.4 billion, in line with previous loss estimates of $8.9 billion.

Uninsured IndyMac depositors will have to wait to see how much of their losses they may recover, FDIC officials said. The depositors have been repaid 50 percent of the $541 million in uninsured funds that the FDIC determined was held in IndyMac accounts.

Mnuchin is a former Goldman Sachs real-estate fund manager. His Dune Capital, known for opportunistic real estate investments, bid unsuccessfully for Donald Trump's casino company last year.

Paulson made billions of dollars betting on a downturn in housing and mortgages, and he provided $15 million in October 2007 to help advocacy group Center for Responsible Lending establish the Institute for Foreclosure Legal Assistance.

Flowers has cultivated investments in troubled banks. He led an investor group that created Shinsei Bank Ltd. in 2000 from the ruins of Japan's collapsed Long Term Credit Bank, and his J.C. Flowers & Co. bid unsuccessfully to buy Bear Stearns before the securities enterprise collapsed last year. Regulators recently gave him the go-ahead to personally purchase a small Missouri bank, perhaps as a platform to buy failed institutions.

Los Angeles Times

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