Radio News AND Feds Bail Out Indy Mac!

 indy mac news update   7-14-08

Indeed by Sunday evening all the TV nets including CNN were getting up to speed on the Indy Mac situation.   I have mixed feelings about FDIC's preparedness. They admit that Indy Mac was not on their 90-bank watch list, but then again the watch list is the concern about asset to liability  or capital coverage ratios needed to allow a bank to carry on its normal activities....Mortgage origination issues, flagged correctly by Schumer who at least had the guts to call out Indy Mac by name, are another matter.   Indy Mac was on the radar of a number of non FDIC regulators (in my opnion) as early as 2005-2006. Indy Mac was an extremely aggressive top-5 mortage lender which insisted that they were not tainted by "sub=prime" problems because their huge business allegedly  primarily underwrote "prime mortgages." And therein lies the problem and perhaps the prosecutions of Indy, Countrywide and others.   A top notch "prime" lender is whatever they say it is.  Basically,  if you paid your bills, weren't bankrupt, and your appraiser did not show up on the bank's "bad" list,and you had your 600-700 credit scores and never stole a freight train, Indy Mac's aggressive salesmen (brokers, agents, originators etc) tweaked the applications to list you as an A-rated lender, and they rarely showed anything "sub" prime on their origination books. A less aggressive or one of the few remaining neighborhood lenders, would have charged some extra points for origination, or a higher mortage rate--fixed or adjustable--for taking extra risk. By the time 85%+ of the Indy Mac mortgages were packaged, re-packaged, sent off to Freddie, Fannie, and Ginnie, and "tranches" were pulled out of groups of mortgages for exotic mortgaged CMO derivatives, the pension fund or wealthy individual investor had no clue and could care less. In the case of Ginnie, Freddie, and Fannie, "final users" were told that if a mortgage defaults the investor was promised "timely payment of principal and interest." Period.  For the millions of holders of commercial mortages, or mutual funds with 51% or 50% "government agency bonds" calling themselves "government bond funds" but in reality loaded with junk, the story is not so happy.   The government assurances are positive psychologically, but do little systemically. Many Americans are still living in homes where the monthly mortgage payment is 30, 40, or 50% (or more) of their net monthly income.     ms/mh

---

Radio newscasts to the rescue again...late Sat p.m. (mt) I caught a radio headline that the feds had Seized Indy Mac bank. This is a GIGANTIC story in business circles. Getting home early evening I turned on CNN which was simulcasting the umpteenth rerun along with CNN HNN of Robin Meade's fairly good long form interview with three rescued contractors. This was followed (I counted) by two reruns of Larry King and MS Betancourt and THREE reruns night and overnight with UFO investigators. CNBC our premier business channel had back to back repeats of "Deal or No Deal" and other infomercials and features. MSNBC ran various "raw" crime and police shows. Our DISH TV does not carry Fox News. None of the three local affiliates had anything on Indy Mac on their late news, which two of three stations re-broadcast during the early morning hours. Fortunately the "interactive" feature of Dish-TV allows for CNN In Depth which had a 1 graf biz item on Indy Mac. Later the same item appeared on the "crawl" on the bottom of the regular screen. Interactive Bloomberg included a short text story in Indy Mac and a rather comprehensive (pre-weekend?) retrospective on Freddie and Fannie. My AOL sign on page News late into the evening had nothing on Indy Mac. When I switched on the radio through most of the night it shared top billing with Tony Snow's death, until pre dawn (no, I couldn't sleep) when a report of possible early USA troop withdrawals from Iraq became the top story. Early feeds of Good Morning America, Today and CBS Sunday morning had interviews on the mortgage crisis in general but I saw no footage or on the seen stories (maybe I missed them) of the Feds busily working this weekend to bring some stability to Indy Mac depositors on Monday. Yes, you could go fishing for AP reports on the Internet, but this is a good case study of the continued value of radio news v Internet, TV and newspapers. Local and national TV news staffing is a joke (been there, done that). Sunday news holes of those remaining dailies go to bed earlier than an exhausted four-year-old. Regarding the Internet I suspect except for glancing at their MSN, Yahoo, Google, AOL etc sign-on page summaries, checking news headlines for most Americans comes way down the list after video games, sports scores, Angelina's new baby, solitaire, and instant messages and chat rooms.