Tax Reform in This Election Year: It's Not Likely
Which Credit Card Rewards Does the IRS Care About?Last Friday, June 11, 2007, the Feds basically put IndyMac Bancorp (NYSE: IMB) into receivership, even as they reminded customers that their deposits were insured by the Federal Deposit Insurance Corporation (FDIC) covering each individual account up to $100,000.
When I posted IndyMac (IMB) turns to stone on June 8, IMB had shut down lending. Now, as they have turned to dust from a shareholder perspective, customers are still lining up to withdraw their funds despite government assurances that there is nothing to worry about.
Some fret that this bailout will cost taxpayers money but most of the money will be coming from actual deposits as company assets are liquidated. However, while a majority of the costs are covered, the process will incur significant costs nevertheless, since this is only the tip of the iceberg and other banks are sure to fall into the abyss as well.
So much of what happens in our world is based on perception, not fact, but the perception affects the facts and worries can become self-fulfilling prophecies. If not for the run on the bank, something the FDIC was set up to prevent, perhaps many institutions would be able to resolve there difficulties over time. When it comes to over-leveraged banks, time appears to be in short supply.
Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm. He writes the columns Chasing Value and Serious Money. Disclosure: I own(ed) shares of IMB.
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