Amidst Foreclosures, IndyMac’s Troubles Deepen
October 22nd, 2009
The American economy is in deep trouble. With unemployment reigning high, people are faltering on mortgage payments. Hence, foreclosures are at an all-time high. Now banks are at the center of action what with sub-prime loans having gone awry.
Take, for instance, IndyMac Bancorp Inc. This bank based in Pasadena is already in trouble what with foreclosures mounting by the day. The bank is already tottering under the pressure of faulty sub prime loans. Now the bank’s troubles have deepened. The company is facing a lawsuit.
A complaint was lodged in the United States District Court for the Central District of California. The bank has been accused of giving wrong information that kept its share prices soaring. Coughlin Stoia Geller Rudman & Robbins LLC filed the lawsuit against the bank and its CEO Michael W. Perry and A Scott Keys, the bank’s Chief Financial Officer. According to the lawsuit, misleading statements have been issued about the bank’s financial results.
The bank’s non-performing assets have been underplayed, the lawsuit alleged. The bank did not reveal much information about the construction portfolios and adjustable-rate mortgage. Subsequently, the stock of IndyMac traded at prices that were artificially inflated. The share price reached a high of 24.55 per share two years ago. However, officials of the bank refused to comment on the ground that the matter is pending in the court.
The bank’s shares dipped to a 52-week low. Does this mean that the bank may not survive? An equity analyst with RBC Capital Markets, Jason Arnold, says that he has doubts if the bank will survive. If there is further economic trouble then the situation could even get worse. He says that the bank may find it difficult to pull itself out of this rut unless something dramatic happens. The survival, says the analyst, would ultimately depend on capital injection. If an investor comes forward then only the bank would survive.
Arnold says it happens when a company is under duress. The fault could lie with the company or with that of the industry. IndyMac’s CEO Michael W. Perry had earlier expressed frustration at the problems happening countrywide. Things have been going from bad to worse. The year has progressed quite badly.
Experts suggest that unless more jobs are created the situation will not improve. With more employment, people will be able to make their mortgage payments timely and that would automatically give the necessary push to the moribund housing sector.
- Spurt in Sales of Foreclosed Properties
- Foreclosure Climate Changes Spirit of Competition to Cooperation Among Contractors
- Bouncing Cheques Issued by Title Companies Lead to Foreclosures
- Increase in Foreclosures Prompting Class Action Legal Suits
- Avoiding Foreclosures by Walking Away From Loans are not Without Problems
- Foreclosure Assistance Being Taken on Tour by Housing Advocate
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