IndyMac said on Tuesday that depositors had continued to withdraw money at “elevated levels” since June, when a senator urged regulators to monitor closely the bank’s condition.
The disclosures, which were made in a regulatory filing, came a day after the beleaguered US mortgage lender said it was shrinking its business drastically because it was was no longer well capitalised, raising concerns it could fall victim to the credit crisis.
The bank said that Senator Charles Schumer’s letters, which he made public last week, had also prompted key lending counterparties to place additional restrictions on IndyMac’s borrowings.
Indymac said that as a result of the withdrawals and more stringent lending conditions, its current operating liquidity was about $1.7bn, down from more than $4bn in May.
Last week, the lender said Mr Schumer’s letters to regulators had prompted its customers to withdraw $100m in deposits in a single weekend.
IndyMac’s shares fell 38 per cent to 44 cents in New York on Tuesday. The stock has fallen more than 90 per cent year-to-date.
In his letters, Mr Schumer said that IndyMac’s “financial deterioration poses significant risks to both taxpayers and borrowers” and questioned the bank’s use of brokered deposits to fund its growth.
He sent the letters to the Federal Deposit Insurance Corporation, which insures bank deposits; the Office of Thrift Supervision, IndyMac’s primary regulator; and the Federal Housing Finance Board. The finance board regulates the 12 regional Federal Home Loan Banks, which are owned by banks and thrifts but chartered by Congress to make loans against bank mortgage collateral.
The California-based bank said in a letter to shareholders on Monday that it had been unable to raise new capital and that it would be forced to stop taking new loan applications and cut half its workforce. On Tuesday it sold the majority of its retail mortgage branches to Prospect Mortgage.
The bank said that asset sales would probably deplete capital further, as IndyMac would be selling into markets already severely depressed.
Michael Perry, the chief executive of IndyMac, said in the letter: “We have been working with our investment bankers to raise additional capital. To date, we have not been successful with these efforts.”
As the bank’s stock price tumbled, analysts questioned whether the bank’s common shareholders could recover any value from Indymac’s lending business in the light of continued home price declines, management’s higher loss estimates and the company’s decision to stop new mortgage originations.
