Harman and MB woman recover IndyMac deposits

Congressional Representative Jane Harman

Congressional Representative Jane Harman congratulates Manhattan Beach Chamber of Commerce Sylvia Singleton , who found her job through the South Bay Work Investment Board. Looking on is Chamber CEO Helen Duncan. The Chamber is one of a dozen local agencies and businesses, including Manhattan Bread and Bagel and the City of Redondo, who have hired new employees through the federal stimulus program. Photo

In April, 2008, Manhattan Beach resident Lisa Marshall and her family deposited their life savings in IndyMac Bank, after being offered what she called a “teaser interest rate.”

“Ten weeks later the bank closed,” she said. “I was told I wasn’t getting my money back.”

Marshall declined to say how much she deposited, but it was in excess of the $100,000 covered by Federal Deposit Insurance.

She and other IndyMac depositors lost a combined $533 million in uninsured deposits when the bank failed in July, 2008.

Three months later Congress enacted the Emergency Economic Stabilization Act in October 2008. The bill increased FDIC coverage to $250,000, but it was not retroactive. IndyMac was one of six banks nationwide that failed shortly before passage of the bill.

In December, 2008, Marshall started a website and blog called IndyMacDepostiors.com, where she and others shared mutual plights.

A widow reported losing more than half of her late husband’s insurance dividend. Another woman lost $63,000 of her disability insurance. A single mother lost $360,000 she had deposited from a home sale into IndyMac for safe keeping before buying another one.

Marshall said many IndyMac customers were led by bank employees to believe that they were insured for more than they actually were.

“The bank would tell you you’re insured as long a you have enough beneficiaries,” she said. “But then they wouldn’t always list all the beneficiaries. They left one off, in my case.”

In the summer of 2009, Congresswoman Jane Harman was contacted by constituent and IndyMac depositor Donald Lawrence. In December, Marshall brought a dozen other IndyMac depositors to Harman’s El Segundo office to relate their stories.

“IndyMac was the largest savings and loan in the Los Angeles area [and the seventh largest in the country]. Its downfall hit California especially hard,” Harman said. “Imagine your child’s education fund practically wiped out overnight. Imagine your retirement nest egg decimated.”

Last fall, Harman introduced an amendment to the Dodd-Frank Wall Street Reform and Consumer Protection Act that would retroactively increase deposit insurance to $250,000 for depositors with institutions that failed between January 2008 and October 2008, such as IndyMac.

The amendment did not pass the Rules Committee.

“Congress has spent hundreds of billions of dollars to bail out Detroit and Wall Street, but today turned its back on Main Street,” Harman said at the time. “My amendment to make IndyMac depositors whole would have cost pennies in comparison, and would have helped thousands of Americans, including hundreds in the South Bay, make mortgage payments, send their kids to school or enjoy a secure retirement.”

With the input and support of House of Financial Services Committee Chairman Barney Frank, Harman then drafted the Investor Deposit Yardstick (INDY) Act, which was introduced to Congress in May, adopted as an amendment in June and signed last month by President Barack Obama.

The FDIC initially estimated that the amendment would cost a total of $243 million to compensate depositors of all six banks, with $233 million going to IndyMac depositors alone.

“These people were the victims, not the cause, of the banks’ collapse,” Harman said. “Giving their depositors the same protection provided to all depositors just three months later is the right thing to do.”

The FDIC scheduled July 22 as the deadline to mail Consumer Financial Protection Agency funds to depositors of the six banks. The other banks were ANB Financial, Columbian Bank & Trust, First Priority Bank, Hume Bank and Silver State Bank.

So far, a reported $180 to $200 million has been restored to depositors.

“[Harman] helped loads of families in the South Bay,” Marshall said. “She’s helped people from San Pedro clear on up to Venice and all over California.” ER


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