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IndyMac Unable to Raise Added Capital
In a letter sent to shareholders, IndyMac Bancorp (IMB 0.71) stated it has not been successful with efforts to raise additional capital. Further, the company does not expect to be able to raise capital until there is more stability and less uncertainty in the housing and mortgage markets.
Based on information provided to regulators, the bank is no longer considered well capitalized. IndyMac has been asked to submit a new business plan for review and approval as a result.
While the traditional method of improving the bank's safety and soundness would be to sell assets to improve capital ratios and shrink its balance sheet, there are no bids for many of IndyMac's mortgage loans and securities. Notably, a fire sale would likely deplete the firm's capital further.
IndyMac also stated it expects losses during the second quarter to be larger than the first quarter. The bank also said it will be slashing its workforce by more than 50% during the next couple of months.
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