Fear: IndyMac checks not accepted

Banks Reportedly Not Taking IndyMac Checks
Finally able to withdraw their money, customers can’t open new accounts.

AP updated 10:41 a.m. ET, Thurs., July. 17, 2008

LOS ANGELES - The frustration didn't end for some IndyMac customers when they finally were able to withdraw their funds from the failing Southern California bank seized last week by federal regulators.

Some people have run into more problems when they tried to deposit IndyMac cashier checks at other banks.

Sheryl MacPhee said she waited in line two hours Tuesday at an IndyMac branch in San Marino to liquidate a certificate of deposit. But when she took it to a Washington Mutual branch in South Pasadena to deposit, she said a manager told her their new policy was not to accept IndyMac checks. If the customer insisted, she said she was told, it could take eight weeks or more to access the full amount.

"Sure, IndyMac will give you a check," MacPhee told the Los Angeles Times, "but what good is it if no other institution will accept it?"

WaMu spokeswoman Olivia Riley said her bank is accepting IndyMac checks, "but depending on the specifics, funds will be subject to an extended hold period."

Officials at the Office of Thrift Supervision said that regulating agency is investigating complaints about the checks.

Wells Fargo is placing holds of up to nine business days on many IndyMac checks. That hold policy applies to checks from other banks, just not as often as those from IndyMac, Wells Fargo spokeswoman Mary Trigg said. Her company is concerned that "people could be taking advantage of this situation by creating fraudulent checks," Trigg said.

The Office of Thrift Supervision transferred control of IndyMac to the Federal Deposit Insurance Corp. on Friday because it didn't think IndyMac could meet depositor demand.

William Ruberry, a spokesman for the federal Office of Thrift Supervision, said the agency has received several reports about problems that IndyMac account holders have had transferring their money.

"Our position is that other institutions should honor IndyMac checks," he said, "and we're looking into the situation."

Over the weekend, it became IndyMac Federal Bank, FSB, and by Monday morning the scramble by bank customers to recover their money was on.