Bank Rescued By FDIC

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The federal government is taking action to try to restore faith in some of America's biggest financial institutions, cracking down on mortgage lenders, shoring up the mortgage giants Fannie Mae and Freddie Mac, and taking over and reopening the failed bank IndyMac. Meanwhile, the stock price of some of the biggest banks tumbled today. Washington Mutual lost nearly 35%. National City fell nearly 15%, and IndyMac, it was off 39%. Bill Whitaker in California begins our coverage tonight. What we're going to do is we're going to let about 10 people, 10 to 15 people in at a time. Hundreds of anxious depositors lined up outside the Pasadena headquarters of IndyMac Bank today, clamoring to get their money out, even though the bank is now in hands of the federal government. Well, I have a CD here, and I want to withdraw it and put it in another bank. The Federal Deposit Insurance Corporation took over IndyMac after depositors, worried about its solvency, made a run on the bank Friday. IndyMac, which had assets of more than $32 billion, another victim of the mortgage mess. Flying high in 2006 on risky mortgage loans, today being run by Uncle Sam. As the new federal CEO was giving yet another interview, a woman in the long line fainted. On loan from the FDIC, the new bank chief says his biggest job calming depositors' jitters. So, I just want to reassure people. If 98% of the people do business with a bank have less than $100,000 in in their accounts, they don't have to worry about anything. Their money is completely protected. But those with more than $100,000 in the bank are in trouble. Naseem Ahmed had deposits well over the insured limit. Right now, the FDIC is promising only 50 cents on every dollar over 100,000. But I never thought, I mean, your liquid money, just real money, it's might be in danger. The percent of uninsured deposits has doubled since 1992, climbing to 37% of the more than 7 trillion in deposits in US banks. 10,000 IndyMac customers had more than 100,000 in their accounts. Financial strategist Richard Bove says we need to take a collective deep breath. Most of the big banks in this country were not in the danger zone in any way, shape, or form. Cold comfort for these folks who've been waiting for hours trying to find out what's happened to their money. The bank says those who don't get in by closing today, and that could be many of them, will just have to come back tomorrow. Katie. Bill Whitaker reporting from Pasadena tonight. Bill, thank you.

FDIC Takes Over Indymac

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Federal banking officials say the new IndyMac Bank opening this morning is sound following the second biggest bank failure in US history. CBS News correspondent Bill Whitaker joins us from Pasadena, California with more. Bill, good morning. Good morning, Jeff. When this bank reopens this morning, it will be in different hands, the FDIC's or the Federal Deposit Insurance Corporation's. The federal government wants to calm customers' jittery nerves and convince them that it's business as usual. But as they say, that remains to be seen. The sign on the bank door says it all. The small print reads closed for business. IndyMac, one of the nation's largest mortgage lenders, was declared unsafe and unsound and taken over by federal regulators. This bank is now being operated by the FDIC. Uh the FDIC, over the next 90 days or so, will begin to market this bank to try and get it back into private hands. Over the weekend, the ATMs were operating, but the bank was closed even as its new CEO tried to reassure customers. I want to emphasize that customers should know that their insured money is safe. But that's not the whole story. The FDIC only insures deposits up to $100,000. Anyone with more than that might be in trouble. I'm very angry, very upset about this. I want to know withdraw all my money. Uh I've got a CD. I've got a approximately $100,000 in IndyMac. The one-time mortgage giant is the latest victim of the mortgage meltdown. A week ago, the lender laid off more than half its employees. By Friday, its stock was virtually worthless. With politicians and bankers pointing fingers, New York Senator Charles Schumer vehemently denies that a letter he wrote pointing out risks at the bank triggered this run and collapse. Everything that was talked about in our letter was already public. So, there were no new revelations in our letter at all. The FDIC has been working around the clock trying to find a buyer for this bank. Ominously, the FDIC says it has a list of 90 troubled banks around the country. And believe it or not, the IndyMac bank here wasn't even on the list. Jeff. Mhm. Bill Whitaker in Pasadena, California. Bill, thank you.

Dow falls 45 despite Fannie-Freddie rescue; Fed issues new lending rules

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Wall Street fell again as concerns about the credit crisis outweighed a government rescue plan for mortgage lenders Fanny May and Freddy Mack. After soaring triple digits in the first minutes of trading, the Dow finished down 45 points. The NASDAQ closed down 26. The Federal Reserve will let Fanny and Freddy borrow money at a discounted rate to prevent their financial collapse. The two governmentbacked lenders handle more than half the mortgages in the country and their debt is now an astounding $5.3 trillion. Experts say their collapse would the mortgage industry and trigger a depression. But investors are concerned that other lenders will collapse. California's Indie Mack went under last week and now there's concern that others are also in jeopardy. The Federal Reserve wants to prevent future meltdowns. It announced new rules today to protect home buyers from the shady lending practices that led to the credit crisis. Also keeping stocks down, the high price of oil. President Bush lifted an executive ban on offshore oil drilling, but Congress must lift its own ban before any drilling can actually begin, and that won't provide relief for drivers anytime soon. And a new king of beers is about to be crowned. And Heiser Bush has accepted a $52 billion buyout offer from the Belgian brewer InBev. The deal, which still needs to be approved by stockholders and regulators, would create the world's largest brewer. And that's your money watch. Be sure to log on to cbsnews.com for more business headlines at the New York Stock Exchange. I'm Alexis Christopherus.

Fannie, Freddie rescue plan; Dow below 11,000

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Washington's ready to lend Fanny May and Freddy Mack a helping hand treasury secretary Henry Paulson announced yesterday he'll ask Congress to help the mortgage Giants get a better deal on loans from the Federal Reserve this after last week's historic losses for the two companies who've dropped 11 billion do in the past 9 months Wall Street Begins the week at its lowest level in nearly two years the Dow Jones Industrial Average slipped below the 11,000 Mark Friday on those mortgage Fallout fears and another spike in oil prices at the closing bell the Dow lost 128 points the NASDAQ finished off 18 investers have a busy week as the earnings parade picks up steam will be getting financial report cards from a slew of companies including Intel Google City group and Coca-Cola Wall Street will also be watching for economic reports on everything from inflation to home construction and the American king of beer looks ready to turn Belgian anheiser Bush says it's agreed to to Belgian beer maker inbev the merger will produce the world's largest Brewer and the fourth largest consumer product company worldwide and that's your money watch log on to cbsnews.com for more in New York I'm Claire Lea

U.S. Banks In Crisis

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the federal government is stepping into it to stabilize Fanny May and Freddy Mack the two mortgage Giants that have been threatened by the housing crisis that's rattled both Main Street and Wall Street CBS News correspondent priia David is at the New York Stock Exchange with more this morning good morning Pria Harry good morning well Wall Street is very concerned about what this week will hold particularly Following last week's stock price nose dive for both institutions and the federal government's announcement that it's stepping in to help Fanny and Freddy Mack isn't helping calm any nerves the Asian markets are both down this morning Japan's Nik index is off 2% Hong Kong's hangsang index off almost a full percentage point and that's because International investors are starting to question just how deep America's debt problems really are Fanny May and Freddy Mack are huge companies that together hold or guarantee almost half of all mortgages in this country more than $5 trillion total both government sponsored Enterprises are rapidly losing money and stock mining confidence in the economy which is why the Bush Administration wants a rescue package it would let the government buy stock in both Fanny May and Freddy Mack and allow both to borrow more money the government will step in uh the marketplace will step in uh you know the housing Market's not going to completely stop functioning in America that's just that's just not going to happen in fact it's been said both companies are too big to fail but that doesn't mean there won't be some repercussions for homeowners and home buyers while it won't affect your current payments it could soon become a little harder to get a new loan or refinance an existing one the real estate related problems don't end there today the aggressive Mortgage Bank IND dmac reopens but is now being run by the feds it's the fifth bank to fail just this year and analyst art Hogan is not so sure it'll be the last could another bank blow up is there another major surprise for us it's it's definitely possible and there will be a critical test of confidence this morning as Freddy Mack is expected to auction off $3 billion doll worth of short-term debt bonds Harry and what happens with that auction is going to have a lot to do about their future all right cbs's priad David on Wall Street joining us now is Senator Christopher Dodd chairman of the Senate Banking Committee good morning sir good morning Harry do uh Freddy Mack and Fanny May need to be rescued by the federal government well not necessarily first of all I think the actions being taken by the administration are probably the right steps we talked over the weekend I'm going to have both uh chairman bernacki and I'm asking Henry Paulson the Secretary of the Treasury and Chris Cox to be before the Banking Committee tomorrow morning to for fully explain these actions uh we need to pass the legislation that was adopted by the Senate on Friday evening dealing with the reforms of the gses are critically important and and indy Max we're going to have hearings on that Chuck Schumer's asked for hearings I agree with him on it we ought to be looking exactly what happened with that bank I think these are the right steps what's important Harry here as well is to calm people's fears there a lot of fear here and fear isn't exactly facts uh these Gs are very well capitalized capitalized at more than adequate levels they did never they weren't beat Bottom Feeders when it came to these subprime mortgages like other Banks were so there's a lot more reason to have some confidence in what's going on here than to have people get a run uh here or have fear take over so this is a very important week but I'd encourage people out there to be calm about this this is not a time for people to be engag any kind of Scare Tactics however comma we just talked about indac which is this big Bank out in California they're the one of these banks that made these crazy mortgages no look mortgages no paper mortgages nothing they had to be taken over by the FDIC there was a practical run in the Bank last week already the a lot of the newspapers this morning reporting there'll be more to come how many do you expect will go down I don't expect many more Sheila bear who's the head of the FDIC has indicated there are problems and as you point out very accurately here there's a big dis difference between indymax and Fanny and Freddy indymax was engaged in these very very bad mortgages luring people into Deals they could never afford that's not the case with Fanny and Freddy so there may be some more but I'm I'm more optimistic about Fanny and Freddy than I am some of these Banks let me ask you also then very quickly we feel like we're in a world financial World turned upside down Abu Dhabi buys the Chrysler Building last week inbev from Belgium is getting ready to purchase just Budweiser beer what kind of a world are we living in right now well a very different one and this is the uh one of the real challenges and obviously at the center of all of this economic crisis again as you pointed out is this housing crisis and foreclosures 8 to 9,000 people every day are filing for foreclosure unfortunately this didn't have to happen Harry going back some time had The Regulators been on the job and doing the job they should have been doing years ago then we wouldn't have had the problem with so many millions of Americans being lured into Deals they could never afford so we need to stabilize the situation as I hope we will this week pass this legislation we've talked about that could do a great deal to keeping people in their homes and then get our economy back on a solid footing Senator Chris D we thank you for your time this morning sir do appreciate it thank you Harry