Hall of shame for IndyMac ex-CEO

The fate of IndyMac (IMB) shows why investors have so little confidence in the financial sector right now. The Pasadena, Calif., bank’s IndyMac Bank unit was seized Friday by the Office of Thrift Supervision and placed under conservatorship by the Federal Deposit Insurance Corp. The bank’s failure is the biggest this year and could cost the federal deposit insurance fund as much as $8 billion, the FDIC said. Depositors whose accounts were above the FDIC limit could lose as much as $1 billion, though losses are likely to amount to just a fraction of that figure as the FDIC sells bank assets to bridge the gap.

IndyMac stock has been under intense pressure for the past year time, thanks to the billions of dollars in questionable loans the firm made during the housing boom. Last Monday, IndyMac fired half its workforce as it shut down its lending business in a last-ditch effort to stay afloat. “In this very difficult and challenging environment,” then-CEO Mike Perry wrote in a note to shareholders July 7, “any of the actions that we take to keep Indymac safe and sound unfortunately have negative consequences to some important constituency.”

What’s remarkable is that just two months ago, Perry was calling the plunge in the company’s stock unwarranted, even as house price declines accelerated. “Given the decline in our stock price, some people have questioned Indymac’s survivability in the current environment,” he wrote back on April 30, with IndyMac shares trading at $3.25 apiece. “I am here to tell you that I believe we have turned a corner and that our business is improving.” Sen. Chuck Schumer surely hasn’t covered himself in glory in this episode, but it’s hard to match Perry for sheer shamelessness.