The US regulators has just closed the Californian mortgage lender IndyMac, which failed to secure funding to cover $900 million of losses.
As bank failures go, this is a big one. After IndyMac was America's second-biggest independent mortgage bank and ninth largest mortgage lender overall. It had $32 billion of assets, at least on paper. Furthermore, IndyMac had around 10,000 depositors had funds in excess of the insured limit $100,000. Depositor losses could exceed $1 billion, which will do wonders for depositor confidence.
The IndyMac failure would be bad enough, but the ongoing troubles at the quasi-state mortgage lenders - Freddie Mac and Ginnie Mae - have overshadowed IndyMac's demise.
Lines are now being crossed that would have seemed inconceivable three years ago. US house prices have fallen faster and further than at any time since the great depression, Bear Stearns is no more, while the Freddie and Fannie are just days away from the biggest bailout in history. Other US retail banks look vulnerable and could follow IndyMac.
The US financial system is now in deep trouble.