IndyMac Seized by Regulators (Update)

The mortgage lender on late Monday said it would stop making most new loans and would cut half of its 7,200 employees in an effort to address the capital concerns raised by OTS.

On late Tuesday it said it would sell a majority of its retail mortgage branches to Northbrook, Ill.-based Prospect Mortgage, part of an effort to address its regulator's concern that it is not "well-capitalized."

OTS said it began an examination of IndyMac in January.

"With no viable alternatives and insufficient liquidity, IndyMac was placed into receivership," OTS said in the statement.

TheStreet.com last week noted IndyMac's dire predicament, pointing out that the development portends bad news for other troubled thrifts like Washington Mutual(WM Quote) and Downey Financial(DSL Quote).

Depositors are insured by the FDIC up to the statutory limits. A successor institution to IndyMac run by the FDIC should open Monday morning, but will have no access to banking services online and by telephone this weekend. They can continue to access funds this weekend by ATM, through other debit card transactions and by writing checks. Online banking and phone banking services will be available again on Monday.