The bankruptcy trustee overseeing the liquidation of IndyMac Bancorp Inc. (IDMCQ) will seek court approval Tuesday to obtain documents from the collapsed company's former auditor. The trustee, Alfred H. Siegel, wants access to "all books records and papers" related to IndyMac and its former thrift, IndyMac Bank, now in the possession of accounting firm Ernst & Young LLP.
Ernst & Young, which audited IndyMac's books from 2004 to 2008, hasn't agreed to hand over the documents, according to Siegel. He's asking the Los Angeles bankruptcy court to order the accounting firm to give him access to the documents.
Siegel believes the parent "downstreamed" cash to the bank to shore up its finances. That downstreaming was at the root of the U.S. Treasury Department inspector general's probe of the Office of Thrift Supervision in connection with a back-dated capital infusion into the bank shortly before its collapse.
The $50 million capital infusion allowed the bank to be classified as "well capitalized," enabling it to offer brokered deposits. Such deposits offer higher yields to consumers but pose a greater risk to the FDIC's deposit-insurance fund.
The Federal Deposit Insurance Corp. has been in control of the thrift, now known as IndyMac Federal Bank, since authorities seized it in July. The FDIC wants to sell the failed California thrift to a holding company owned by a group of hedge funds and private equity firms.
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