Inside the FDIC. Bovenzi John F.

also the chief operating officer and president of the new bank. Our new board of directors already had met for several hours over the weekend to address a variety of issues. Interest rates were set for new deposits, at a lower level than what the bank had previously paid. Existing delegations of authority had been ratified so the bank's employees would have the authority to continue to do their jobs.

      We also had ensured that the bank's call center was ready for the onslaught of phone calls that would begin Monday morning. Question-and-answer forms had been prepared to help the bank's employees respond to the most likely questions. By the time I went to bed Sunday night, following very little sleep the previous two nights, I felt that we had done everything we could to get ready for the bank's reopening. But we hadn't.

      Early the next morning, lines of people started to form at each of the bank's 33 branches. Television cameras were there to capture it all. The camera crews' trucks extended far down the street outside of the bank's headquarters. Local, national, and international-based reporters began interviewing the people waiting in line at the branch office located on the first floor of the headquarters building.

      I went outside to talk with some of the people who were waiting in line. A few of them were angry, but most were not. Each person I talked with wanted to have a chance to explain his or her situation. I listened to as many people as I could and then tried to explain to them that they did not need to wait in line but, for the most part, to no avail. They wanted to get their money back. Reporters came over to interview me throughout the day. I also walked up and down the street with David Barr from the FDIC's press office so we could talk with each waiting reporter. As soon as one round of interviews was complete, another round started. This was fine with us because we wanted to take every opportunity to reassure the bank's customers and the general public that there was nothing to worry about.

      We also wanted to help everyone get into the bank's branches as quickly as possible, but that wasn't easy. The branches were fairly small and could accommodate only a few people at one time. We brought in some local FDIC bank examiners to help work inside the branches. Volunteers from the bank's staff also came to help as well.

      As the day went on, it became much hotter outside. A few of the people waiting in line had anticipated the summer heat and brought lawn chairs with them. Others stood. One woman standing near me while I was being interviewed fainted and fell to the ground. I didn't see her fall; I only heard her head hit the cement. (The reporter and I promptly ended our interview, assisted the woman, and called 911). Some of the camera crews started to film the woman as she was lying on the ground. Other people waiting in line came over to shield her from the cameras. Soon an ambulance arrived and took her to a local hospital, where she was treated and released the same day.

      After that unfortunate event, we set up canopies over the people in line to provide them with some protection from the midday sun. We also brought out food and water. The media remained, continuing to interview the bank's customers and me, sometimes at the same time. CNN aired new interviews every half-hour.

      Late in the afternoon, we put a numbering system in place for the people still in line. Everyone was told when they could get into the bank, depending on their number. This made a real difference. The people in line left once they knew they had a designated time when they could get into the bank, even if that time was sometime the next day.

      In retrospect, I wish we had thought of the numbering system earlier or that we had made separate arrangements for the uninsured depositors. If we had rented conference rooms for the uninsured depositors at hotels (away from the bank's branches), we would have been able to better address their questions and might have avoided the long lines that formed outside of the bank's branches that day.

      A few hours after the bank's branches closed for the day, I went to the hotel to get some sleep. I had a live interview scheduled with CBS Morning News for their 6 A.M. show, which was 3 A.M. on the West Coast. I had my wake-up call set for 2 a. m.

      I arrived outside the bank a little before the scheduled interview time. The person interviewing me was in New York, so I would be hearing his questions through earphones. It was pitch black outside, and bright camera lights were shining on me, so I couldn't see the camera lens. The cameraman put a piece of light-colored masking tape on the bottom of the lens. That worked. I could see where I was supposed to be looking. But all I remember about that interview was that I did my best to have an intelligent conversation with a piece of masking tape.

      Two FDIC employees, David Barr and Rickey McCullough, were with me that morning. Both had been talking with the press the day before from morning through nightfall. Now what we really wanted was some coffee. But before walking off the bank's premises, we saw someone waiting alone in front of the branch door. It wasn't even 4 a. m. Rickey went over to talk with him to let him know that he didn't need to be there. He thanked Rickey and said that he understood, but he couldn't sleep, so he was going to stay.

      We hoped that the numbering system we had put in place would mean there would be no lines of people that morning. We did not need another day of news stories featuring a run on the bank. The public already was on edge. Their concerns extended well beyond IndyMac. Many weren't sure if their money was safe in other banks as well. It was important that we calmed the situation as soon as possible.

      Federal deposit insurance was designed to prevent this type of panic. But the more people I had talked with, the more I realized how little many people understood deposit insurance. Many of the people waiting in the lines had total deposits that were far less than the $100,000 deposit insurance coverage limit, yet they were worried. I realized we needed to do a far better job of educating everyone about deposit insurance.

      The media didn't help. We wanted them to educate their audiences that if you had $100,000 or less in any bank, then your money was completely safe. While some in the media were helpful in that regard, a majority seemed to prefer emphasizing the more sensational scenes that only added fuel to the fire.

      When we opened for business Tuesday morning, I was pleased to see that no one was waiting in line in front of the branch door at the bank's main building. I stood in front of that branch door for a televised interview so everyone could see how quiet it was at the bank. I felt we had turned the corner.

      My pleasure was short-lived. After the interview, the reporter told me that no other reporters were there because they were at one branch in Encino where a small riot was under way (the bank's 32 other branches were peaceful). Apparently, two sets of numbers had been handed out the day before. A third set was given out that morning. As a result, there were three groups of people trying to get into the branch, leading to some fairly heated arguments.

      One of the bank's managers visited that branch to restore order. Despite taking more than a slight amount of abuse, he settled the crowd within half an hour. There were no more lines after that. Nevertheless, we now had one more day of worldwide news coverage that showed agitated depositors waiting to withdraw their money.

      Even though the lines were gone, people kept withdrawing money – totaling about $3 billion in the two weeks following IndyMac's closure. In one sense, the withdrawals were not a big concern, as we were not going to run out of money. The FDIC owned the bank and was ready to provide it with whatever amount of money was needed. Our broader concern was that these withdrawals probably indicated that people across the country were worried about the safety of their money.

      Whenever I had the chance, I explained to the bank's customers and to broader audiences that as a government-owned bank, IndyMac Federal Bank was as safe as any bank in the country. But even that raised some questions. One woman who passed by me on the street stopped to ask me if I could guarantee that the federal government would never fail. Clearly, she was concerned. I was taken aback by her question. I told her that there was nothing safer, but her question was one more indication of diminished public confidence in the financial sector and the federal government.

      One unexpected problem arose in the days following IndyMac's closure: many of the bank's customers started to complain that other banks were placing excessively long holds on their checks or, in some cases, were not accepting them at all.

      When IndyMac's depositors withdrew their money, they were given an official government