Getting the name straight

What exactly is IndyMac? A mortgage company? A thrift? A bank? Well, yeah. Much of the media coverage has been fast and loose in designating the Pasadena-based company that was taken over by regulators. The confusion is understandable considering that many of the functions of banks and thrifts have morphed over the years. Over at grumpyeditor.com (HT to Talking Biz News), some explanations are provided, starting with the description of IndyMac as a "bank."

That was partially correct --- but technically wrong. What confuses things is “bank” in the name of the institution. The full name of the failed operation: IndyMac Bank, FSB. The FSB stands for federal savings bank, which is different from a commercial bank such as Bank of America. A savings bank’s primary purpose is accepting deposits and putting those funds to work as a mortgage lender. Clouding things somewhat is that since deregulation in the 1980s, a savings bank can offer services competitive with many commercial banks. Along with savings and loan associations, savings banks also are called “thrifts.” So thrift, correctly, should be in headlines and texts relating to IndyMac.