First Fed seized

Just too many bad loans in that mortgage portfolio. The 80-year-old savings and loan was taken over by federal regulators late Friday, with Pasadena-based OneWest Bank assuming all deposits, as well as FirdFed's 39 branches. The bank will reopen on Saturday under the OneWest name. OneWest may not ring a bell, but it's basically the former IndyMac - and many of its managers are well versed with troubled loan portfolios. Just a week ago, Babette Heimbuch stepped down as CEO of FirstFed and noted in prepared comments that "both the bank and the economy are experiencing positive trends." Obviously not positive enough - FirstFed had been desperately trying to raise enough capital to fall within the levels required by the government. From the Business Journal:

FirstFed has been a fixture in the area since opening its doors in downtown Santa Monica in 1929, taking deposits and offering personal and home mortgage loans. In 1983, the institution began offering adjustable-rate mortgages, which would become a core product offering. Over the past decade, however, with Wall Street securitizing mortgage loans in large numbers, competition grew heated, driving down underwriting standards. In a recent interview, FirstFed executives admitted to dropping their own standards during the boom times, but said they tried to cut back well before the crash.

It's been a busy day for regulators. Also this afternoon, La Jolla-based Imperial Capital Bank was seized, and the FDIC announced that City National will take over all deposits. All told, seven banks around the country have been shut down. (MarketWatch)