Banking regulators seized IndyMac Bancorp, one of the country’s largest mortgage lenders, on Friday evening.

The bank, a star in the subprime era, is the second largest ever to fail and the first major bank to shut its doors since the savings and loan crisis of the 1980s.

The bank collapse came after a frenzied week as IndyMac’s executives tried — and failed – to bolster the bank’s financial footing. The bank, based in Pasadena, Calif., said on Monday that it had stopped making new loans and announced layoffs of more than half of its 7,200 workers. But IndyMac’s customers — afraid their savings might disappear – stampeded tellers, demanding their money back.

The run on the bank came after a critical letter about the bank’s future written by Senator Charles Schumer, Democrat of New York. Federal regulators said on Friday that Mr. Schumer’s letter had pushed IndyMac into collapse, causing the bank run and scaring away potential acquirers.

“The senator made comments in his letter questioning the viability of the institution,” John M. Reich, director of the Office of Thrift Supervision, said on a phone call with reporters. “When a member of the United States Senate makes such a statement, it frightens depositors.”

In the days after Mr. Schumer’s letter was released on June 26, IndyMac customers withdrew an average of $100 million a day from the bank, or a total of $1.3 billion, the government said. Before Mr. Schumer’s letter, the bank had been receiving net inflows of money from depositors, Mr. Reich said.

Mr. Schumer, who has been critical of bank regulators for months, released a statement, in turn, criticizing Mr. Reich’s agency.

“If O.T.S. had done its job as regulator and not let IndyMac’s poor and loose lending practices continue, we wouldn’t be where we are today,” he said.

For all the write-downs and bad news on Wall Street over the last year, few regional and local bank have shut their doors. The Federal Deposit Insurance Corporation listed just 76 troubled banks in its report in April. The handful that have failed have been a fraction of the size of IndyMac. IndyMac held $30 billion in deposits as of late March, according to the government release.

“It’s the biggest failure in 24 years,” said Chip MacDonald, a banking lawyer at Jones Day in Atlanta. “You haven’t had a lot of failures of that size, yet.”

IndyMac’s collapse was unrelated to the market worries about Fannie Mae and Freddie Mac, the big mortgage finance companies.

Meanwhile, CNN is reporting on Sunday morning that IndyMac Bank, closed will reopen Monday with a new charter and a new name — IndyMac Federal Bank.

The following press release was released by the FDIC:

IndyMac Bank, F.S.B., Pasadena, CA, was closed today by the Office of Thrift Supervision. The Federal Deposit Insurance Corporation (FDIC) was named conservator. The FDIC will transfer insured deposits and substantially all the assets of IndyMac Bank, F.S.B., Pasadena, CA, to IndyMac Federal Bank, FSB. Brokered deposits will be held by the FDIC and those insured deposits will be paid off when the insurance determination is complete. IndyMac Bank, FSB had total assets of $32.01 billion and total deposits of $19.06 billion as of March 31, 2008. As conservator, the FDIC will operate IndyMac Federal Bank, FSB to maximize the value of the institution for a future sale and to maintain banking services in the communities formerly served by IndyMac Bank, F.S.B.

Insured depositors and borrowers will automatically become customers of IndyMac Federal, FSB and will continue to have uninterrupted customer service and access to their funds by ATM, debit cards and writing checks in the same manner as before. Depositors of IndyMac Federal Bank, FSB will have no access to on-line and phone banking services this weekend. These services will be operational again on Monday. Loan customers should continue making loan payments as usual.

Beginning on Monday, July 14, IndyMac Federal Bank, FSB’s 33 branches will observe normal operating hours and will continue to offer full banking services, including on-line banking. For additional information, the FDIC has established a toll-free number for customers of IndyMac Federal Bank, FSB. The toll-free number is 1-866-806-5919 and will operate today from 3:00 p.m. to 9:00 p.m. (PDT), and then daily from 8:00 a.m. to 8:00 p.m. thereafter, except Sunday, July 13, when the hours will be 8:00 a.m. to 6:00 p.m. Customers also may visit the FDIC Web site for further information.

At the time of closing, IndyMac Bank, F.S.B. had about $1 billion of potentially uninsured deposits held by approximately 10,000 depositors. The FDIC will begin contacting customers with uninsured deposits to arrange an appointment with an FDIC claims agent by Monday. Customers can contact the FDIC for an appointment using the toll-free number above. The FDIC will pay uninsured depositors an advance dividend equal to 50 percent of the uninsured amount.

Based on preliminary analysis, the estimated cost of the resolution to the Deposit Insurance Fund is between $4 and $8 billion. IndyMac Bank, F.S.B. is the fifth FDIC-insured failure of the year. The last FDIC-insured failure in California was the Southern Pacific Bank, Torrance, on February 7, 2003.

(Source: NY Times / FDIC / CNN)