A $50 million margin call? I'll short Wall Street.

Thursday, June 2008, 7.

Pasadena, California.

It was already bright when Maria Sanchez parked her Honda Civic in the employee parking lot of the IndyMac Bank Ville Avenue branch at 6:11 a.m.

Dawns come early in Southern California in July, and the sky is so clean it looks like it's been wiped clean.

She is the deputy manager of this branch.

She's 43 years old and has worked at IndyMac for eleven years, working her way up from a teller to a higher-ranking employee. Her annual salary is $54,000, which can reach a little over $60,000 with performance bonuses. It's not a lot, but it's enough for her and her husband to raise their two children in Altadena.

She arrives at her post at 6:15 every morning, and the bank opens at 8:30. The two-plus hours in between are her preparation time—checking the system, verifying transaction records, replenishing ATM cash, and confirming interest rate adjustments. For eleven years, the order of each step has remained unchanged.

She got out of the car carrying a lunch bag—leftover chicken burritos from last night and a bottle of Pepsi—and headed for the back door.

She saw it before she even got there.

Outside the parking lot's metal fence. On the sidewalk of Ville Avenue. A dozen or so people stood in a somewhat disorderly line along the bank's main entrance.

It's 6:11. There are still two and a half hours before we leave.

Maria has worked at IndyMac for eleven years and has never seen a customer line before the doors open. This branch on Ville Avenue isn't in the heart of the business district, and typically sees forty to fifty customers a day, mostly for deposits, withdrawals, and mortgage inquiries.

She quickly swiped her card and entered through the back door, put down her lunch bag, walked to the floor-to-ceiling window in the front hall, and looked out through the gaps in the blinds.

The line was even longer than before. In the two or three minutes since she came in, five or six more people had joined.

I couldn't see his expression clearly through the glass, but I could make out his outline. At the very front was a middle-aged man wearing an old T-shirt and work pants.

Behind him was an elderly woman carrying a large handbag, her hair dyed a dark red with cheap hair dye. Further behind was a young couple; the woman was carrying a canvas shopping bag, and the man was clutching an envelope.

They were very quiet.

The silence unsettled Maria more than the noise. Noise, at least, indicated that people still had the energy to be angry. But they simply stood there, heads bowed, waiting. With a patience she had never seen behind a bank counter.

It's not the patience to wait for service. It's the patience to wait for a verdict.

She picked up the landline and dialed the cell phone of her regional manager, Peterson.

"Mike, this is Maria from Ville Avenue. There's a line outside our branch. About twenty people. The bank isn't open yet."

There was a pause on the other end of the phone.

"Maria, prepare to open the door as usual. If any customers ask, tell them that IndyMac is operating normally and all deposits are protected by the FDIC."

"Mike, what exactly—"

"Follow the normal procedure."

She hung up the phone.

7:45.

Nalisha arrived at the first counter. Twenty-eight years old, of Filipino descent, her face still bearing traces of freshly applied sunscreen. She walked into the lobby and glanced outside through the blinds.

"Oh my God."

There was nothing dramatic about it. It was just that when you see something that shouldn't be there, your mouth moves faster than your brain.

"When did they start lining up?"

"It was already there when I arrived at six o'clock."

What are they going to do?

"Withdraw the money."

Lisa stared at the line for a few seconds, then turned and put her bag in the locker. She closed the locker a little too hard, the door bouncing softly in the empty lobby.

"Maria, how much cash do we have at the counter right now?"

Maria glanced at the system and read out a number.

Lisa did the math in her head. If each of those people outside took an average of five thousand—which, according to the depositors' profile in this community, is a conservative estimate—then...

"not enough."

Maria didn't reply. Because she had already calculated it.

Eight o'clock. The other two cashiers arrived. Including Maria, there were four people in the branch.

Four people stood facing a line of more than sixty people outside the glass door.

Maria dialed Peterson's number again. This time it rang eight times before he answered.

"Mike, there are more than sixty people at the door."

"I know. It's not just you guys. There are over forty in Corvina, thirty in Monrovia, and nearly a hundred at that shop on Main Street in Pasadena."

All lines. Simultaneously.

"We open at 8:30 as usual," Peterson said. "Process every withdrawal according to normal procedures. If anyone asks if there's a problem with the company, just say that."

What if we don't have enough cash?

Silence. Three seconds.

"I'll have headquarters arrange for an emergency transfer. Open the door first."

8:30.

Maria stood in front of the glass door. Through the door, she could see the face of the middle-aged man at the front of the line. His skin was tanned a deep brown, his eyes were deeply wrinkled, and the knees of his work pants were worn white—the result of long hours of kneeling while working.

Maria took a deep breath, turned the lock, and opened the door.

The heat and the smell of sweat rushed into the business hall at the same time, diluting the coolness of the air conditioner.

The man was the first to come in, went to window number one, and placed the envelope on the counter.

"I want to withdraw all my savings."

Lisa took the envelope, opened it, entered the account number, and retrieved the balance.

Are you sure you want to withdraw the entire balance?

The process requires this question.

The man nodded slightly. The movement was subtle, and his eyes remained fixed.

Lisa began counting the money. The banknotes twirled between her fingers, the rustling sound particularly clear in the quiet branch.

All three windows were open simultaneously. The queue outside moved slowly forward. Everyone who walked in wore the same expression—a quiet resoluteness.

It was 10:00 AM. One and a half hours after opening, the three counters processed over forty withdrawals, far exceeding the daily cash allowance.

Lisa turned her head and lowered her voice, "Maria, I don't have any cash here."

Maria went to the vault and brought back two stacks of cash. After she finished, she peeked out through the blinds.

The line didn't get shorter. It got longer.

Because people who had already withdrawn their money and left encountered neighbors, colleagues, and fellow church members on the road.

"You went to IndyMac?"

"It's gone. It's been retrieved."

"So many people are in line?"

"You should go too."

These conversations took place on the sidewalk, in the supermarket parking lot, and at both ends of a telephone line.

Every conversation creates a new queue.

No need for Bloomberg Terminal, no need for analyst reports, all you need is a simple "You should go too."

It's noon. The vault is empty.

Maria called Peterson for the third time.

This time, Peterson's voice was completely different from the one he used in the morning. That layer of "following the normal procedure" rigidity was gone.

"Headquarters is transferring cash from the Los Angeles Federal Reserve. The armored truck should arrive in about two hours."

"Two hours? Mike, there are almost a hundred people outside."

"Make them wait."

Maria walked to the center of the hall, facing the crowd in the waiting area.

"Dear customers, we apologize, but due to a significantly higher-than-expected customer flow today, we are temporarily short of cash at the counter. Additional cash is en route and is expected to arrive in approximately one hour."

She said "one hour" instead of "two hours" as Peterson said. That was her own judgment.

"Withdrawals at the counter will be suspended until cash arrives. ATMs will remain operational, with daily limits."

She read out the number.

Someone in the line stood up and walked towards the door. Not to leave—but to make a phone call. To call family, to call friends, to say the same thing.

"IndyMac is out of money."

That statement is inaccurate. It's just that this branch is temporarily short of cash at the counter, and headquarters is transferring funds.

However, in the chain of word-of-mouth communication, the "temporary shortage" is simplified with each transmission.

First response: "We don't have enough cash."

Second time: "Withdrawals have been stopped."

The third time: "I can't withdraw any money."

The fourth time, it became the simplest yet most fatal five words—"IndyMac is finished."

At 2:40 PM, the armored truck finally arrived. The Grumman armored vehicle stopped at the back door, and two guards in bulletproof vests opened the cargo compartment, carrying dozens of sealed cash bags into the vault.

The counters reopened. The sound of counting money returned.

But Maria calculated that at the current rate, this batch of cash would last until 4:30, maybe 5:00.

The line outside had already turned the corner and disappeared from her sight. She had no idea where it ended.

3:30 p.m.

Two people in dark suits walked into the branch. They weren't there to withdraw money. A man and a woman went straight to the counter and showed their identification.

Federal Deposit Insurance Corporation (FDIC).

Maria looked at the eagle in the blue shield on the document.

"Ms. Sanchez,"

The man said, "We are field representatives from the FDIC. We need to speak with the branch manager."

"The manager isn't here today. I'm the assistant manager."

"Then please lead us to the back."

The door to the small office was closed. Outside the blinds, the line was still there, the sunlight was still there, and the sound of counting money was still there.

The man took a document out of his briefcase and read only the key paragraphs without letting her read the whole thing.

"Based on the FDIC's assessment, IndyMac no longer meets the conditions for continued independent operation. The FDIC will take over the operation starting today. All deposits protected by FDIC insurance—up to $100,000 per depositor—will be fully protected."

He looked up at her.

"We need your cooperation on a few tasks. After business hours, retain all system status and transaction records without performing any data cleanup. Inform on-duty staff that they are required to report to work as usual tomorrow. The FDIC will send a management team tomorrow morning—"

Maria sat in the chair she used every day. The cushion had been dented by her weight for eleven years.

She heard every single word.

It only took her a few seconds to process the fact that a federal official was sitting across from her, telling her in a rehearsed tone that the place where she had worked for eleven years had just died.

"Ms. Sanchez? Did you hear that?"

"I heard you."

5 PM. Business closes.

The last customer left. Lisa shut down the system, and the cashiers locked their drawers.

Maria stood behind the front desk, looking at the empty waiting area. The chairs still held the warmth of people sitting on them, and there were footprints of dust brought in from outside on the floor.

The line outside hadn't completely dispersed. People who arrived later in the afternoon were told the store had closed; some left, some didn't. A dozen or so people were still standing on the sidewalk.

One of the elderly women was sitting on the steps in front of the bank. She was in her seventies, wearing a faded floral dress, and clutching a plastic document bag in her hand. She had been sitting there since four in the afternoon.

The evening light came from the west, stretching her shadow long and casting it on the glass of the bank's main entrance.

Maria closed the blinds.

Then she returned to her small office, sat down, and began organizing the transaction records as required by the FDIC. Her fingers moved across the keyboard, and numbers appeared on the screen.

It's very quiet. The only sounds are the air conditioner and the keyboard.

IndyMac's last day has come to an end.

This is the beginning.