IndyMac Slashing Staff Size

IndyMac Bancorp, Pasadena, Calif., is slashing nearly one-quarter of its workforce in an effort to "right-size our costs and implement process changes to make our new production model profitable," according to an e-mail sent by chief executive Michael Perry to company employees. The cut of 2,403 people comes on top of a cut of nearly 1,600 people through a voluntary resignation and severance program last September. The most recent cuts include a 27% reduction in the number of staff from outsourced and temporary vendors, mainly in India. Mr. Perry noted that while he had said in an Oct. 12 e-mail that there would be no further reductions unless the mortgage market continued to tumble, the fact is that it has. "The reality is that since Oct. 12 conditions have gotten worse in our industry. The private secondary market remains virtually frozen, and the market suffered another setback in November, as the GSEs reported large losses and indicated that they are capital-constrained, with the result that they had to further tighten their own guidelines." IndyMac said it now expects to originate just $43 billion in volume in 2008, compared with $78 billion in 2007. As a result of another product menu change because of secondary market conditions, its pipeline fell from $10.7 billion at the end of November to $7.7 billion as of Dec. 31, 2007.