The swap meet that has become the financial industry is changing hands like never before. Bank of America (NYSE:BAC) picked up the remnants of Countrywide; JPMorgan Chase (NYSE:JPM) jumped in to grab what was left of Bear Stearns, and later tried to make a run for Washington Mutual (NYSE:WM), only to be rebuffed. If you're in the market for bargain-hunting assets out of the financial sector, today's conditions should be keeping you busy.

For IndyMac Bancorp (NYSE:IMB), the summer of 2007 apparently looked like a good time to swoop in on the market's pain and take advantage of the turmoil. We've all heard the term "Don't try to catch a falling knife." For IndyMac, you might want to add, "Don't try to catch a falling knife, especially if you're the one dropping the knife."

Last summer, IndyMac hired as many as 850 former employees from then-bankrupt American Home Mortgage and assumed the leases on 90 offices they worked in. An analyst covering the situation called it "… a way to try to take advantage of the turmoil." What may have been overlooked is that IndyMac itself was hardly exempt from that turmoil, or, more importantly, that the bloated mortgage market was part of the reason for the turmoil in the first place, making scaling up seem a bit counterintuitive.

Fast-forward one year, and IndyMac is staring a stock price approaching zero square in the face. Finally, it looks like the market may have accepted that it has to part ways with a small army of mortgage brokers who'll grant almost anyone with a heartbeat and a smile a shot at homeownership. Taking advantage of turmoil might be a waste of time if the turmoil is for good reason.

You'd think that would be the case, right? After multiple games of musical chairs, someone would realize, as Charlie Munger so eloquently puts it, "When you mix raisins and turds, you still have turds."


Prospect Mortgage has signed a deal to take over 750 IndyMac employees as well as 60 branches -- a move that looks eerily similar to IndyMac's bottom-fishing last summer. Prospect Mortgage commented on the transaction, saying, "The IndyMac transaction benefits our loan officers, customers, sales managers and referral sources."

Last summer, IndyMac commented on the American Home Mortgage acquisition, saying, "The addition of 750 to 850 former AHM retail lending professionals provides a strong complement to the acquisition of the retail lending division of New York Mortgage Company …"

As Yogi Berra says, it's like deja vu all over again.

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