IndyMac Bancorp Inc. continued to fall Tuesday, a day after the beleagued mortgage lender said it will slash its workforce by nearly 4,000 employees and stop accepting new loan submissions.

Shares of IndyMac were down 30 cents, or 42 percent, to 41 cents on mid-day trading after dropping 30 percent on Monday.

The cuts, announced after Monday's close, will reduce the Pasadena-based mortgage company's workforce to 3,400 positions from 7,200.

In a letter to shareholders, the company said the cuts have become necessary as it has been unable to raise sufficient capital as a result of the current economic climate. By closing its new mortgage business and cutting its workforce by more than half, the company expects to reduce operating expenses by approximately 60 percent.

Additionally, the company said it will refocus its efforts on its reverse-mortgage subsidiary known as Financial Freedom. The unit is a leading reverse-mortgage lender, producing more than $5 billion in new loans annually.

IndyMac, which has been wracked by the mortgage meltdown and credit crunch, said it has fallen below the level that regulators consider "well capitalized" and expects to take a significant loss when it reports its second-quarter earnings.

"We have been working with our investment bankers to raise additional capital," said IndyMac Chief Executive Michael Perry said in the letter. "To date, we have not been successful with these efforts, and, while we will continue these efforts with our bankers and others, we don't expect to be able to raise capital until there is more stability and less uncertainty in the housing and mortgage markets."

Given the size and scope of the layoffs, Perry also said he will reduce his base salary by 50 percent.

IndyMac declined to comment further.

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