Michael Dell is going to try to turn a buck on the mortgage mess. He’s part of a consortium of seven private equity investors that signed a letter of intent with the Federal Deposit Insurance Corporation (FDIC) on New Year’s Eve to buy the failed IndyMac Bank, one of the accursed entities that led the US economy down the primrose path of sub-prime loans.

In its day IndyMac was the second-largest publicly traded independent mortgage lender, making way only for its sister operation Countrywide Financial Corporation, and specialized in making home loans that didn't require borrowers to document their income or make much of a down payment.

IndyMac crashed and burned in a fatal run triggered by unpaid mortgages in July and after Washington Mutual went bust two months later became the fourth-largest bank failure in US history.

The consortium of private equity firms and hedge funds has agreed to pay $13.9 billion for what remains of the southern California bank and inject another $1.3 billion in cash into the property.

The FDIC, which has been running IndyMac since it failed, still expects to lose between $8.5 billion and $9.4 billion on the unusual deal; the agency prefers to sell busted banks to other banks not private investors but couldn't get a classic buyer.

In a statement the FDIC explained that "the current economic climate is challenging for selling assets" and that the consortium deal "was the least costly to the Deposit Insurance Fund (DIF) of all competing bids."

The consortium, called IMB Management Holdings LP, is buying IndyMac's 33 branches, which still have $6.5 billion in deposits, its $157.7 billion loan servicing business, which collects mortgage payments and distributes them to investors, its $23 billion loan and securities portfolio, and its successful reverse-mortgage operation, Financial Freedom.

In return for the FDIC agreeing to limit the consortium's potential losses, IMB has promised the agency that it will continue to try to salvage mortgages and avoid foreclosures generally by modifying the interest rate. FDIC used IndyMac to experiment with the program, which it wants to push nationwide.

The deal is expected to close by early February.

Besides Dell, whose contribution is coming out of his $10 billion MSD Capital investment firm, the consortium includes billionaire investor George Soros, J Christopher Flowers, who made a packet turning around the Long-Term Credit Bank of Japan, and John Paulson, who made $3.7 billion in 2007 betting the housing bubble would burst.

IMB is being led by former Goldman Sachs executive Steven Mnuchin, the co-CEO of Dune Capital Management. Terry Laughlin, who ran Merrill Lynch Bank & Trust and before that worked at Fleet Bank for 14 years, will be IndyMac's CEO.

By the way, the Washington Post said that the "Treasury Department's inspector general reported last week that a senior official of the Office of Thrift Supervision knowingly allowed IndyMac to conceal the depth of its financial problems only weeks before it failed by falsifying a key financial filing."

Thrifts have to have 65% of their lending in mortgages and consumer loans, making them highly vulnerable to the housing bust.