BREAKING: Bank Collapses. Feds cite Sen. Chuck Schumer as "immediate cause" of collapse

By Erick Posted in | | | | | Comments (14) / Email this page » / Leave a comment »

Federal regulators just seized and shut down IndyMac, a major mortgage specialist.

The Pasadena, Calif., thrift was one of the largest savings and loans in the country with about $32 billion in assets. It now joins an infamous list of collapsed banks, topped by Continental Illinois National Bank and Trust Co., which failed in 1984 with $40 billion of assets.

IndyMac specialized in Alt-A loans, a type of mortgage that can often be offered to borrowers who don't fully document their incomes or assets. The company sold most of the loans it originated but continued to hold some on its books. As defaults piled up, IndyMac's finances deteriorated.

The bank will be run by the Federal Deposit Insurance Corp., a federal regulator, and will reopen Monday.

Now the question is, did Senator Chuck Schumer cause IndyMac's collapse? The Office of Thrift Supervision, that regulates entities like IndyMac, says "the immediate cause" of IndyMac's collapse was Senator Chuck Schumer.

In a written statement, the Office of Thrift Supervision, which regulated IndyMac, said "the immediate cause" of the failure was statements made by Sen. Charles Schumer, a New York Democrat. Mr. Schumer in late June publicly raised concerns about the bank's solvency.

"Although this institution was already in distress, I am troubled by any interference in the regulatory process," said OTS Director John Reich.

This is huge -- that a federal regulatory agency would precisely finger a United States Senator as being responsible for a present financial disaster. And why? Because Schumer demands camera time and soapboxes to keep his power. And this time, he stepped up too high.

Now taxpayers will foot Schumer's bill.

Ordinary, Decent Criminal Watch: 07/03/2008Comments (8) »
BREAKING: Bank Collapses. Feds cite Sen. Chuck Schumer as "immediate cause" of collapse 14 Comments (0 topical, 14 editorial, 0 hidden) Post a comment »

Nobody is surprised when low-class Dems talk down the economy for their political ends, or even ruin individual companies as collateral damage.

But the Fed calling them out by name - that's golden. I can't wait to see the fallout, although no way will the Treason Media lead the way.

Impeach the 5 usurpers

Will any of the Sunday talk shows haul Chuckie's ass before the cameras and grill him for his apparent stupidity? My bet is, for undislosed reasons, Chuckie will be unavailable.

I have a feeling that the Obama people will try to link this bad news to Gramm's recent statements in order to make a good spin against McCain's camp. What do you think?

to make such a statement.

Have you added to the population of the McCain 2008 minicity yet today?

I drive a car powered by hydrogen - C8H18 to be exact.

Could someone link to what he said? I'm just a 20-something who doesn't even have mortgage yet, and knows nothing about investing, so I am having a hard time following all this.

Have you added to the population of the McCain 2008 minicity yet today?

I drive a car powered by hydrogen - C8H18 to be exact.

When negative rumors spread in the market on the solvency of a fixed-income investment company (like banks), stocks of such entity will be shunned by stock buyers/brokers. The result is bankruptcy.

A single callous statement of a US senator on the solvency of the Bank is enough to bring it down, especially if the remarks imply some form of insider's information.

... {drum roll } Nothing, Nada, Zip, Zilch, Bupkis. If the New York Times gets away with treason why should Chuckie not get away with this.

Non story, there is nothing to see here, move along please.

Why would God invent something like whiskey? To keep the Irish from ruling the world of course.

to the FDIC, Office of Thrift Supervision, and FHLB (San Fran branch) stating he "was concerned IndyMac's financial deterioration poses significant risks to both taxpayers and borrowers... and could face a failure if prescriptive measures are not taken quickly".

The issue will be why he intentionally leaked the letter, and the legal ramifications of that action. A civil suit for gross negligence would seem to be in order -- kind of like yelling fire in a crowded theater and then acting surprised when folks are trampled.

I won't say more since I personally had a very public run-in with him in the past (front page NY Daily News, etc) and am not an impartial observer. Maybe I'll write a blog on it.
"Enlightened statesmen will not always be at the helm." -- James Madison

by the statement of one man, I find it hard to blame him for the collapse. How many times have the Democrats hammered Big Oil? Seen any recent bankruptcies there?

If you think exposing a borrower in trouble is a bad thing, you'd better close all the credit bureaus. How dare they facilitate sensible choices!

The only thing to complain about is taxpayer liability for yet another bubble-rider.

and the stock price dropped another 26%. Again, what was the intent of leaking the letters?
The bank was certainly in deep trouble, but his actions were reckless and in violation of the Office of Thrift Supervision's policy (per the director).

Schumer needs to be reprimanded and taken off any Senate committee that is involved in banking and/or finance.
"Enlightened statesmen will not always be at the helm." -- James Madison

will lay down to cover for Chuck over the next few days, the WSJ, DC Examiner, NYPost and other conservative voices will have to lay out a very good case, easily understood by the layperson, as to why Schumer rightly deserves to be blamed (at least in part) for IndyMac's failure. (Calling blackhedd!!!)

Whitfox has already graced us with the opening shot in this argument: "How can one man bring down a bank?" Well, our side will have to explain that Sen Chuck Schumer isn't just any man. He's a US Senator, involved in financial oversight, with unparallelled insider access, who should have known how reckless his words were and how powerful their impact could be. And yet, he said them anyway.

Does anyone doubt that he knew how devastating it could be, especially in today's uncertain economic times, to leak information like his staff did? And yet, they did it anyway.

What kind of people "play the game" this way? Are they indifferent to collateral damage? Even if it's our economy and banking system that are being "damaged"?

Chuck Schumer is a ruthless man. He strikes me as the kind of person who can look right into the camera, lie boldly and brazenly, and not flinch one iota as he does it. Put nothing past this guy. Expect plenty of bluster from him over the next few days, with plenty of reinforcement by the Whitfoxes.

I hope the voices on our side are up to taking this guy on. Frankly, I'll bet that he thinks they're not.

We shall see.

"Who will stand/On either hand/And guard this bridge with me?" (Macaulay)

blaming the OTS (Office of Thrift Supervision)and IndyMac for the collapse, not his letter which became public:

"IndyMac’s troubles, just like Countrywide’s, were caused by practices that began and persisted over the last several years, not by anything that happened in the last few days," the senator said in a statement. "If OTS had done its job as regulator and not let IndyMac’s poor and loose lending practices continue, we wouldn’t be where we are today. Instead of pointing false fingers of blame, OTS should start doing its job to prevent future IndyMacs."

You can be sure that the Sunday talk shows will be taking his position.

I think this is fertile ground for a Republican-led congressional investigation as to how this letter became public. If it is discovered that he leaked it to the press, then he should be censured by the Senate. And the SEC and FDIC should also begin investigations into how and why a confidential letter, with such dire warnings, could find its way into the press, thus resulting in the ensuing panic by depositors. was a nice dream anyway.

John D. Hawke, the U.S. comptroller of the currency (regulator of national banks) from 1998 to 2004, had more pointed words for Schumer in a story in the American Banker newspaper today.

"If Schumer continues to go public with letters raising questions about the condition of individual institutions, he will cause havoc in the banking system," Hawke said.

"Leaking his IndyMac letter to the press was reckless and grossly irresponsible. I don't see how he can be trusted with confidential information in the future. What this incredibly stupid conduct does is put at risk the willingness of regulators to share any information with the [congressional] oversight committees. After this, you'd be crazy to share information with Schumer."
"Enlightened statesmen will not always be at the helm." -- James Madison

have a major conflict of interest in that the top 9 campaign contributors to his 2004 re-election campaign were investment banks according to the Center for Responsive Politics:
Goldman Sachs $270,090; Citigroup Inc $241,100; JP Morgan Chase & Co $135,550; Credit Suisse First Boston $154,794; Morgan Stanley $1194,000; Bear Stearns $140,900; Merrill Lynch $147,000; UBS Americas $139,750; Lehman Brothers $115,000; and Bank of America $71,600.

I guess IndyMac forgot to donate, oh well it's only 3800 folks out of work..
"Enlightened statesmen will not always be at the helm." -- James Madison

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