Senator Chuck Schumer blamed for IndyMac Bank Failure

Jul 14, 2008 | Comments 2


John Reich, the director of the Office of Thrift Supervision, blames the IndyMac Bank Failure on comments that were made by Senator Chuck Schumer. However; Senator Schumer has denied any such blame.

This all started back on June 27, when Senator Chuck Schumer’s office had released a letter to various bank regulatory agencies, in which he called into question about the viability of IndyMac, he urged them to take steps to prevent the collapse of the troubled bank.

The public disclosure of this letter from Schumer resulted in an eleven day run on IndyMac; as a result more than $1.3 billion had been withdrawn. It was this action that John Reich believes gave the bank a heart attack.

Senator Chuck Schumer, fired back at the comment saying that the blame of the collapse of IndyMac was down to regulators turning a blind eye to the “fast and loose lending practices” until it was too late.

Reich then conceded that IndyMac, who had been plagued by mortgage loan defaults, might have failed on their own even without such comments from the Senator. IndyMac is now under the supervision of the Federal Deposit Insurance Corp.

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Filed Under: Business News

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  • jason smith

    New York Times reported that hedge fund managers have a new champion in their effort to keep legally dodging the taxes the rest of us pay: none other than New York Senator Charles Schumer. Now you know who is Schumer’s friend and why he caused the bank run on Indymac. He truly support hedge fund and private equity because they truly support him.

    http://www.nytimes.com/2007/07/30/washington/30schumer.html?_r=1&oref=slogin

    “Large Investor decided to pay a few bucks to a Senator in New York to force the issue.”(Prospect Mortgage Backed By Sterling Fund–Private Equity Acquired The Mortgage Branches from Indymac before FDIC takeover)
    http://www.housingwire.com/2008/07/03/regulators-to-schumer-weve-got-a-whole-bag-of-shhh-with-your-name-on-it/

    “And do remember that there are many investment bankers located in New York, making them pretty influential constituents of Sen. Schumer.”
    http://www.pasadenastarnews.com/opinions/ci_9783402

    “In a Sunday news conference, he said everything in his letter was already known to the public.”
    If it was already known to the public, what is the reason for his public letter? It is contradict to what he said previouly :”I just bring private message to the public. Do not kill the messanger.” What a great liar from time to time!
    http://www.cnn.com/2008/POLITICS/07/13/indymac.schumer/?iref=mpstoryview

  • http://petes2cents.com Petes2cents

    Now that IndyMac is the first of many banks to fail, I think we’re going to see a lot more banks, not only close for the weekend, but close for good and go bankrupt. Rumors talk about 90+ banks, I think that’s a little exaggerated, but very well possible. I would guesstimate around 30+ banks will close shop.

    I’m an investor in the stock market and have started to build a position in Bank of America. One of the few 500 lb. gorillas left in the room. Every dip, I pick up more shares. I don’t think there going anywhere, but you never know. Investments are all risky.

    I never thought I would see this happen here in the USA, but here we are….let’s all cross our fingers.

    petes2cents.com