Who's to Blame for IndyMac's Failure? [Can you spell Schumer?]

Seeking Alpha ^ | July 12, 2008 | Mark McQueen

[NoControllingLegalAuthority]

They were already well on their way there before he opened his mouth.

You would not have known about IndyMac but for its failure. Many of those who ran to that bank to make withdrawals were likewise panicked by information not previously known to them.

It is illegal for anyone to cause a run on a bank. In fact, there are laws against causing a run on any insured financial institution and Schumer could be prosecuted for divulging inside information which caused a bank to fail. Schumer had no business making public pronouncements about potential insolvency of any bank. Such statements have been proven historically to be self-fulfilling prophesies.

[Dems_R_Losers]

I think some Republican Senators need to demand an Ethics Committee hearing, at a minimum, and also demand thsat Schumer be removed from the Banking Committee. It would also be nice if some IndyMac shareholders and depositors filed a class action lawsuit against Schumer.

[SAJ]

Among other things, GLB tore down the old Glass-Steagall ‘’wall’’ between investment and commercial banking, with one result being that we now have an orgy of speculation by investment banks using commercial banks’ funds (i.e. your and my deposits).

[EBH]

Republican Banking Committee Members

Richard C. Shelby Ranking Member (R-AL)

Robert F. Bennett (R-UT)

Wayne Allard (R-CO)

Michael B. Enzi (R-WY)

Chuck Hagel (R-NE)

Jim Bunning (R-KY)

Mike Crapo (R-ID)

Elizabeth Dole (R-NC)

Mel Martinez (R-FL)

Bob Corker (R-TN)

http://banking.senate.gov/public/index.cfm?FuseAction=Information.Membership

They can be contacted through their links on the site.

[Dems_R_Losers]

That’s a good idea about a Justice investigation. We should try to get some Republicans in the Senate or House to write to the AG and request an investigation. IndyMac was based in Pasadena - I don’t know who the Congressperson is for that area, but he or she might have some questions for Mr. Schumer! God knows Barbara Boxer and Dianne Feinstein won’t care about this, even as thousands of their constituents lose their jobs.

[cquiggy]

You might be asking yourself, why is a New York Senator asking a regulator to look into a California bank’s “solvency”?
Theory 1: Schumer is the head of the Senate Democratic Campaign Committee. If he can show that he can destroy a bank by circulating a letter questioning its solvency, then he might expect that will lead to more campaign contributions from fearful financial institutions.

Theory 2: He believes he can increase Democrat gains in November by causing one or more banks to go under, producing more economic turmoil

Possibility number three. A New York based bank swoops in to save the day and pick up the pieces. For pennies on the dollar I might add.

Maybe a bank from this list.
Chuck Schumer is Chairman of the Democratic Senatorial Campaign Committee. Take a look at some of the DSCC’s top donors so far :

Goldman Sachs $362,550
JPMorganChase $311,604
Morgan Stanley $169,450
Citigroup $146,250

[BusterBear]

Is there any way to punish Schuckster?

Publicity.

On Friday, Mark Levin's producer put in a call to Schumer's office to try to get him on the show to answer questions. Larry Kudlow was all over Schumer on his show today. I expect Rush and Sean will be after him next week. His role has already been publicized in the Wall Street Journal and the NY Times (gasp).

Maybe after enough publicity, something real will be done.

[RegulatorCountry]

You would not have known about IndyMac but for its failure.

Their rapidly declining stock price is available to all. I read several financial forums daily, and the condition of IMB has been the subject of much dire speculation, for several months.

Republicans need to stop circling the wagons because one of the main factors in this is the responsibility of Gramm. There's quite enough blame to go around, all the way back to the Clinton era. Clinton flunkies at Fannie Mae have a lot of explaining to do, too, not that they'll ever be called on the carpet.

[Dems_R_Losers]

We'll know for sure if Citigroup buys what's left of IndyMac. IndyMac already sold its mortgage operation to a new company called Prospect Mortgage, but there are no political connections there.

There's another angle to this that I am working on and it's a lot more complicated. It involves ongoing efforts by the State of New York to assert regulatory authority over national banks. This would explain why Schumer went after IndyMac, and it also involves AG Andrew Cuomo going after Washiungton Mutual over its appraisal practices.

[mkjessup]

Unfortunately it appears that Pasadena is represented by Congressman Adam Schiff (D).

However that doesn't mean that he shouldn't be receiving plenty of input on an issue that affects his constituency:

Email the good Congressman right here:

http://schiff.house.gov/HoR/CA29/Contact+Information/Contact+Form.htm

[depressed in 06]

Is it S-h-i-t-h-e-a-d?

[Dems_R_Losers]

Fannie Mae is MUCH more at fault here than Phil Gramm. Stop reading the DNC talking points. The Gramm-Leach-Bliley legislation passed on an overwhelming, bipartisan vote. It was needed to help U.S. banks stay competitive with foreign banks, and to allow Citigroup to buy Travelers Insurance.

[mkjessup]

You would not have known about IndyMac but for its failure.
Their rapidly declining stock price is available to all. I read several financial forums daily, and the condition of IMB has been the subject of much dire speculation, for several months.

I salute you on your financial awareness and acumen, however I think you would have to concede that the average American does NOT read any financial forum on a daily basis, let alone more than one. Our population has been dumbed down to the point where all the majority knows is what the DJIA is at the close of business, assuming they've bothered to tune in the evening news on the tube.

Sad but true.

[sloop]

who was the senator that pulled a cya letter from his files when caught doing something? i can’t recall the details or who it was - but the senator was known for doing that

i am glad the announcement was held until after the market closed - friday was already a spooky day without adding this

i can understand why they were spooked when you add fannie mae and freddie mac to the mix - seems like monday will be a test of their stability

http://online.wsj.com/article/SB121577699220645703.html

After a week of near panic among shareholders of the two companies — and a stomach-churning day on Wall Street Friday — the next big test will come Monday when Freddie Mac is due to sell $3 billion of short-term debt. An unsuccessful sale could be a major blow to investor confidence. If the administration were to intervene, it could do so before markets opened that day, according to a person familiar with the deliberations.

but obama’s buddy will be ok

http://corner.nationalreview.com/post/?q=NWM3MDFkM2QwNzRjODk3NWZhZTc3OGIxNDQ4Nzc2NDc=

Investigators found that Fannie Mae had hidden a substantial amount of Johnson’s 1998 compensation from the public, reporting that it was between $6 million and $7 million when it fact it was $21 million.

[Montfort]

Does anyone remember what event preceded (but did not necessarily cause by itself) the tech bubble to burst? I think it was perhaps a pretext for the selloff. I remember that a Microsoft antitrust case brought by the feds poked a hole in the bubble. At the time, I saw the bubble as one that probably ought to be burst sooner rather than later, so maybe the Democrat Administration's bursting the tech bubble was not entirely bad.

A lot of people lost a lot of money from the tech bubble bursting and don't have my same feeling about it. The are angry and resentful, but they do not recognize that the Clinton administration stuck the pin in the tech bubble.

Now Schumer arguably caused a run on a large bank (or thrift), which may well lead to more runs on banks and then bank failures and taxpayer funded bailouts. He will not be blamed. George W. Bush will be blamed. Few will his role. Liberal academics will never cite him in their historical discussions of bank failures in 2008.

[HereInTheHeartland]

“Oh that’s nonsense, the bad business decisions led to the run on the bank.”

I would say Democrats in Congress are responsible and the voters should hold them accountable this fall.

I would also blame the Democrats in Congress for the floods this year, and the wildfires in California.

[upchuck]

Close enough!

[sloop]

“I think some Republican Senators need to demand an Ethics Committee hearing, at a minimum, and also demand thsat Schumer be removed from the Banking Committee. It would also be nice if some IndyMac shareholders and depositors filed a class action lawsuit against Schumer.”

if difi got away with her military committee games (passing info to her husband’s partner), there is zero chance that this will go anywhere

can you envision pelosi’s botox’d face saying ‘culture of corruption’ and ‘for the children’?

[sloop]

“Maybe after enough publicity, something real will be done.”

the plan is to model this on the bcci scandal - too complex to be told in a 2 minute news story

[BusterBear]

who was the senator that pulled a cya letter from his files when caught doing something? i can’t recall the details or who it was - but the senator was known for doing that

It was Jay Rockefeller. It had something to do with the Bush Administration's tracking down terrorists - the heads of the Intelligence Committees had been informed and had concurred - but I don't remember the details.