Regulators to Schumer on IndyMac: Please shut up

Sen. Charles E. Schumer publicly taunted bank regulators last week about IndyMac Bancorp's financial condition, which helped trigger a sudden outflow of deposits from the Pasadena thrift. Now the New York Democrat is getting some harsh blowback from one current and one former regulator.

Their message, distilled: Zip it, Chuck.

As noted here on Monday, Schumer sent letters to the Office of Thrift Supervision, the Federal Deposit Insurance Corp. and the Federal Home Loan Bank of San Francisco, saying he was "concerned that IndyMac's financial deterioration poses significant risks to both taxpayers and borrowers."

IndyMac, which has suffered huge losses on defaulted mortgage loans, "could face a failure if prescriptive measures are not taken quickly," Schumer wrote.

Uh, wait a minute -- how could Schumer know that? And since when are regulators supposed to tell the public in advance that a particular institution has been earmarked for possible failure? All that would do is guarantee a collapse. If depositors are within FDIC insurance limits they have nothing to worry about, anyway.

That pretty much sums up the content of a letter to Schumer today from John M. Reich, director of the Office of Thrift Supervision.

"As a regulator of insured depository institutions, we do not publicly comment on the financial condition or supervisory activities related to open and operating institutions," Reich wrote. "We believe it is critically important to maintain the confidentiality of examination and supervision information."

He went on: "Dissemination of incomplete or erroneous information can erode public confidence, mislead depositors and investors, and cause unintended consequences, including depositor runs and panic stock trades. Rumors and innuendo cause damage to financial institutions that might not occur otherwise and these concerns drive our strict policy of privacy."

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."

The senator's office didn't respond to a request for comment today. On Monday, Schumer aide Brian Fallon offered this explanation for Schumer's action: "The home loan bank system has an obligation to lend responsibly and police its members. But it has not been doing its job. We have found the only way to get the home loan bank system to act appropriately and positively is to make public the concerns we've already expressed privately."

If that's Schumer's policy on the U.S. financial system's troubles overall, it's going to be a long, hot summer.

Photo: Sen. Charles Schumer. Mark Wilson/Getty Images

Comments

[rukus]

I think the senators should have been much more discreet with his concerns! He should be investigated!

[Jennifer]

I have nothing but praise for Senator Schumer. What he did, in reality, was issue a legitimate warning to IndyMac's unsecured creditors that they are at risk in continuing to do business with the bank.

FDIC supposedly has a policy that there should be no "Walking Dead Banks". Yet I fear that decisions have been made, administratively, not to allow any significant financial institution to fail before the Fall elections.

The problem with that approach is that the FDIC has very clear policies on what happens if they seize a bank. While depositors up to $100,000 are insured, unsecured creditors of the banks are not paid. The seizure harms many innocent people and companies who do business with the Walking Dead Bank within the weeks or months before the seizure:

Construction loan borrowers who are depending on the bank to make a series of disbursements to pay for construction costs as they are incurred, but who, upon the bank's failure, do not receive full loan pay out and are left with mechanics lien claims and possible bankruptcy of their own;

Home buyer mortgage loan applicants who spend time and money to go through the loan process only to have it stopped part way, causing the buyer/borrowers in process to lose their purchase contract deposit when the bank won't close the loan because the bank has failed;

Buyers in escrow who are in contract with the failed bank to buy REO, with those buyers losing their buyer's purchase deposit which is in the bank's coffers, while FDIC decides to cancel the contract and not close after the seizure;

Landlords for bank branches who renew leases in good faith, and perhaps pay for tenant improvement renovations, thinking that they have a good credit tenant, when in fact FDIC will ultimately cancel the lease prematurely and stop paying rent;

Vendors who sell everything from xerox copies to computer services to printing jobs to night time cleaning services all of whom receive nothing for their accounts receivable from the failed bank.

Allowing a "Walking Dead Bank" to continue to do business, and make FDIC-rescindable contracts with innocent third parties and thereby take funds, goods or services with no intention of payment for them, is actual fraud under the law of most states. However, as shown by what FSLIC and FDIC did in the 1980's, when the party "doing the fraudulent inducement" is a federallly insured Walking Dead institution, there is no consequence suffered by the officers of that Walking Dead Bank. They are perpetrating frauds, to the detriment of others, to keep the bank operating beyond the date it becomes insolvent.

One economic statistic never disclosed in the days of the "S&L Crisis" is how much money unsecured creditors lost when the Walking Dead S&Ls were seized.

Senator Schumer should be commended for protecting the interests of IndyMac's unsecured creditors by telling the truth about what is going on.

John M. Reich's comments, as head of the federal Office of Thrift Supervision, clearly show that his organization promotes the perpetration of frauds on insolvent banks' unsecured creditors, in the name of having a stable banking system. Is that an "Unlawful taking in violation of the 4th Amendment?" If not, at the very least it is immoral and reprehensible conduct by federal officials.

[Mr Big]

I lost my job at Indymac today. They eleminated a profitable division. Toast. I'd like to think it's a New York senator's fault for helping to erode our capital base and force the CEO's hand in quickly cutting all non-core business.... but come come on, the writing's been on the wall for at least eight months.

At this point, if anything, this fiasco will only help, as it has drawn the public eye to the question of who can be bailed out by the Fed, and who can't? Why Countrywide, Bear, but not Indymac?

Side note, I'd like to see Schuner's staff investigated for anyone shorting the stock before leaking the letter. This was pure market manipulation.

[Nestor]

Jennifer,

Let's let the PROFESSIONAL BANK REGULATORS do the bank regulating. Schumer had no right to leak one-sided, inflammatory comments the way that he did. It was irresponsible and completely bone-headed.

If you were worried about all of the construction loan borrowers, mortgage loan applicants, buyers in escrow, landlords for bank branches, and various vendors BEFORE Schumer leaked his letter, then you should be really worried now.

And, by the way, most of the personal depositors I have come across during my career are insured for MORE than $100,000. Remember, the FDIC insures accounts $100,000 per owner per qualified beneficiary.

Thanks.

[Chris]

Schumer has been a blowhard for as long as I can remember. I really can't believe anyone takes the guy seriously. That aside, when you ignore the funny math of Indymac's PR department, it's quote obvious that Indymac is a Zombie Bank on the verge of insolvency. If the institution doesn't go into receivership before their Q2 report is released in early August, I suspect that the losses will be absolutely staggering. Clearly, the bank is clinging on for dear life and desperately trying to raise capital as fast as possible, but it's almost akin to trying to extinguish a forest fire with a squirtgun. WIthout a doubt, the FDIC has already placed the institution on probation, just like National City.

The one thing I really have a real problem with the idea that the Fed should in any way bail out Indymac. (They had no business bailing out Bear Stearns either.) Institutions should be allowed to fail if they make bad business decisions. A bailout only helps to worsen the situation because it allows other banks and lenders make risky decisions because they know they'll get a bailout too if something goes wrong.

On a side note, I just invested several thousand dollars in an Indymac 10 month CD, because their rates are unbeatable. I'm under the FDIC limits, so there's nothing to worry about from my perspective.

[martscan]

Jennifer has it right, in fact she nailed it. A "10".

Regarding the indignant letters from mssrs: Hawke and Reich. IMO, these are classic cases of entrenched, hubristic bureaucrats resisting encroachment on their turfs by a mere United States Senator who is fulfilling his duties and responsibilities to the American public. Poor babies.

As to Nestor's implication of his esoteric knowledge, by dint of his 'career', he has it wrong. The FDIC does NOT insure "depositors", they insure "deposits." And while a 'depositor' may have much more than $100K insured via joint accounts, trusts, business accounts, etc., he has only $100K insured in any one account. And, by the way, I never buy jumbo CDs of $100K...I always buy $95K or less CDs, depending on the rate, so the earned interest will be covered.

[Bithead]

Irresponsible, perhaps. Boneheaded, no. Think;

Why would Schumer, a Democrat from as far to the left end of the scale as one might imagine, want to erode public economic confidence during a Republican administration, and during an election year, do you suppose?

Aside from the rather nasty implications of that, one also must wonder if Schumer profits from this in terms of stock holdings in IndyMac's competition. But however that falls out, this was nothing but market manipulation from his government perch... along with the use of government provided insider information, for which Scumer should stand trial, and prison.

And I speak as a NY resident, under his misrepresentation.

[Continuum]

Yet, another example where the big boys know the details, while the rest of us are kept in the dark. Schumer did the right thing in letting the cat out of the bag.

[jack]

FOR CHRISSAKES IMB!! Your stock is a 60 Cents a damn share!!--(Kind of speaks for itself, dosent it)?? Schumer didn't cause that to happen, YOUR greedy and CORRUPT company directors did!!

He is only stating what is plain as day!! Stop blaming the messenger!!--How ludicrious!!

[Jack]

IMB--

FYI--Your stock was 64 CENTS the last time I checked. Schumer didn't need to say a word...........Buhhh Byeeeeee

[Dan]

Chuckie is seems to be a lip flapper who likes to hear himself talk. No wonder our country is in trouble. The not so esteemed senator and his collegues have been asleep at the wheel in Washington. As a result, a massive collision is unfolding in every sector of our society and old Chuckie keeps on flapping his lips away blaming everyone else except those in the halls of congress and the white house. They should all be investigaged by the PEOPLE!

[rex jones]

I agree that Shumer should be investigated as to wereas his contacts have shorted IMB stock. Also if any of his friends/contacts who have a short interest asked him to publicly send this letters. IMB stock lost 1/4 of it's value after his comments. While this sort of thing might have seemed as ingenious and unheard of my to anipulation, it is now very common place and easy to detect.

[Bill]

As the mortgage meltdown continues unfolding, the long knives come out one at a time. Just why is it OK to bail out Wall Street gamblers in NYC and then trash a California bank? Schumer should be censured by the Senate.

[Qzaki Fan]

At times like this, California voters should regret sending a lightweight twit like Barbara Boxer to the US Senate.

This is regionalism at its worst. He targeted a CA-based institution to make his point. The East-West dichotomy in rap and sports is bad enough, we don't need it playing out on the Senate floor. And how has Boxer responded???

Feinstein can't do everything. We need a junior senator who is QUALIFIED and COMPETENT (not Babs Boxer).

Vote smart next time, or lose your job and ruin California (more).

[William]

Jennifer,

"I have nothing but praise for Senator Schumer. What he did, in reality, was issue a legitimate warning to IndyMac's unsecured creditors that they are at risk in continuing to do business with the bank."

If you were an unsecured creditor, all you have to do is look at IMB's stock price. When any stock is trading for the price of a $1 value meal, you know that you have potential trouble. We do not need Schumer to tell us what we already know.

[million]

all Schumer did was pull peoples' heads out of the sand. just about everyone who's been following this debacle was aware of IMB's (and other banks mired in pay option ARMs) insolvency for years now.

Schumer did what the regulators would not, he addressed the obvious. i'm done with the lies and constant deception coming from Wall Street. it's time for some cold, hard honesty all the way around.

and i have no delusions that Chuck did this for the sake of the country, somebody will scratch his back later to return the favor... but ends/means IMO.

[Hugo]

So if I understand John M. Reich and former comptroller John D. Hawke correctly, let the bankers handle banking issues, keep pertinent information away from uninformed depositors, and why should bankers report to a lowly U.S. Senator?

LOL. As to the first assertion, bankers couldn't run a dairy queen unless they were able to offer an option ARM on the soft freeze. Do all of you not get it? Bankers DON'T KNOW WHAT THEY ARE DOING! They bring us things like Lincoln Savings & Loan and Bear Stearns, ruining the finances of thousands and leaving taxpayers to foot the bill, and yet, some of you would chastise a Senator for airing legitimate concerns about a bank's solvency? Really? Maybe we deserve 4 years of McCain afterall.

And as for the third assertion, even if regulatory boys like Reich consider Schummer nuts, or a blabber mouth, the point is that he is still YOUR BOSS, and if you want to keep your cozy lil job on a banking regulatory body, you better be upfront about all you know, or you'll have hell to pay.

Finally: Go Schummer! This is courage in action. He didn't say IMB was insolvent, he only asked. Those who withdrew their funds were skittish depositors and probably would have pulled their money out anyway.

FDIC insures your principal up $100,000 but does not include interest. If you had a 10 month cd of $95K, and IMB goes down, what will you have to show for the months you let IMB use your money? Exactly.

[Bank Exec]

I am a senior executive with a large regional bank.

I can only echo the opinions of those who've said Schumer is a loose cannon and his actions are harming many people.

This isn't about politics. This isn't about Republicans vs. Democrats. This is about the integrity of the FDIC insurance system and a regulatory oversight process that has survived many crises in spite of the bad behavior of both bankers and politicians.

If Schumer has a problem with the effectiveness of regulatory oversight, the media isn't the forum to discuss or comment on this. To mention the name of an institution, as he did, is the height of irresponsibility. If he has an issue, he should talk to the regulators, in private. His behavior is that of a rookie, not a seasoned legislator.

Schumer has now guaranteeed that no one will tell him anything other than under subpoena.

Idiot.

[Edward Woodruff]

Shame on Schumer

Sen. Schumer comments regarding Indymac Bank and its associated regulators (FDIC, OTS, and FHLB) were irresponsible, inaccurate and ultimately counter productive to the larger financial services industry and the greater public Sen. Schumer purports to serve.

As a United States Senator, he must understand the consequences of his words. Choosing to place his unsubstantiated accusations in a public forum caused unnecessary harm to both Indymac Bank and the banks individual depositors.

Customers choosing to close their accounts based on Sen. Schumer’s imprudent and inaccurate words incurred early termination fees and the loss of competitive market interest rates.

Indymac unnecessarily lost deposits at a time when, like all other banks, it is working through a very tough market. While Sen. Schumer’s comments were directed exclusively at Indymac, the larger implications were clearly associated to all institutions serviced by these same regulatory groups.

If Sen. Schumer’s true intentions were to ensure that the Home Loan Bank was doing its job to lend responsibly and police its members he failed. As an elected official, it is Sen. Schumer’s responsibility to develop his internal network to address his concerns and to engage the American public when it is prudent and necessary to do so. In this case it was neither.

Sen. Schumer’s overstated and incorrect overview specific to Indymac Bank along with his inappropriate use of the media is an unacceptable abuse of his public responsibility.

[concerned]

Come on, folks. Chuck Schumer is doing the bidding of Citicorp which has bankrolled all of his campaigns. He helped bring down Countrywide and now he is bringing down IndyMac. You folks out in California think that is a coincidence? Who benefits from the disappearance of these two major players? Duh!

What I don't get is how your two brain dead Senators let this guy kill thousands of jobs in your state for the benefit of his New York bankrollers.

[Ken Orji]

I am really scandalized that a senator in the free-enterprise USA could actively campaign to kill a corporation just to satisfy hedge funds and short sellers. And to think that Indymac employed thousands of people, some of whom are now loosing their jobs because of this low-rated senator is disturbing. Virtually all financial institutions are reeling from the unprecendented crises that the US, albeit world economy is facing. To think that some regulator's response to the crises would be to take active steps to force the downfall of a tax-paying bank is spurious. I was mad when I first heard it, I am mad now. I do not think that that man's actions were genuine, and I believe that Indymac should be entitled to recover any losses in a lawsuit against this dumb and dumber senator.

[JMH]

I agree 100% with concerned and ken's previous postings regarding the dumb, dumb senator. I believe the senator is helping Citicorp, Bof A or another major bank get rid of IndyMac. I've been in the mortgage business for 17 years and the banks that are surviving or treading water are the banks that HATED wholesale business. What does that mean to the consumer??? Consumers are going to have their hands tied when looking for a new mortgage/loan program. Yes, there were crooked, greedy mortgage professionals that took advantage of consumers and I'm glad they are exiting the business by choice (they do not know the true meaning of working for a client) or because they were forced to leave. Every industry has crooked individuals posing as good business people (any politicians come to mind?), but removing wholesale lending and the mortgage professionals who are honest and try to do the right thing for a borrower is going to hurt consumers. The few banks that survive this will have a monopoly on home loans and it will not be good. IndyMac built their business with wholesale business, expanded it to retail and despite the accusations and rumors they offered good loan products to everyone. As much as the media, government and watchdog groups sound-off about this mess how come no one interviews the borrowers who commited fraud and knew what they were getting into? For a borrower that was truly taken advantage of there are a dozen who commited fraud along side the LO or broker or on their own without the LO/Broker knowing. This mess is everyone's fault. Sen dumb dumb, why don't you give back your donations from Wall Street and start a watch dog group on your friends down in Wall Street. Leave Califonia alone.

[Chuck Scummy]

Who profited??????? When IndyMacs' stock plummeted 25% after chuckies' letter was leaked - who profited? Somebody scalped around 10M shares of IndyMac stock in just a few hours. Is this just one more example of a slime ball politician and his cronies lining their pockets at the expense of america? Hey - I could care less that chuckie caused a $100,000,000 run on the bank - I don't even care that he will be the person most responsible for the death of IndyMac - I'm just pissed because I'm not one of his cronies!

[TheBankDick]

I am an agent who, during the banking crisis of 1988 - 1992, investigated many, many failed banks. I also frequently run cases that are the subject of Congressional scrutiny.

From my vantage point, Schumer was way out of line in making his comments public. It was his chocie whether his letters to OTS and FDIC were made public; he did it on purpose - just to get more attention. He could have sent it privately but he chose not to. An irresponsible "look at me" exercise.

Members of the House and Senate get briefed on classified and otherwise confidential matters all the time. Unfortunately, I've never met a Member that didn't have an agenda, so these leaks happen all the time. Conduct like that displayed by Senator Schumer is why there is now a rule that says matters currently being investigated criminally are exempt from Congressional oversight.

Frankly, he should be censured or sued.

Jennifer, while you have a very valid point about the pain that is inflicted when a bank is closed, I'm afraid you missed what is really happening during the probationary period - the regulators and the bank are trying to work out a resolution that avoids the bank failing. These efforts are often successful and, when they are, they manage to avoid inflicting the pain on the public, the employees and the DIF. Some examples of resolutions which avoid pain are bringing in a new management, having another institution merge with the troubled bank or outright assumption by a healthy institution. So there is a reason they don't slam the door shut at the first whiff of a CAMEL 5 rating.

Bank Exec was right - confidentiality in banking regulating is vital. If banks can't speak freely with regulators for fear of Senators making these kinds of irresponsible statements, banks will stop talking to regulators - period. Then no one is going to know what's happening and the banking system will be in more jeopardy than it is today.

Indy may or may not be a troubled institution (even if I knew, I wouldn't say so publicly). But it is appropriate for all depositors and investors to know their banks - just as the banking industry is constantly reminded to "know their customers." So do your own research. If your bank's stock is crashing, and the loan loss reserves look inadequate, and they suddenly start offering CDs with seemingly outrageous rates of interest, use your best judgement.

Be safe...

[Mike]

To all the posters that are indignant that they are not part of the evil short sellers posse: it isn't possible to short a share under $5.00.
Indymac has to jump 4 400% to get back to its year ago price. IMB has been clearly dead for over six months to anyone with a frontal lobe.
While the senator may have issues the devastating and not talked about extension of credit by the FHLB will be studied for decades in our colleges.

On another note: "Indy may or may not be a troubled institution"?!! You are the one keeping our banks safe?!

[M Stephens]

All I see is that Schumer did the equivalent of saying, "Where are the emperor's clothes?" Many of you say that Indy's demise is obvious and has been for quite some time. Well, it is now so obvious that even a SENATOR notices it and says something about it.

I fail to see how anything banks are doing right now is really doing any good. If there were a solution I should think that they would have found it by now and we'd be hearing about it, but instead things get more troubled. When solutions have failed, it seems that it is time to say so.

If it is true that banks will never tell Schumer anything ever again, all that really says is that they have plenty more ugly stuff to hide. If things were just fine, they would have no problem opening up.

I think Schumer has guts.

[RegulationMan]

To those of you who think that Chuckie did a service to the customers of IndyMac by breaking confidences and speculating on it's eventual demise, think about this:

a) Chuckie could have just as easily sent letters asking if IndyMacs situation was being monitored, and expressing confidence in the regulating authorities. Why didn't he?

b) So, it's ok to speculate about the demise of a very large banking institution, causing a minor run on the bank's deposits and fueling rumors which lead to destabilization and mistrust of the banking community, but it's NOT ok to speculate about other highly classified material that Chuckie is privvy to as a result of his position? Who was Chuckie trying to "protect?"

c) During the FDIC's 75-year history, no one has lost one cent of insured deposits. To preserve confidence in the banking industry and prevent the panic of the late 1920s and early 1930s, the FDIC is very circumscribed when it comes to bank information. This allows banks to trust the FDIC with sensitive information, and allows customers to have confidence that the FDIC is doing it's mandated job. Deposit accounts are insured up to $100,000 per account, per depositor, grantor, or beneficiary; therefore, it is possible for a family of two parents and two children to be insured for $1,200,000, given the different types of deposit accounts available at an institution. And yes, interest is insured in that amount. as well (contrary to an earlier post from someone who is woefully uninformed).

d) Chuckie should be under ethical and criminal investigation to ascertain exactly why he felt the need to create a panic, and who benefitted directly from his actions. You can't convince me that someone related to Chuckie's personal or professional interests did not benefit from his indiscretion.

[martscan]

First, it is my understanding that Sen. Schumer had brought the matter of IMB to regulators' attention privately, but did not receive any feedback and, thusly, made it a specific point to go public with the express intent of putting pressure on the agencies, who he considered were being lax in their duties and responsibilities.

With respect to comments of 'TheBankDick', I find it contradictory, and hypocritical, that he would find Schumer's public release of his letter so 'irresponsible', yet mention that Congressmen all have an agenda and "these leaks happen all the time." When, BankDick, have you last called for a "leaking" Congressman to be "censured or sued"? And, pray tell, on what grounds would Schumer be sued and by whom? Also, BankDick states that the type of conduct displayed by Schumer precipitated a rule exempting Congressional oversight of matters that are being criminally investigated. BankDick, what specific case triggered the rule and is IMB being criminally investigated? Additionally, has the Senate Banking Committee ever recommended such an investigation of a bank to the DOJ? If so, what is their authority for doing so? Further, is IMB on some sort of "PROBATIONARY" status? If so, when did this occur and what is the source of your information? Regarding a CAMEL 5 rating and "slamming the door shut"...since there is no CAMEL 6 rating, what IS the criteria for "slamming the door shut"? BankDick goes on to say, "If banks can't speak freely with regulators for fear of Senators making these kinds of irresponsible statements, banks will stop talking to regulators - period." Is this meant to be a joke? Since when do banks have the option of answering regulators questions "freely" as to the banks solvency? For someone claiming to be a bank examiner of some kind...this is utter fol de rol, nonsense of the first rank. And, to suggest that the average depositor preempt the regulatory agencies functions by "knowing their banks", and satisfying the depositor's requirements of the bank's loan loss reserves is beyond ludicrous. Frankly, I'm embarrassed for BankDick..who should have signed his phony didactical piece, PiggyBankDick.

[martscan]

Regulation Man:

I don't know where it has been written that Senator Schumer's letter to the regulatory agencies was meant to be a service to IMB's customers. I'd like to see your source for this. IMB's customers and stockholders were already screwed before Schumer's letter.

a) It is my sense that Senator Schumer wrote the letters, and made them public, because of his LACK of confidence in the agencies.

b) To what other "highly classified material" are you referring? Aren't you speculating?

c) Contrary to your assertion that the FDIC is "very circumscribed" as a result of bank failures wrought by the Depression, the fact of the matter is just the opposite. The FDIC strives to be highly transparent for the public's benefit. Just ask them. Your statement, "This allows banks to trust the FDIC with sensitive information...", is patently ridiculous on the face of it. Are you telling people that banks can arbitrarily withhold information, say, a little financial statement, from the FDIC? Banks DO NOT have any options when it comes to providing ANY financial information requested of them by a regulatory agency under whose authority they answer to. PERIOD. OUGHT. ZING. ZERO. S**T!!

Regarding your claim that a woefully uninformed person, who I take to be me, erroneously stated something to do with interest not being insured... Take a lesson. I said I bought CDs less than $100K because interest plus principal in excess of $100K is NOT covered. Your scenario of mom, dad and the 2 kids apparently fails to take that fact into consideration as you maxed out the account combinations, and accrued interest on your $1.2M accounts would NOT be covered. Really, not too smart.

d) Woeful conspiracy hogwash.

Reggie, you can't convince me you're not the type that doesn't think there are boogiemen under your bed...if there are any, they should be ethically and criminally investigated.

[Michael LittleBig]

Director John Reich, Office of Thrift Supervision that oversees the Federally Chartered Savings Banks is the main reason that we have a foreclosure crisis in the USA. Senator Schumer is also part of the problem. Director Reich does not regulate, nor supervise nor enforce the violations of the savings banks that his inept organization is charged with regulating in the mortgage lending operations. Banks are self regulating, there is no oversight, and the federal examiner does not have to time, education or the smarts to ferret out a banks unethical operations until the public starts complaining. The Office of Thrift Supervision on their letter head stated in 12-2006 that there is no federal consumer banking regulations. That means that if a mortgage borrower is harmed by unethical savings bank there is no redress for the borrower and the OTS will not enforce or punish their banks for any wrong doing because there are no regulations violated, because there are no regulations. That means the Senator Schumer is the problem because the Senate banking committee has not passed any federal consumer regulations. This is an example of the wealthy and the powerful protecting the wealthy and the powerful. One of Director Reich’s savings banks in Cleveland Ohio with wanton disregard for the operating federal regulations sold my house at foreclosure in 2008 because there were no federal regulations to permit my redress with this unethical savings bank and I did not have the thousands of dollars to hire a creative attorney. Yes, I signed the banks papers and understood what the terms, but this bank changed the rules in the middle of the gotcha game. The description of a bank’s mortgage document is a vague, broad definition
that can be interpreted any way the banks attorney sees fit.
Furthermore I am not surprised that John Hawke OCC agreed with Reich. These Banks operate their lending operation with ruthless impunity. They have continued this pattern since the savings and loan crisis since the 1980’s. The present foreclosure crisis is nothing more than a repeat of that same saving &loan crisis, only worse.
There is hint that they operate their credit card operations in the same way since the bankers demanded for years that Congress give them relief from their card holders filing bankruptcy and costing millions. In 2005 the Congress gave the Banks what they wanted and now today a new credit card crunch is underway choking the financial life out of millions of credit card holders. This is called the wealthy and powerful protecting the wealthy and the powerful.
The Cleveland Ohio savings bank that filed their foreclosure against me, threatened to file a frivolous lawsuit against me for fighting my foreclosure. This arrogance of this savings bank is matched by the arrogance of Director Reich. Keep in mind that Director Reich is appointed by the president of the United States and only answers to Congress.
My savings bank refused for years to discuss the issues, but kept complaining that I was harming their reputation by talking about the issues with the State and Federal officials. The US Attorney’s office in Cleveland Ohio told me that their job was to protect the bank and that I should take my complaints to the Office of Thrift Supervision. The FBI in DC told me that my foreclosure was a civil matter. The State of Ohio said that it had no authority over federal banks. Please note that the lack of government oversight regarding banks with regards to their mortgage lending which is verified by the fact that two states now are suing Countrywide bank which by law is untouchable by a states authority to regulate a federal. 2 million foreclosures and counting.
Mr. Hawke knows better about not mentioning a Banks name because it could hurt the Banks reputation; try National City Bank Cleveland Ohio, how many customers were hurt. Director Reich knows better, try Countywide Bank and Washington Mutual, how many people got hurt because Director Reich did not tell those borrowers.
The analogy would be not releasing the name of a bank robber because it might hurt his criminal reputation. Complaining and commenting to this piece changes nothing, it just
strokes your ego. Do something constructive, tell Director Reich by email what you think, at the Office of Thrift Supervision at their public intake……… Public Info@OTS.Treas.Gov

[million]

our financial system has regulators?? that's the funniest assertion i've read all day, thanks for the laugh.

i suppose there are some spineless types that have that job descrip, but nobody embodies the term "regulator" in our financial system. nobody.

Schumer provided a much needed public service, for once in his Congressional career.

[DemandSide]

Blame the messenger.

If we had listened to Schumer last year at this time, there would be a much different situation in the financial system.

To say the regulators know what they are doing when they are putting wallpaper over rotted planks is not helping anybody.

[Left out]

Speaking as a family member of one of those 'spineless regulators' I'd love to personally meet Schumer and thank him for causing a hell of a lot more work than he needed to for those regulators and ruining most of their Independence Day's. VERY PATRIOTIC of him to leak the news right before the holiday and force them all to work over the 4th. I know for a fact that the bank would have been fine another couple weeks if he had waited. People don't understand the consequences of their actions- they just want to make their own names look good. Someone should put him in the pentagon- I bet he'd announce a full deployment of all military on Christmas Day.

[Bill George]

For several years Federal Reserve Governor Edward M. Graemlich attempted to warn policy makers, regulators and legislators about the issues that created the mortgage meltdown. It's amazing how our legislators and regulators seem to want to hold hearings and dwell on the last crises they failed to anticipate, rather than try to better understand the sources of the next un-anticipated crises.

Not so long ago mortgage lenders had to hold to maturity the "paper" they created, or otherwise bear default risk for the loans evidenced by the "paper" they created. But when mortgage originators, mortgage lenders and investment bankers discovered they could package the paper and sell it (with a lot of underwriting hype and "mystery" risk modeling) to a "greater fool" the whole idea of real risk analysis flew out the window. Everybody lied a little, everybody cheated a little, everybody engaged in hyperbole and soon the cost of an average home was bid way out of line with the local income statistics necessary to actually support home ownership.

Never bet on a house of cards.

Do a key word search on: Edward M Graemlich September 7, 2008, and read the Washington Post obituary.

[Rantly McTirade]

At last, a reason to have a modicum of respect for Chuck Schumer. An even
better reason would be if Schumer, and a whole lotta other Congresscritters
publicly stated:'We are the elected representatives of the American citizenry
and you(regulatory bodies) WILL share any and all information with us that we desire, when we desire, or we WILL cite you for contempt of Congress
and see your butt in jail. Additionally we are now going to undertake a vigorous investigation of how our financial system generally-and especially the depository institutions-became so toxic and dangerously degraded, and regulatory incompetence and/or corruption definately will be a major locus of investigation, so the jail thing for regulatory executives-as well as many, many executives and managers at private-sector financial firms-may be attained in this fashion, along with full impoverishment via personal asset seizure. Now shut the !*&# up and get busy providing the following-initial-
documents we desire.'
And monkeys will fly out my butt.

[Bill George]

KEY WORD SEARCH CORRECTION: Fed Governor Edward M. Gramlich

[rhcesquire]

Schumer is clearly involved in stock price manipulation and should be tried, convicted and sent to prison. Everyone on his staff should be subject to investigation, deposition and criminal proceedings - I'm sure that they were in on the stock manipulation.

This man is a criminal. Why is he not behind bars?

[barla]

Some have said Senator Schumer’s initial leak was irresponsible and reckless. In retrospect, his behavior was worse; it was criminal and he should be censured and removed from the Senate Banking Committee. His leaked statement caused a panic and run on IndyMac Bank that was not a “ mini run”, it pushed the bank over the edge because it lost its rating of “ well capitalized”, costing 3800 employees their jobs. There are many banks and mortgage lenders teetering near disaster, but Senator Schumer did not express concern about them.
Additionally, the Senator would appear to 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.
He has an axe to grind and has made it clear that he plans to destroy IndyMac Bank.

[Barla]

Would you say that Schumer has a conflict of interest goin, sitting on the House Banking Committee and taking over $1 million from investment bankers and commercial banks in campaign contributions?

According to the Center for Responsive Politics these were his 2004 contributions:
Goldman Sachs $270,090; Citigroup Inc $241,100; JP Morgan Chase & Co $135,550; Credit Suisse First Boston $154,794; Morgan Stanley $194,000; Bear Stearns $140,900; Merrill Lynch $147,000; UBS Americas $139,750; Lehman Brothers $115,000; and Bank of America $71,600.

This is about double what he received in his 1998 campaign. In 1999 he supported the GLBA which deregulated investment and commercial banks allowing mergers and enabling investment bankers to not only securitize mortgages but also originate and fund them through their mortgage companies like Aurora and Lehman.

[FMJ]

Michael LittleBig you have it right. I don't think Schumer called the alarm out of the blue. I have been dealing with IndyMac for over a year with a construction loan and I know they have been in trouble for some time. I complained to the Office of Thrift Supervision and my own senator....what is apparent to me is that the Office did not investigate...they responded and they KNEW Indymac is in trouble. Any idiot who read my letter would have seen this....and maybe, just maybe Schumer had constituents who contacted him as I did my senator. And, Schumer understood the complaints and did something about it. My experience with Indymac is they have been deceptive and predatory. And, many of the people I have dealt with I KNOW more than they do about banking. The alarm has come to late and Indymac has been fooling it's investors for some time. The Office of Thrift Supervision has not done it's job. I'm sorry they had to work on the 4th...but if anyone had investigated my letter in January they would have been way more on top of Indymac than they were. Thank you Schumer for protecting the little guy...we have so few advocates in government for us.

[barla]

MORE REASONS TO CENSURE SCHUMER

The Senator would appear to 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. Notice the marked increase in the size and number of contributions from his 1998 campaign and 2004 campaign. They can be labeled Pre and Post Gramm Leach Bliley Act approval rewards.
2004 campaign contributions:
Goldman Sachs $270,090; Citigroup Inc $241,100; JP Morgan Chase & Co $135,550; Credit Suisse First Boston $154,794; Morgan Stanley $194,000; Bear Stearns $140,900; Merrill Lynch $147,000; UBS Americas $139,750; Lehman Brothers $115,000; and Bank of America $71,600.
1998 campaign contributors:

Goldman Sachs $102,550; Citigroup Inc $99,116; Bear Stearns $37,850; Lehman Brothers $35,750; Merrill Lynch $31,150.

According to Rep. Barney Frank(D-Mass.), the chairman of the House Financial Services Committee, "We are in a worldwide crisis now because of excessive deregulation." He noted that in 1999 when Congress replaced the New Deal-era Glass-Steagall Act with a set of looser banking rules, "we let investment banks get into a much wider range of activities without regulation." This helped create the subprime mortgage mess and the cascading calamity in banking. http://www.washingtonpost.com/wp-dyn/content/article/2008/07/10/AR2008071002264.html?referrer=emailarticle.

In his April 10, 2008 article on the Bear Stearns bailout, Robert Novak of the Washington Post alludes to possible price fixing and Senator Schumer appears to have been acquiescent and Senator Dodd apologetic, but neither provided the leadership called for by the occasion.

“ …at the Senate Banking Committee hearing on the government's historic bailout of Bear Stearns, two questions were expected. Who set the initial bargain-basement price of $2 a share for the investment bank? Who picked J.P. Morgan Chase as the fortunate buyer? Those questions were not clearly asked and were not answered at all.

“A fraternal mood prevailed on both sides of the table, as if Wall Street had moved to Washington. While conservatives inside the administration are unhappy about the intervention in markets, President Bush seems content with how the Federal Reserve and the Treasury cooked up the deal with erstwhile colleagues on Wall Street. ……Uncritical Democratic senators were not even inquisitive.

“The closest a senator came to asking who set J.P. Morgan's price for Bear Stearns was this apologetic question from committee Chairman Christopher Dodd: "There's just reports -- I want to share them with you -- that they [J.P. Morgan Chase] would make an offer of $4 a share. . . . Did you or anyone in your agency provide feedback to J.P. Morgan or Bear Stearns on the value of that offer?"

Senator Schumer should be censured for his statements and their leak regarding IndyMac Bank which clearly precipitated what has now become a $400 million run, FDIC conservatorship, the loss of probably more than the initially designated 3800 jobs and a major loss to the San Gabriel Valley and Pasadena Communities.

Senator Schumer’s behavior is wonton, irresponsible, reckless and criminal and he needs to be investigated for the handling of the Bear Stearns bailout, his Countrywide investigations as well as any dealings he may have had with respect to IndyMac Bank.

[Andrew]

I think Jennifer is really Chuck!

[Dee Smith]

Did not any of you read the whole article most of the mortgage loans were undocumented which means no proof of employment and assets,they were giving mortgages out like candy bars to people that had no documents. When was the last time you purchased a home with no money,documents or assets which means no money down,

[edgar]

For Bithead: The reason for Schumer's behavior it's simple. Like every other communist he wants control over economy and banking system centralized, in the hands of the government, no matter if the administration is democrat or republican. Lately there is no big difference between them anyway.

[Greg]

Well Jennifer,
Regulators have a list of problem banks ranked from likeliest to fail to not.
I guess you think this should be published today in the interests of full dislosure.

[Rob Stumpf]

Ridiculous. All Chuck cares about is publicity...all he ever does, about any issue, is put out press releases. And moronic New York liberals eat it up...the same geniuses that gave us Eliot Spitzer.

If Chuck has legitimate concerns to air, that's all good. But obviously, to do so in a way that's going to cause a bank panic is ridiculous. We need to know the truth, but we don't need to cause people to panic. Now, because of Chuck's desire of publicity, thousands of people are out of work this morning. What does he care?

[Jeanne]

Dee:
<<...they were giving mortgages out like candy bars to people that had no documents."

Even if true, that doesn't justify Schumer's publicly revealing proprietary information.

Of course, I don't know why any of us are surprised. His counterparts on the Intelligence Committee leak sensitive top-secret intelligence to the NY Times at the drop of a hat. They simply do it anonymously.

[JB]

OK, so, if loudmouth stupidor had't said anything, it seems that IndyMac would be continuing business as usual?

DUH!!!!????

Oh yeah, he's exempted from ETHICAL PRACTICE?

Yeah, And this used to be the United States of America, now it's ..........................................

[Fidei Defensor]

Whether IndyMac "deserved" this or not, I do not know and I do not care. However, Charles Schumer is a corrupt politician -- in fact, he is about as sleazy and crooked as politicians come. The timing, and thus motivation, of his actions are very suspect and highly questionable. And I completely agree with others above who are calling his actions irresponsible, reckless, and criminal.

On matters of national security, let it be also stated for the record that Senator Schumer is also a traitor.

[Bob]

The issue is not whether or not IndyMac should go down; the issue is whether or not Schumer should disclose sensitive information causing a mass panic.

Do we really want elected officials to publicly create panic. IndyMac did not have a run on its deposits until the letter from Schumer.

What Schumer did was paramount to yelling "FIRE" in a crowded room. He is the catalyst for the event. Without Schumer's letter IndyMac may have succeeded in righting itself and correcting its deficiencies or perhaps they still would have gone under.

Thanks to Schumer we will never know. He did the one thing that elected officials should never do but are so good at - he made things worse.

[Stephen Crouse]

I'm a mortgage broker in CT who has worked with Indymac since '99. They had an application platform which many thousands of brokers nationwide preferred over those of other lenders. It was very efficient and unique. Indymac had a small percentage of sub prime deals in their product mix compared to most other lenders. They were very strict in their U/W guidelines, something unknown by those who paint an evil brush stroke to all mortgage lenders.

They were drastically downsizing but were recovering until Schumer started firing away. Hopefully it will be learned why he picked out a relatively small lender in California to trash. Some others in their comments here, have suggested conflicts of interest.

Hopefully , we'll find out.

Steve Crouse

[TheBankDick]

To Martscan:

You missed the point.

Confidentiality and full disclosure to regulators allows the regulators to assist troubled institutions resolve their capital and liquidity problems without having to close them down. Usually thisd is done by getting another instutuion to assume some or all of the failing institution. Such negotiations occur under intense secrecy to prevent a run.

Schumer, whose legendary hubris is surpassed only by the national debt itself, just had to make another press release showing how important he was, "looking out for the people" and triggered a $1 billion + run on IndyMac by making the confidential information public. A $1 billion shift in the metrics like that kills rescue deals and, by midweek, no longer was a suitable merger was possible. Hence, he caused the closure.

So who should sue Schumer? How about the depositors who had in excess of $100,000 in deposits; there are about 10,000 of them (according to media reports). Their total loss wil be some part of $500 million (to be determined in the months and years to come - it takes that long to liquidate an institution and distribute assets).

How about the DIF? Rather than selling part or all of IndyMac back into industry, the FDIC had to go in and close it. The impact on the $53 billion DIF? Estimated to be something on the order of $5 billion (give or take a billion) - or about one tenth of the DIF funds available. And we have a lot more banks to close coming up.

Unfortunately, senators get some sort of immunity from suits for actions taken while in office, so a lawsuit actually wouldn't go forward. Pity. In one moment of poor judgement, Schumer cost thousands of employees their jobs, thousands of depositors millions of their dollars, and the DIF approximately one tenth of its reserves.

And you think the Senate's ethics panel shouldn't censure him? In China, they'd execute him for what he did.

So let's review the facts: there was no report that IndyMac was under criminal investigation, so Congress could inquire as to its condition. Under conditions of confidentiality, Schumer was briefed. When he didn't see enough activity in the media, he put it there. That started the run, which collapsed any chance for a resolution, which forced the bank's closure.

Thanks, Chuck. At least you could publicly apologize to all those you hurt...

[IndyMacMikeNYC]

I just learned on the news this morning about IndyMacs takeover by the feds.

I voted for Senator Schumer in past elections and I have my current mortgage with IMB....well had. This whole thing has me wanting to start a campaign to flood this guy's office with phone calls, letters, etc expressing my extreme displeasure with his actions.

Granted, Jennifer makes some relevant points in her post. However, the bottom line is that there are protocols for this type of information to be shared and he didn't follow them. If this happened with every institution that may be having trouble, think of the outcome....We all might as well go out now and buy fireproofed mattresses.

I'm really shocked by what I feel are his reckless actions that have not only added to the current panic of the economic state of this country, but has also directly impacted others who were dependent on IMB to survive.

I hope this isn't any posturing on his part for a cabinet or other higher level position within the potentially new administration.

In the meantime, I'm trying to find out what this means for me as an individual being a NYer with an IMB backed mortgage.

Schumer, if I could have my vote back, I'd definitely take it back from you.

[paul]

Good news for democrats=bad news for the US.

If you haven't figured this out:

the democrats WANT economic calamity, as the economy is percieved as one of the key strenghts of the democratic party.

caveat:
63% americans believe weare in a recession...we aren't.
56% of americans believed Saddam Hussien had something to do with 9/11...he didn't.

just as the WH slow walked us into Iraq, the democrats are slow walking us into an econmic crisis. We aren't there yet, and the more we do now, the less the impact later. unfortunately, the democrats LOVE where we are now, and will do nothing to help, and everything to hurt.

If you fell things are bad now, what plan of action have the democrats offerred. Not the punishing of indivuduals, the actual means of getting out of the impending mess.

[Shona M. Brogden-Stirbl]

My Fellow Consumers (formerly known as Americans),

"Government is not reason, it is not eloquence, it is force; like fire, a troublesome servant and a fearful master. Never for a moment should it be left to irresponsible action." George Washington

http://houstonconservative.com/2008/07/chuck-schumer-causes-indymac-bank.html

[HEADLINE] Chuck Schumer Causes IndyMac Bank Failure
Time for Chuck Schumer to be investigated for interfering in the supervisory activities of the Office of Thrift Supervision (OTS).

[Keith]

Jenny and the other Schumer defenders are koolaid drinking apologists for someone who at BEST is irresponsible. If anyone has tracked or followed Schumer, it's obvious that he's a megalomaniac, and even worse, like most poiticians (particulary senators), an ignorant megalomaniac. He should be kicked out of the senate. He's not fit to be dogcatcher

[Carlo]

Schumer is a crook an needs to be investigated by the FBI over this. All banks in the USA are houses of cards. The government allows them to lend out more capital then they have, expanding the money supply and robbing from the rest of us. The government knows that a run on any US bank will cause it to fail. Schumer deliberately caused a run on Indymac and deliberately caused its failure. 1.3 billion dollars were withdrawn within a week. Schumer alleged the FDIC would not be able to cover the losses so even those with under $100,000 took their money out and this sealed the banks fate. It is obvious Schumer is working for other bankers and was told to do this. The government needs to investigate what Schumer knows and who is controlling him.

[Adam]

The OTC was right, Schumer is wrong here. There are rules on the books like this for a reason that Schumer (I happen to live in the area he represents and did vote for him, but this was just DUMB) just doesn't get. This is something you forward to the OTC, but you don't air the laundry when so much is at stake.

[Mikes]

Another question, does Shumer own stocks in Banks that would benifit from the failure of IndyMac? If he knowingly caused a bank to fail while benifiing from that failure Shumar may be guilty of stock manipulation. An SEC lawyer would have to look into this, but taking advantage of insider knowledge of a future stock collapse has sent many a stock broker to jail.

[JAY BECKER]

WE SHOULD MOVE TO IMPEACH SHUMER-- HE DOESNT DESERVE A POSITION WHERE PRIVACY AND SECURITY ARE AT STAKE. HE IS ANOTHER LIBERAL IIDIOT INTERESTED IN DEFEAT OF OUR DEMOCRACY..

JAY BECKER AKRON OH

[Colleen]

LOL, that is some comment Jay especially looking back over the last 7 years of this administration. You are a hoot. Schumer is one of the good guys actually working for the people.

[Pete de Leon]

A lot of people who get most of their information from the media are understandbly upset by the closure of a Southern California-based financial institution. As an Indymac Bank (IMB) employee, whether you believe it or not, I can tell you that our bank's failure was not due to some inappropriate or criminal behavior on the part of any officers and/or employees of the bank. IMB made mortgage loans based on the existing rules that both our regulators and Wall Street in general said we could do. The truth is IMB created opportunities to a lot of Americans to own a piece of the American dream, and we the employees of IMB will always be proud of that.

No amount of care and dilligence that we at IMB have been putting together these past several months to make IMB safe and sound, is sufficient to halt the fear and panic that ensued after the unfortunate disclosure of Sen Schumer's letters to the media. Its a lot of water under the bridge, but a question in the minds of thousands of fellow employees that have lost their jobs, has yet to be answered. What did the taxpayers of this country get in return by the action of a respected and high ranking member of the United States Senate in naming and singling Indymac Bank as a bank that is doomed to fail?

[Gary]

Senator Schummer should resign and be investigated for violating federal banking law!

It violates Federal law for a public official or bank official to make public statements about a bank's solvency

This is what caused the run on the banks in the Great Depression. Rumors.

[Billy]

I'm going to post a quote from a movie. Tell me if this doesn't seem similar to the present situation.

Cosmo: Posit: People think a bank might be financially shaky.
Martin Bishop: Consequence: People start to withdraw their money.
Cosmo: Result: Pretty soon it is financially shaky.
Martin Bishop: Conclusion: You can make banks fail.

[Greg Brady]

Classic run on the bank. Anyone seen "It's a Wonderful Life." Schumer is old man Potter who wanted and got IndyMac's failure for his own nefarious purposes.

[Vlad]

"Let's let the PROFESSIONAL BANK REGULATORS do the bank regulating"

I want to puke reading these words. Are we referring to the same “PROFESSIONAL REGULATORS” that drove the economy into the ground? Or to those who looked the other way while the short sales of the Bear Stearns shares were under way? Or, perhaps, those who opened up the national treasury for pirates from the Wall Street?
All that these so called “PROFESSIONAL REGULATOR” can do really well is to rob the country and make fools out of you! I think PROFESSIONAL GANGSTER is more appropriate!

[Bronx Boy]

HELP!!! I live in a state filled with brain dead idiots who continue to re-elect the Schmuckster and The Witch in the Pants Suit to represent us in Washington. (Part of the problem is the NYS GOP continues to run no-name crash-test dummies against them.)

This guy has always been a sniveling, slimy little rat. Why should we be surprised?

I can only fantasize that he gets ousted from the U.S. Senate, but I won't hold my breath.

Schmuckie Shumer is an embarrassment to the once great State of NY, and frankly, speaking as a fellow Jew, he's an embarrassment to the Hebrew race as well.

[martscan]

BankDick:

I get the point, loud and clear.

Rather than address the remarks I made in the first sentence of my critique of your prior comments, to wit: "First, it is my understanding that Sen. Schumer HAD brought the matter of IMB to regulators' attention PRIVATELY, but did not receive any feedback and, thusly, made it a point to go public with the express intent.........", you utterly ignore them and assume a didactic position by lecturing me on confidentiality and disclosure to regulators (I presume by banks). Could you not agree that my prior first sentence obviously evidenced my cognizance of exactly what you mention in your "point" rebuttal?

You go on to sarcastically describe Schumer's hubris as being of the stature of the national debt. Can we agree that you have been 'anti-Schumer', for lack of a better term, long before this flap? By extension, is it fair to presume, Mr. BankDick, that you are a Republican?

Are you aware of the price of IMB stock in the month prior to Schumer's revelations? In the 3 months prior? In the 6 months prior? Are you aware of ANY negative press concerning the financial state of IMB prior to Schumer's revelations? Would you agree, Mr. BankDick, that it is fair to suppose that most IMB depositors having in excess of $100K in the bank were aware of IMB's press coverage in the month before Schumer's revelations? You would agree, wouldn't you, that most stockholders of IMB were certainly aware of IMB's stock price in the month, the 3 months and 6 months prior to Schumer's revelations? Wouldn't it be fair to say, Mr. BankDick, that any reasonable person could safely assume that most depositors and stockholders of IMB were aware of IMB's deteriorating financial condition prior to Schumer's revelations? I'll take this answer as an unqualified 'yes'. Given all these conditions, isn't it fair to say that IMB was headed for insolvency and if, indeed, that is the case, isn't it fair to say that, barring the bank's successful attempt to rid their $500M+ portfolio of inferior quality Alt-A loans which they had been aggressively shopping with no takers in sight, and other attempts to shrink their balance sheet and meet mandated reserve ratios, that it was only a matter of time before the bank would be in receivership? You know perfectly well the answer to this question is a resounding YES! Ergo, did Schumer CAUSE the closure? NO. Did Schumer's actions speed the process? YES. As I have said, Schumer's only indiscretion was that he did not act SOONER. Had he brought public pressure, rightful humiliation in my view, on the reg agencies a year earlier, when IMB was in a better position, along with the industry, to peddle their junk...the bank could have been saved.

Mr. BankDick, please, stop with the law suit talk, its not only ludicrous on the face of it but it would have not get past the court house front door. A class action lawsuit brought by disgruntled depositors savvy enough to accumulate in excess of $100K, $200K in joint accounts, because the excess of $100K is not covered by the FDIC in a bank that the depositors knew for months was falling apart, against a United States Senator that did nothing but make the facts of the bank's financial condition known to the public...his employers, so to speak. Excuse me, I'm taking a laughing break.

And how about the DIF? Are you telling me an entity organized to perform a certain function is not allowed to perform that function under pain of mortal sin? So the DIF is out $5B, that is exactly why it was formed, isn't it? Yes or no, Mr. BankDick? Now member banks will get a dues assessment to bring it up to $53B...they should think ahead and raise it to $100B, they're going to need it.

Mr. BankDick, YOU don't seem to get the point. If any public official is culpable of misfeasance here it certainly is NOT a U.S. Senator..it is that, those, official(s) WITH THE EXPRESS RESPONSIBILITY OF REGULATING FINANCIAL INSTITUTIONS TO THE EXTENT THAT THE PUBLIC'S MONEY IS PROTECTED. The banking regulatory agencies DID NOT do this. What is so difficult to understand?

Mr. BankDick, on an emotional note, that you would allude to the execution of Sen. Schumer, however remote the simile, metaphor or comparison, I find reprehensible, disgusting, spiteful and indicative of your totally blind, authoritarian partisanship and contrary to everything which our country aspires to stand for. As an American, I am deeply offended by your remarks.

[Oscar BullFrog]

ummm, is it even possible to sue mucking-chuck for his reprehensible and intentional destruction?

i wonder why he didn't pick on a ny bank first ... oh, wait; nevermind.

The FDIC, by design, will not reveal which banks may or may not be
having problems or may or may not be under investigation because a
run on a bank is typically instigated by speculation, rumor, inuendo
or senator schumer. (i think the fine for revealing starts at about
$1 million.)

chuck schumer knew precisely what release of his letter would do, cause
a run on the bank. and schumer knew that that run would then cause the
destruction exactly as he planned. schumer incited the run against an
existing precarious situation at IndyMac; precarious, not insolvent -
until the muck-from-chuck incited that run.

there *IS* a newly-started investigation that the bear-stearns run was
instigated by a rumor - schumer learned fast.

[Juanita]

The man should not be allowed to continue in office and should be investigated. He guaranteed the failure of this bank and it can/will happen again if they don't make an example of him and put him out.
I find what he did not only harmful to this bank/the bank industry but, it undermines the confidence of any entity and in this environment I find it to be one step away from treasonous.

[david p.]

"And since when are regulators supposed to tell the public in advance that a particular institution has been earmarked for possible failure?"
Why would an institution be allowed to operate at near possible failure in the first place? We are talking about the simple responsibility of holding deposits for everyday folks here.
As soon as the rules and regulations are removed, undesirable elements creep in.

[Dagmar Solberg]

Me, I'm sad.

I'm an employee with the IMB bridge bank IndyMac Federal Bank. I'm just a phone room monkey, a little person in the trenches, right on the front lines of this crisis. I have a job, for now. I'm one of the lucky ones.
I've heard every story imaginable from mortgage loan borrowers. Now I listen to the consumer banking borrowers as I assist in answering their overloaded phone lines. I've looked a this issue from the inside, and from the outside. I've read the articles, watched the press conferences, listened to the mocking and laughing and crying and whining, and tried very hard to be educated and objective.

I am here in the middle of all this, a loyal worker for a company I adored, a company that placed high value on me as a person and a productive worker. I lament the downfall of what I think of as one of the few institutions that genuinely embraced diversity, creativity, and inventiveness.

At first I was furious with Senator Schumer, feeling he had indeed cried, "Fire!" in a crowded theater. I still do not discount his role as one of the contributing factors to IMB's collapse, but I feel that ultimately it is the human traits of Greed and Fear which were primarily instrumental.

It is Greed which drove the housing bubble, and motivated lenders to broaden their approval requirements. It is Greed which stimulated home-buyers to apply for loans with payments they could barely afford, purchasing homes that were beyond their means. Greed led to the refinancing of loans to use more and more home equity in order to spend more and more borrowed money - to keep up the appearance of affluence, perhaps, or to acquire more possessions.
It is Greed which drives predatory lending, but it also drives predatory borrowing. Greed kept consumers and banks turning over transactions at an ever-increasing rate.

The economy did not do what was expected. People weren't able to later flip their houses or loans for better terms. People lost equity as home prices plummeted - many of them had home equity lines of credit which got frozen, and cried out in fury that they would not be allowed to continue spending.
Interest rates went up, loan payments increased, and people who could barely afford to pay their initial payments were unable to pay the new higher payments. Some are still in the grip of Greed, and unwilling to cut other expenses in order to keep their mortgages current. Some are simply way overspending beyond their current means. Some were uneducated or uninformed innocents paying the consequences of their & others' actions.
I see many players in this crisis. Government officials, government agencies, private brokers, lenders, underwriters, real estate agents, attorneys, and citizens. Any individual can be driven by Greed to do shocking things.

Now we are looking at Fear. Fearful account-holders are pulling out their deposits in a panic, convinced they will lose everything. Fearful homeowners are desperately trying to renegotiate their loans. Fearful doom-sayers are predicting a terrible recession full of misery and chaos. Fear is driving people to make bank-runs not just in America, but world-wide. People's fear of banks is growing, as their fear of the government and fear of their neighbors.

I'm scared, too. I'm afraid of being laid off and having to struggle to find work again. I'm afraid of my workplace being purchased by another mortgage giant - one that won't be as good to me as my former employer. I'm afraid of what the future holds because it is so uncertain. And I'm one of many thousands of people who feel this way. Employees, their family members, and everyone directly effected by the fate of the IMB employees is afraid to some degree.

I watch all these arguments about the culpability of this regulatory body or that individual. I read articles about the economics and implications and etc. But I don't see any mention of the people whose individual lives hang in the balance. I wait in the eye of a hurricane, while the controversies and crises fume around me, baffled and sad.

[martscan]

Dagmar:

You are obviously much too intelligent to have been "just a phone room monkey", or this piece was written by a professional.

If you, indeed, wrote this, you will have no problem getting a better position that matches your intelligence and talents, provided you present yourself to employers that can recognize your potential.

I suggest you contact Tom Petruno at the Times Financial Section. Certainly, tell him I recommended him to you.

And, Dagmar, learn this: it is not only perfectly legal and acceptable, but absolutely morally incumbent upon you to yell "FIRE!" when, in fact, the theater IS on fire.

[Dagmar Solberg]

Well, thank you, Martscan.
I did indeed write that and am not a professional writer. However, you've given me something to consider...

I suppose my use of the phrase "phone room monkey" is a bit flippant, but it keeps me humble. Truth is, it's mentally challenging work, which I find rather exciting, even when it's at its most frustrating. I like negotiating, using lateral thinking to do problem solving, and I like those moments when I get to be someone's hero. Plus, I get (got?) decent pay and excellent benefits.

I have made my contingency plans and feel confident that I'll not be facing any significant period of unemployment.

I do see your point of view regarding "Fire!" - however (to shift metaphors) I believe we had adjusted our ballast and were poised for recovery when the senator tipped the balance with his outcry. To me, his seemingly heroic act served primarily to damage the delicate balance and destroy any chances of recovery the company had.

Let's say I am able to think the best of Schumer:
He's in a pretty tough position now, having risked his career, his credibility, and his position in relation to the country's financial institutions, in order to do something he thought was morally right. I'm guessing that if he did mean well, he did not foresee the full extent of what would result. Maybe he didn't realize he'd stir up mass panic. Perhaps it didn't occur to him that he might not be considered trustworthy with confidential information anymore. It may be the case that in his zeal to make his urgent point, he just didn't think it through all the way. Economics still confuses me, and perhaps the senator's understanding is also limited.

Hey, he's only human.

Still, being human also means being able to feel things such as fear and greed. Charles E. Schumer is not above these emotions.