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Brown decides against probing Schumer on IndyMac

August 22, 2008 | 12:30 pm

California Atty. Gen. Jerry Brown won’t be investigating Sen. Charles E. Schumer for damning comments the New York Democrat made about Pasadena-based IndyMac Bancorp days before its collapse.

Brown’s office on Thursday sent a thanks-but-no-thanks letter to former IndyMac employees who had requested a Schumer probe.

"While we deeply regret the circumstances surrounding IndyMac's failure, we believe that there is insufficient evidence for us to investigate Senator Schumer at this time," the letter says. Read it here.

Schumercharles A group of 51 ex-IndyMac workers wrote to Brown last month accusing Schumer of a "malicious, politically motivated act" aimed at bringing down IndyMac.

Schumer on June 26 made public a letter he had sent to the Office of Thrift Supervision and the Federal Deposit Insurance Corp., saying he was "concerned that IndyMac's financial deterioration poses significant risks to both taxpayers and borrowers."

When the OTS seized IndyMac on July 11 it specifically fingered Schumer in the bank’s demise, saying that "the immediate cause of the closing was a deposit run that began and continued" after Schumer went public with his concerns.

The letter from the IndyMac ex-employees asked Brown to prosecute Schumer under a state law making it a misdemeanor to spread false and damaging statements or rumors about a bank.

Schumer's critics said he was trying to push IndyMac over the brink to make trouble for the Bush administration; Schumer asserted that banking regulators were "asleep at the switch" on IndyMac and that he was trying to wake them up.

It's politics all around in this particular financial debacle. As my colleague E. Scott Reckard wrote on Aug. 16, the IndyMac employee group had a partisan ally in their efforts to have Schumer investigated by Brown: Their letter was publicized by Alexandria, Va.-based CRC Public Relations, a firm whose clients have included the Republican National Committee, the National Republican Senatorial Committee and the National Republican Congressional Committee.

Photo: Sen. Charles E. Schumer (D-N.Y.). Mark Wilson /Getty Images