Regulators to Schumer on IndyMac: Please shut up
5:47 PM, July 2, 2008
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.

Did Schumer Cause the failure of a major lender for gain in the upcoming elections? He may now face a class action lawsuit for his Hack Political Stupidity...

Feds Blame IndyMac Failure on Sen. Schumer
Schumer's comments blamed for depositors' panic




July 14, 2008
• Troubles Persist for IndyMac Customers
• Feds Blame IndyMac Failure on Sen. Schumer
• Feds Seize Mortgage Lender IndyMac
• IndyMac Cuts Staff, Trims Mortgage Operations
• Consumer Complaints


When federal regulators moved Friday to close mortgage lender IndyMac Bank, the office of Thrift Supervision pinned blame for the bank's failure on Sen. Chuck Schumer (D-NY).

Agency officials didn't leak their opinion, or have it attributed to "a senior official" within the agency. No, they put it right in their press release.

"The immediate cause of the closing was a deposit run that began and continued after the public release of a June 26 letter to the OTS and the FDIC from Senator Charles Schumer of New York," the news release stated. "The letter expressed concerns about IndyMac's viability. In the following 11 business days, depositors withdrew more than $1.3 billion from their accounts."

If that wasn't plain enough, OTS Director John Reich underlined the point.

"This institution failed today due to a liquidity crisis," Reich said. "Although this institution was already in distress, I am troubled by any interference in the regulatory process."

For his part, Schumer didn't take the criticism lying down. The senior senator from New York fired back that if OTS and the Federal Deposit Insurance Corporation had been doing their jobs, the meltdown might have been avoided.

IndyMac had been in a precarious financial situation that was caused, in part, by an unprecedented stress in the residential real estate market, combined with the evaporation of the non-agency secondary mortgage market in August of 2007. The OTS said it had significant concerns with the bank's funding strategy, had directed appropriate changes and was finalizing a new set of enforcement actions to address its numerous problems.

As a result of an OTS examination that began in January 2008, the OTS said it deemed IndyMac to be in troubled condition. An overwhelming majority of problem institutions are able to successfully modify their operations and business plans, work closely with their regulator and eventually return to a healthy condition, the agency said.

IndyMac had reacted to market conditions and OTS concerns in November 2007 by changing its operations and business plan to build a foundation for recovery, the OTS said, adding that IndyMac was actively seeking to arrange a significant capital infusion or find a buyer.

"The recent release of the senator's letter undermined the public confidence essential for a financial institution and took away the time IndyMac needed to pursue a recovery," the agency said in its news release.

The bank reopened today under FDIC control.

		Yes, I am a hack and could care less about America... My goal is to get elected...
		No, I have a really good excuse for causing the failure of that bank!!!! This is it....
		Hope.... No Change..... No Hope......
		I am lost and cant make up my mind.....

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