Saturday, July 12, 2008

Schumer causes run on bank

IndyMac Bank is broke
The Office of Thrift Supervision (OTS) are the regulators of the IndyMac bank which was seized yesterday following a panic withdrawal of funds by many of their customers.

“It’s the biggest failure in 24 years,” said Chip MacDonald, a banking lawyer at Jones Day in Atlanta. “You haven’t had a lot of failures of that size, yet.”
LINK: NYTimes

The OTS is at least partially blaming the panic on a letter written by Charles Schumer, the democrat senator from New York.

So our question should be, why did Schumer target one particular lender?

Was this really to benefit the American public, or is their some more dastardly reason for his letter? Hopefully, someone who "can" will find the answers for us.

Hopefully, the right reasons were the basis of the letter. Perhaps making the letter public was the mistake. Obviously people will react to such warnings.

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 letter expressed concerns about IndyMac’s viability. In the following 11 business days, depositors withdrew more than $1.3 billion from their accounts.


LINK: Full story - Feds cite Schumer

Schumer's response:

"If OTS had done its job as regulator and not let IndyMac's poor and loose lending practices continue, we wouldn't be where we are today," Schumer said. "Instead of pointing false fingers of blame, OTS should start doing its job to prevent future IndyMacs."

LINK: Government shuts IndyMac

LINK: FDIC IndyMac page

According to a blog by Jeff Kornfeld, a senior mortgage consultant for WCS Lending, 232 lenders have folded since late in 2006. Please note that I am in no way pointing anyone to a lender, this guy just happens to have the information I was searching for - the watchlist.

There are 17 lenders on the "watchlist" right now.

LINK: 17 Lenders on watchlist

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