Feds Seize IndyMac in Second Largest Bank Failure in US History
Here's one for the history books - IndyMac Bancorp, the bank began by Countrywide founder Angelo Mozilowhich, is no more. Federal regulators seized the California bank on Monday, citing not the subprime mortgage industry mess as the cause of the bank's demise, but Senator Charles Schumer (D-NY). So just how does one man cause the downfall of a multi-billion dollar bank?
Schumer recently criticized the Office of Thrift Supervision (OTC) for allowing banks to underwrite shoddy mortgages. Specifically, he mentioned that IndyMac could be in trouble. Following his criticism, depositors began a run on the bank, withdrawing up to $100 million per day from their accounts.
John Reich, director of the OTC, issued this statement, blaming Senator Schumer:
“The senator made comments in his letter questioning the viability of the institution. When a member of the United States Senate makes such a statement, it frightens depositors.”
To the OTC's statement, Schumer himself responded:
"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. Instead of pointing false fingers of blame, OTS should start doing its job to prevent future IndyMacs.
IndyMac's failure is going to cost the FDIC about $10 billion. IndyMac customers will be able to have access to their money through ATMs over the weekend, and will gain full access by next week. In the meantime,however, there have been runs on the bank, with long lines and many outraged customers.
Approximately 10,000 customers of IndyMac deposited collectively $1 billion above the FDIC insurance limit of $100,000. They'll get the $100,000 insured by the FDIC, and about half of the non-insured portion. The rest of the money will just disappear.
This bank failure should serve as a reminder than deposits up to $100,000 will be insured. However if you have more than you you'd be better off spreading your fortunes around to different accounts and banks to stay on the safe side.
The failure of IndyMac also leaves many consumers wondering - "Will my bank be next?" According to the experts, the banks most at risk for a fate similar to IndyMac are the smaller regional banks.
Comments
New York Times reported that hedge fund managers have a new champion in their effort to keep legally dodging the taxes the rest of us pay: none other than New York Senator Charles Schumer. Now you know who is Schumer's friend and why he caused the bank run on Indymac. He truly support hedge fund and private equity because they truly support him.
http://www.nytimes.com/2007/07/30/washington/30schumer.html?_r=1&oref=slogin
"Large Investor decided to pay a few bucks to a Senator in New York to force the issue."(Prospect Mortgage Backed By Sterling Fund--Private Equity Acquired The Mortgage Branches from Indymac before FDIC takeover)
http://www.housingwire.com/2008/07/03/regulators-to-schumer-weve-got-a-whole-bag-of-shhh-with-your-name-on-it/
"And do remember that there are many investment bankers located in New York, making them pretty influential constituents of Sen. Schumer."
http://www.pasadenastarnews.com/opinions/ci_9783402
"In a Sunday news conference, he said everything in his letter was already known to the public."
If it was already known to the public, what is the reason for his public letter? It is contradict to what he said previouly :"I just bring private message to the public. Do not kill the messanger." What a great liar from time to time!
http://www.cnn.com/2008/POLITICS/07/13/indymac.schumer/?iref=mpstoryview
Same thing he did for FRE and FNM, he forced FRE and FNM to buy $145 billion bad loans last September. So his hedge fund friend could short the stock, then his private equity friend could take huge discount to acquire the properties. So obvious criminal acts, but he is still out law and do whatever to harm the American and benefit himself and his friends.