Bye, IndyMac, And Thanks, Schumer, You Idiot

The Wall Street Journal:

IndyMac Bank, a prolific mortgage specialist that helped fuel the housing boom, was seized Friday by federal regulators, in the third-largest bank failure in U.S. history.

IndyMac is the biggest mortgage lender to go under since a fall in housing prices and surge in defaults began rippling through the economy last year — and it likely won’t be the last. Banking regulators are bracing for a slew of failures over the next year as analysts say housing prices have yet to bottom out.

Frankly I think this somewhat overblown. IndyMac specialised in a particular segment of the market; Those who really didn’t qualify for a mortgage. I’ve been saying for some time that what failures occurred would be specifically due to the trend of the federal and state government to push issuing such loans on the idea that  it was some sort of panacea cure for racial discrimination.

That said, however, the immidiate cause of the damage be traced to one man… Chuckles Schumer., and we have already blogged about that one, last week:

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. anhttp://bitsblog.florack.us/wp-content/uploads/2007/07/schumer_charles.jpgd 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 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.”

That’s Tom Petruno of the LA Times blog.

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.”

Ya know, one would almost think that what Schumer is about is eroding public confidence in the economy. Now why do you suppose he’d want to do that? 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?

Gee, I wonder.

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 Schumer should stand trial, and prison. And keep in mind, I live in New York State.

The stampede of withdrawals that went on for over a week and caused the bank to collapse, started within a few hours of Schumer’s statement. How direct his guilt is is for others to decide, but he must bear at least part of the blame for this collapse. With the collapse of IndyMac, I’m more convinced that Schumer should be hauled up before a court for his misdeeds and see jailtime.

As such, I’m going to urge fellow bloggers to demand an investigation into the role of Schumer into the collapse of this institution, with an eye toward criminal charges.

Addendum: (Bit) Redstate has picked up a report that says Schumer is already being cited by the fed as the cause of the collapse. As Redstate suggests:

This is huge — that a federal regulatory agency would precisely finger a United States Senator as being responsible for a present financial disaster.

Indeed. Trouble is, Schumer’s a Democrat, and the Democrat congress will not hold him accountable without serious an unending pressure.

Addendum][:(Bit) This post made it to Reuters via Blogburst Thanks.

Addendum III:(Bit) This post made it to Google’s Financial page. Thanks