IndyMac Failure: How Much Trouble Is Sen. Schumer In?

In case you missed it amidst all the news about the iPhone this week, there was bank failure news and debate about the illegality or legality of spreading rumors. In fact, my Dealbreaker colleague John got into the equivalent of a street fight with NYT wunderkind Andrew Ross Sorkin all about this. NYMag did a fine write up about it here. You can guess which side I come down on.

So, now that IndyMac has failed, and the feds have cited Senator Chuck Schumer in causing troubles for it, will he go to prison? After all, if it's illegal to prompt a bank collapse for monetary profit, why not ding him for doing this for his own political profit?

Comments

[Thomas Smic...:]

How can you prosecute a politician for being a horse's ass? Chuckie has been doing this BIG MOUTH routine for years. Makes the late Jackie Gleason sound like an introverted mumbler.

2008 Jul 12 07:50 PM

[User 225572:]

What a dork this guy is....so self-important

go away Chuck you piece of crap

2008 Jul 13 09:01 AM

[gwinner:]

Schumer's suggestion that IndyMac would fail and the resulting run was a disaster, it may have happened at some point, but his actions show an ignorance that should help us all realize how ignorant our elected officials can be. The subsequent excuse was classic, basically: "If everyone had done their job right, this never would have happened". You too Mr. Schumer.

2008 Jul 13 11:07 AM

[TKTK53:]

This is the way Washington works, you should know that by now.
And this is the way most of the people that write these articles do too
They open their mouth and start typing just to send it to you.
Lets get the facts right first, and then print it
I have see many GOOD companys lose stock value when there was no cause for it just due to one of these articles

2008 Jul 13 11:23 AM

[PCScipio:]

Of course, IMB had been on a downward slide for more than a year, and any investor (or $100K+ CD owner) who got caught with their pants down doesn't deserve a whole lot of sympathy.

2008 Jul 13 11:59 AM

[waldipup:]

"This is the way Washington works, you should know that by now. "

Did we just brush past any justification for direct criticism of Schumer ?

(and by substitution , the criticism of ANY gov't official - unless , of coarse , it's a Republican , in which case this exemption doesn't apply!) -

And instead direct the criticism towards the guy daring to point out the inappropriate rhetoric by Schumer?

I reckon it's a free country and anyone can say whatever they want -

And I'm also glad we don't hang "witches" anymore ,

So if someone points a finger in Schumer's direction ,

They don't end up like Clint Eastwood in

"Hang Em High" for doing so.

2008 Jul 13 01:49 PM

[Urbane Gori...:]

The bank failed on its own merit. Schumer may or may not have popped the balloon... But if it wasn't a problem waiting to happen, it wouldn't have. As a member of Congress, who sits on many committees, he has the **obligation** to address problems. As a country, we like to bury our head in the sand and talk pretty in the hopes that the problems will resolve themselves. My understanding is that his office drafted a letter to the banking committee... Not sure how it leaked.... Buuuut!

Thx jegan ;-)

2008 Jul 13 03:13 PM

[Cash_and_Fetal:]

Chuck Schumer is an @ss clown.....
He single handedly wiped out BILLIONS of Equity in two short weeks.
He should be held PERSONALLY accountable for the 1000's of individuals personal wealth his words WIPED OUT.........

What do you mean "if it wasn't a problem waiting to happen...." His reckless disregard caused a RUN ON THE BANK and almost $2 BILLION was withdrawn from the bank in two weeks.......sure maybe a BofA could handle that kind of activity.....but do that to any other bank, and they'd be as much of a sitting duck.......What if he did that to Wachovia? What if this complete IDIOT came out and talked about Wachovia the same way he did IndyMac....you think Wachovia could handle a run on the bank? Wachovia is pretty sound....or so we think.......but when you lack deposits, your bank crumbles.....

2008 Jul 14 06:08 PM

[jackson hill:]

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.

www.nytimes.com/2007/0...

"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)
www.housingwire.com/20.../

"And do remember that there are many investment bankers located in New York, making them pretty influential constituents of Sen. Schumer."
www.pasadenastarnews.c...

"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!
www.cnn.com/2008/POLIT...

2008 Jul 14 07:42 PM

[equitytrader:]

I think some of you owe Schumer an applogy. The New York Post shows us to how IndyMac's failure was largely to blame on the OTS. And spells out problems years before Chuck outed them.
Keep in mind withdrawals were only $90m a day after Schumer letter was made public to the WSJ. After Indy announced it was out of the mortgage business (because the OTS finally forced them to shut it down) withdrawals jumped to $190m a day. Check out the OTS fact sheet... it's all spelled out if you know how to read between the media spin.

www.nypost.com/seven/0...

2008 Jul 21 03:54 PM

[Frieda Choose:]

Thousands of people were put out of a job because of the run caused by Charles Schumer's reckless mouth. Thousands more paid CD penalties because they bought into his hysteria (rather than recognizing that their funds were insured). Evidently this was the "prescriptive measure" Schumer had in mind. Like the OTS said, we'll never know if IndyMac Bank would have survived or failed, absent the panic caused by Schumer. But at least the employees would've enjoyed months (or years) more employment and health insurance coverage, shareholders might have held out some hope of eventual recovery, and the customers who pulled their CDs prematurely would've been spared the penalty consequences of overreaction. Some public servant, that guy.

2008 Jul 25 11:00 PM