Friday, July 11, 2008

Schumer Not To Blame For IndyMac Failure

John Reich over at OTS (Office of Thrift Supervision) is trying to blame Senator Chuck Schumer for the failure of the large thrift IndyMac. His story is that when Chuck Schumer supposedly leaked documents to reporters that raised questions about the banks viability he triggered a run on the bank which eventually led to its failure late Friday evening.

Its fairly easy these days to google up all the news stories available about this sort of thing and google finance can put that information in context for you.

Clearly Schumer's statements had little or not effect. This bank was in freefall well before his statement on 6/26. There was a bit of a sell off, small compared to what had come before now, and nothing compared to when the bank itself announced it would issue no new loans, and fire half it's staff on 7/8. On the same day S&P changes their rating to complete JUNK.

This bank had so many bad loans they were going down, it was a question of when. No, they failed because the bank's management got involved in tons of crap loans, and then mishandled the internal management of the crisis. Their drastic actions in early July look like much too little to late, and that triggered the runs. But when you are a Republican hack, hired by George Bush to cover up the Fed's culpability in the mortgage crisis, it's much better to blame a Democrat from New York for the failure of a California Thrift that you yourself are responsible for. Heckuva Job Johnny...