Democrat Charles Schumer of New York, playing politics with the economy and people’s life’s savings, caused the failure of California’s IndyMac Bank according to a written statement by the Office of Thrift Supervision. The bank was closed today. Customers can withdraw funds over the weekend using ATMs, debit cards and checks. The bank will reopen on Monday run by the FDIC as IndyMac Federal Bank, FSB.
The problems at IndyMac were well known and being handled until comments by Schumer caused a run on the bank. At that point, the Feds didn’t think the bank had the ability to handle its affairs any longer.
The Pasadena, Calif., thrift was one of the largest savings and loans in the country with about $32 billion in assets. It now joins an infamous list of collapsed banks, topped by Continental Illinois National Bank and Trust Co., which failed in 1984 with $40 billion of assets.
IndyMac specialized in Alt-A loans, a type of mortgage that can often be offered to borrowers who don’t fully document their incomes or assets. The company sold most of the loans it originated but continued to hold some on its books. As defaults piled up, IndyMac’s finances deteriorated.
The bank will be run by the Federal Deposit Insurance Corp., a federal regulator, and will reopen Monday.
In a written statement, the Office of Thrift Supervision, which regulated IndyMac, said “the immediate cause” of the failure was statements made by Sen. Charles Schumer, a New York Democrat. Mr. Schumer in late June publicly raised concerns about the bank’s solvency.
“Although this institution was already in distress, I am troubled by any interference in the regulatory process,” said OTS Director John Reich.
Taxpayers - what do you say we send Chuck Schumer a bill?
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