Patterico's Pontifications

7/11/2008

Did Chuckie Schumer Trigger the Failure of IndyMac?

Filed under: General — Patterico @ 6:43 pm



The feds say yes.

15 Responses to “Did Chuckie Schumer Trigger the Failure of IndyMac?”

  1. Cause and effect.

    Paul (ae2fbe)

  2. Here’s Schumer’s response:

    “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.”

    What’s really enraging about this comment — and I blame the Adminstration for this as well — is that these are the same liberals who demanded that banks lend money to unqualified borrowers so that the lower socio-economic classes could purchase homes. That opened the floodgates to the elimination of risk-avoidance in lending policies.

    Poorer prospective borrowers are less likely to have a down payment for their house, and thus more likely to walk away from the house in a declining market.

    But it was guys like Schumer who railed against the industry with charges like redlining.

    Well, the purpose of providing a “loan” to a prospective homeowner is to get repaid with interest. When the objective facts suggest that a particular applicant is a poor risk to repay the loan, DON’T ENCOURAGE THE LENDER TO MAKE THE LOAN!!!!!

    If the prospective homeowner has an investment of 10-20% of their own money into the purchase price, that buyer is much more likely to hold onto the house through troubled times.

    WLS (68fd1f)

  3. Indy Mac was a POS player in the mortgage market, but reckless statements by public servants causing liquidity crises are just rank stupidity. Schumer should take responsibility, but he won’t. Typical arrogant asshat.

    daleyrocks (d9ec17)

  4. Schumer is a media whore…he saw an opportunity to insert himself (yet again) in a situation that did not need his input. It has been said that the most dangerous place in the world is the space between Chuckie Schumer and a camera.

    Another thing with Schumer is the “follow-the-money” principle. Who benefits from IndyMac’s demise, and did that entity contribute to Chuckie’s perpetual campaign fundraising? That man is too slimy for words…

    CarlosG (bf2230)

  5. Oh, by the way…

    I just found this at the “Jewish Virtual Library”

    http://www.jewishvirtuallibrary.org/jsource/biography/schumer.html

    It is a biography of Chuckie Schumer, and it contains this interesting tidbit:

    “A member of the Banking committee in the House and the Senate, Schumer worked for a decade to pass the 1999 Financial Services Modernization legislation, which modernizes regulations governing the US banking, securities and insurance industries. He played a key role in drafting language to ensure that financial companies serve traditionally underserved areas and has exposed unequal lending practices of banks and predatory lending practices of subprime lenders in minority communities.”

    Hmmmmm…are these the same communities that are now defaulting on loans (that he pushed banks to extend) like if it was an Olympic sport?

    And yet New Yorkers keep electing this guy back into office…

    CarlosG (bf2230)

  6. I liked Indy Mac. Their deposit customer service was great; the bank was efficient and treated its depositors well. They did have a piece of the subprime mortgage market–but they really were operating off the higher, better quality end of that market.

    I had had a chunk of money there for several years. Fortunately my wife’s new kitchen remodel took most of what was there by early June. So the new kitchen got to those funds before Chucky Schumer’s big mouth did. I would have been verrrry pissed at Schumer if I had still had all those funds in Indy Mac. They were and are good people and don’t deserve to be brought down by a jerk like Schumer. He’s a grandstanding twerp.

    Mike Myers (31af82)

  7. Mike Meyers — the flip side of my outrage at Schumer is that he didn’t put your money at risk or any other depositor of IndyMac at risk. That’s what FDIC is for.

    The government is the insurer of IndyMac deposits.

    FDIC is an acronym that stands for TAXPAYER.

    WLS (68fd1f)

  8. New York based Aurelian Management, LLC was short-selling IndyMac shares to gain from declines in the days prior to this takeover by Federal Regulators.

    If Schumer has a pattern of large donations from this company staff and principles, it would be worthy of a probe into what motivated Aurelian to do all that sudden shorting.

    daytrader (ea6549)

  9. Now wait one minute. Shumer may be the bastards Senior Senator from New York, but goddamnit, he’s my bastard Senior Senator.

    A true idiot and a waste of oxygen.

    Dr. K (5139b5)

  10. “That man is too slimy for words…”
    Comment by CarlosG — 7/11/2008 at #4. pm

    Senator Charles Schumer, D-NY, gives slime a bad name.
    What’s worse is that he doesn’t care.

    C. Norris (763ef6)

  11. Shumer probably saved the taxpayers money by forcing the FDIC to take over. Letting insolvent banks continue to operate just lets them run up more losses.

    James B. Shearer (a38b8a)

  12. They weren’t insolvent until there was a run on their deposits.

    If they are insolvent now, then taxpayers through FDIC will have to make good.

    WLS (02df99)

  13. This is typical of Schumer’s irresponsibility.

    SPQR (26be8b)

  14. 12

    You are confusing two things solvency and liquidity. A bank is insolvent when its assets are less than its liabilities. An insolvent bank can continue to operate for years as long as all its depositors don’t ask for their money.

    A run on the bank can also cause a solvent bank to fail if its assets are illiquid (can not be converted to cash quickly).

    But a run on the bank won’t make a solvent bank insolvent. Given time everyone can be paid in full.

    So if the FDIC loses money the bank was insolvent (which seems very likely).

    James B. Shearer (fc887e)

  15. 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

    jason smith (7f8263)


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