Schumer's letter did indeed play a significant role in hastening the downall of Indymac. It wasn't a problem of the stock value dropping but much more the fact that a mini-run occured on Indymac as a result of the letter. So it really comes down to how you define the word blame.
On the econ-blogs the far more interesting discussion is whether Schumer was morally justified in doing what he did. There was also a lot of speculation that the Bush Administration is just trying to run a four-corners operation so that the main portion of the coming economic meltdown occurs after November. Schumer's intervention is seen as an attempt to precipitate the crisis earlier.
In any case the failure of Indymac is but a sideshow to the main event which features the invisible hand of the market vs. Fannie and Freddie. Watch for the US Peso to drop hard and for oil to skyrocket if things don't stabalize quickly on this front.
I probably know less about economics than McCain (but I do know how much gas costs, thank you), but based on the graph it does seem that Schumer's information hurried the process along.
Now, whether this was a calculated ploy to cause a run on an already failing bank so that blame could be laid at the Bush Administration's feet is not something I would put past Schumer or any other politician. Hell, I'd expect the GOP to do the same thing in a Democratic government.
Fannie and Freddie thought - sweet zombie Jesus if either of them go under, holding (according to reports) 70% of all the mortgage paper in the country), it could be catastrophic.
OT, Tony "Snowjob" Snow died.
http://news.bbc.co.uk/2/hi/ameri...cas/
7503368.stm
This is like when Lyndie England said "if only the press didn't report our torture" it would have been ok.
Oh, yea, Tony Snow was a lying piece of shit. Just because he's dead doesn't excuse his crappy behavior. He damaged a nation.
While Washington fiddles, Bush is getting away with murder.
All of these games that are being played out by folks who know nothing of the struggles middle Americans face daily are simply disgusting.
Is it really Schumer's fault or is it the fault of deregulation and lack of oversight? I'd start there, and then it wouldn't really matter if Schumer hustled it along.
Who the hell cares at this point? What we need is a housecleaning like no other in that cesspool we call our nation's capitol.
Click to expand and it is easier to see the drop afer 'G.' THAT blip is what all the shouting is about? Shumer is not responsible for anything except helping (an apparent few!) investors from tossing good money after bad! It is not a large drop and in line with the trend. It is CERTAINLY NOTHING IN COMPARISON to the drop from the earlier points 'H' and 'I' which were:
IndyMac's fate could test banking regulators
Reuters - Jul 10, 2008 -Related articles »
Investor Class Action Continues Against IndyMac Bancorp, Inc. Reports...
I noticed the tags say "Bush Administration" and "incompetence". That's redundant.
Richjob-
While I'm not normally one to wish ill on others I'd have to say he had it coming. Karma's a bitch.
Now if only some of the bigger criminals from the last 8 years of Bush misrule would get their karmic payback sooner rather than later.
Its the same old story no one ever escapes the final equalizer. Those who will in time have to face it can only savor the recollections of those who have already met it.
The recollections of Mr. Snow is that he acted as if he belonged to an elite that was [in]famous for telling 300 million Americans untruths and smearing those who did not submit to their way of thinking.
As the French are wont of saying, "c'est la vie".
My sister was an underwriter for IndyMac, and she told me two years ago that she and the other experienced underwriters there knew trouble was coming from the kind of loans they were being told to underwrite.
All you had to do was state income - not prove it - to qualify for a mortgage. Cab drivers, waitresses, dog groomers etc. were claiming monster incomes and moving into overpriced housing. The collapse was inevitable.
Schumer isn't to blame for IndyMac's collapse - IndyMac is.
The two most often-repeated questions in Russian history are "what is to be done," and "who is to blame".
This John Reich, Bush administration hack, is trying to spin the answer to question #2. He doesn't want to be thought of as the financial world's "Heckuva Job Brownie."
I don't think it's going to work.
Sorry guys, I don't know how you can look at that info and say Schumer had a significant impact. just not showing that...
I totally agree with Hubris Sonic. The charts just don't show a connection. Run the same amount of time (June 26 to today) back on on the Google timeline. Yeah, IndyMac drops 77% between then and now (17 days). Try May 5, there's a 47% drop. Try May 12, there's a 50% drop.
And here's one more; from June 15, 2007 to today, there's been a 99.15% drop. Schumer didn't help, but pinning any real share of IndyMac's collapse on his comments means spending less time on the real culprits in this whole mess.
Blaming Schumer is like blaming a fire on the person who calls 911.
Just saying, and I'm not fan of Schumer.
republican jumb at a change to blame a dmeocrats for any and all of Bush/Cheney's criminal crimes and corruption.
This down of our economy started as soon at Bush/Cheney took control of the wheel.
Bush/Cheney has taken a powerful economy built by Bill Clinton for the citizens of this country and turn it into a disaster for our economy , retirement , jobs , social programs , military and our constitution/democracy.
They have sold our country/citizens to private corporations and "FOREIGN COUNTRIES" for their power , wealth and control.
http://www.guardian.co.uk/world/
...ections2000.usa
Buoyed by the United States' continuing surge of economic prosperity, Bill Clinton yesterday unveiled a political budget to mark the end of his eight-year presidency - and painted a picture of a debt-free US federal government by 2013.
http://archives.cnn.com/2000/ALL...linton.surplus/
President Clinton announces another record budget surplus ...
http://query.nytimes.com/gst/ful...96F958260&
fta=y
The President said his $1.77 trillion plan would insure the solvency of Social Security and Medicare for decades while paying for billions of dollars in programs for schools, cities, families, the environment and the military.
Sorry guys, I don't know how you can look at that info and say Schumer had a significant impact. just not showing that…
The info you posted is irrelevant to the case, so sure, based on stock prices you cannot point a finger at Schumer. The problem is, of course, that it was not the stock price that made the Feds take over Indymac; it was the $1.3 billion of deposits that where withdrawn after Schumer published his letter. Before the letter Indymac had net inflows of capital. What is amazing is that even after Schumer’s letter, depositors were clueless enough to leave $1 billion in deposits that were not covered by the FDIC. I know after I read Schumer’s letter I called my mother and told her to rearrange things so that she was always under the FDIC limits. Those who ignored Schumer's letter are going to take a serious haircut on thier life savings.
So if you post a chart showing capital inflows /outflows in comparison to the date of Schumer’s letter, I think you might see a little more clearly just what effect Schumer’s letter had. Pointing to a stock chart as evidence of innocence is not so different than a defence attorney claiming that his client is innocent since the victim’s white blood cell count didn’t decline significantly after his client’s action. That ignores the huge gaping gun shot wound to the head, that Schumer's letter represents. Schumer's prints are all over the murder weapon; in fact he signed it.
Now there is no doubt that Indymac was terminally ill. But that doesn’t absolve Schumer from busting a cap up into Indymac’s backside. The real question is whether it was a justified mercy killing or mere political machinations?
Sorry but that dog don't hunt. I would imagine investors noticed Schumers comments but customers? You and your mom were an exception. I just dont buy that tons of people even heard what Schumer had to say. Naa....
How I wish it were only my mom but unfortunately the amounts of withdrawals are ever so slightly more than her net worth:
http://www.ft.com/cms/s/0/
2817c4...0077b07658.html
The bank said Senator Charles Schumer's letters had also prompted key lending counterparties to place additional restrictions on IndyMac's borrowings.
IndyMac said that as a result of the withdrawals and more stringent lending conditions, its current operating liquidity was about $1.7bn, compared with more than $4bn in May.
Last week, the lender said Mr Schumer's letters to regulators had prompted its customers to withdraw $100m in deposits in a single weekend.
http://uk.reuters.com/article/
UK...lBrandChannel=0
Schumer questioned IndyMac's ability to survive the housing crisis in late June, and over the next 11 business days, depositors withdrew more than $1.3 billion, the OTS said.
People who have savings higher than the Federal insurance levels do tend to pay attention to these things. No one was withdrawing money the week before the letter; $1.3 billion was pulled out in a week and a half after. So someone was paying attention.
I hate to harp on this but after eight years of political lies, I think it is very important to stay reality-based, no matter where the chips fall.
Schumer is an out of control blowhard. It's about time he got burnt.
kevin de bruxelles, even the experts are saying the bank was doomed. terminal. etc.
who really cares if Schumer sped the process along? Isn't it part of the job of oversight to tell people what the heck is going on.
If Schumer had NOT written the letter while being aware of the situation as it obviously existed prior to writing the letter, he would be a prime candidate for an indictment, IMO.
The 'talking points' BS is idiotic. In fact, people like John Reich should be indicted NOW for 'fiddling while Rome burns'. I've had enough of these administrative incompetents pointing fingers at everyone but themselves for their own lack of interest in doing the jobs for which they're wildly overcompensated.
All of us in this country - except those whose incomes put them in the top tenth of the top one percent - are being crushed by the lazy, worthless scum at the top. It's just about time to build some guillotines and have a good housecleaning.
the littest hussein gator,
That is the one thing most people agree on, that the decline of Indymac was a question of when, not if.
I think a strong case can be made that Schumer's actions were justified and saved the taxpayer's money. Much of that $1.3 bllion withdrawn would have to be reimbursed by the taxpayers had Indymac gone down quietly a few months from now.
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/2007/07/3...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/...our-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/...ions/
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...ref=mpstoryview
You people need to stop bashing Reich. If you google "Reich", "OTS" and "credit standards", you'll find that he's been urging lenders to tighten up their credit policies for years now. But since there was nothing illegal about giving out these crap mortgages (thanks to Congress) and the crap mortgages weren't impacting the lenders' balance sheets (thanks to Wall St) until just recently, there was nothing Reich or OTS or any other regulator could do until it was too late. Sure, the regulators have "oversight", but only to enforce laws passed by Congress, and there's no law that says you can't give out a loan to every sap who comes along if that's what you want to do.
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.
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