This to me was likely the driver for Schumer’s letter; some staffer brought home to him that the colossal size of Indymac’s brokered deposits marked a ‘Savings and Loan’ debt spiral which was going to cost the FDIC more after the Election. I don’t doubt that he called the regulators on the carpet and got voicemail for several months before his letter. I don’t like him personally, but in this instance his action is nothing but a public service, this rotting zombie had to be put down before it swallowed even more of the FDIC.

So Steve at 12:53, ‘preciate the summary there: that tells the real story on IndyFake.

And a re: “The best this Administration can do is to encourage the banks to loot the deposit insurance fund?” Yes, really, and the White House and the Cabinet level ones for the most part Just Don’t Care. It has been clear for two years that their goal was to sandbag the weeping levy until January, 09, then blame the Incoming Fool for dropping the ball. The conduct of senior public officials in this Administration is indescribably selfish and irresponsible, but that has been their trademark since they took office. Everything is spin; nothing is accountability; absolutely nothing is responsibility. Congress really needs to take the bull by the horns but the current lot has made ducking tough issues such a career move than their spines are wrapped in a C-curve to navel level. In that case, Sen. Shumer going it alone is the only kind of action really possible—and we should applaud. WyMe, Citifunk, Layman’s, Countryfried, Wachouttau, and a slate of similar undead financials need to be put down, like, NOW before they soak up anymore capital. UBS, RBS, and their ilk are someone else’s problem. Inshallah all it takes is a letter and a microphone.

I was going to write about your comments last night and held back, and it’s even worse tonight. This has been going on pretty much all week.

You make ham-handed editorial comments on NC posts to steer traffic to your own site. And what you say is pedestrian at best.

Your last comment reveals your ignorance. Schumer is on the Senate Banking Committee. As Steve indicates, it does not take an in-depth analysis to see the bank was in trouble. Senators have staffers who do grunt work, and they are often sharp. Oh, maybe you didn’t you know that either?

Yves, this guy is a troll.

Schummer as Steve implies was not asking questions. Rather he was making accusations. Unless we are to believe that he or his staff spent a lot of time analyzing and tearing apart the financial statements of a middling bank (why in the world would they care) it seems reasonable to assume that he used confidential information to help spark a run on a financial institution that may or may not have had a chance of survival. His attack was a very big and totally unecessary nail in the coffin.

– Indymac had 1/3 of its assets ($10B) booked as level 3.

– An unbelievable 40% of its deposits were money desk deposits (which OTS categorizes as brokered deposits).

– Indymac had lost all access to the commercial paper markets.

– No one would do repo with Indymac.

– Indymac’s sole sources of liquidity were insured deposits and FHLB borrowings.

– Moody’s had pulled its ratings at Indymac’s request after cutting Indymac to junk way back in Sept of ‘07.

–S&P and Fitch downgraded Indymac to junk in Q1 08.

Now it’s amusing to see our “business knows best” Administration decide that the private sector had it all wrong, and that Indymac was in fine shape.

Basically Schumer asked the same questions that many people in the credit markets had been asking for months.

Count on government at your peril.

How might you be “counting on government”?

tomd

The S&Loans went under regardless–you can kick the can down the road only so far. Blaming Schumer distracts from the real issue–which is solvency, now of Indy, then of WAMU, and of Freddie. A solvent IndyMac would not go by a comment by a windbag.
Period. I’ve seen this before but I never thought the FED and FDIC would let it happen again on a national scale.
They did–not Schumer. And I don’t even like the man. If he keeps a widow from losing her retirement funds at Indy or the next bank, whatever his motives, he’s done a public service.
I have a one year CD maturing at WAMU on the 13th, with a son going off to college, so I’ve been dreading this for WAMU, even though
it would only be an inconvenienc–at least until the FDIC runs out of funds. We set up another account at Schwab as insurance in February when my wife received a bonus and half of the salary is going there, and I’m going to send my older son in CA some money to set up a second savings bank in a different bank than WAMU (probably BAC), as a backup. I recommend hedging your bets in some such fashion, in case the early 80s S&L does replay. I hope not but think so.

Lack

These were the thoughts I published when this broke and the article also carries a link to a decent article in the LA Times that also discusses the issue.

http://blog.metro-real-estate.com/?p=664

The reality is, there was a lack of GAAP accounting honesty and regulation by this government, and this mess has been going on far too long! Schumer is a hero in the face of almost 99% corruption and collusion!