IndyMac collapse

[mr_genius]

the largest savings and loan in the Los Angeles. one of the biggest banking collapses in US history. They specialized in risky home loans.

[Texsox]

Ka-ching. How much will this cost every taxpayer in America. Savings and Loans Part 2.

[kapkomet]

Ka-ching. How much will this cost every taxpayer in America. Savings and Loans Part 2.

This is literally just the tip of the iceberg...

[southsider2k5]

Schumer runs his mouth, the bank has a run, fails, and its not his fault. Yet another politician who doesn't understand that words mean something.

 

http://mensnewsdaily.com/2008/07/11/chuck-...ailure-results/

 

Chuck Schumer Causes $1.3 Billion Run on IndyMac: Bank Failure Results

 

July 11, 2008 at 7:26 pm · Filed under 2008, Analysis, Conservatism, Economics, Money, OP/ED, Politics, Vox Populi

 

Time for Chuck Schumer to be investigated for interfering in the supervisory activities of the Office of Thrift Supervision (OTS).

 

Senator Chuck Schumer (D-NY), who sits on the Senate Banking Committee, publicly released his letters to the heads of the Federal Deposit Insurance Corp. (FDIC); the Office of Thrift Supervision (OTS), an agency of the Treasury Department; the Federal Home Loan Bank of San Francisco; and the Federal Housing Finance Board, which regulates the system of regional home-loan banks, expressing his concerns over the loan practices of IndyMac.

 

Over the next eleven business days following Schumer’s reckless behavior, IndyMac, experienced a $1.3 Billion run by the bank’s depositers. In short, the bank failed because a United States Senator publicly poked his nose into the operational procedures of the OTS.

 

Chuck Schumer’s actions brought a strong rebuke from OTS Director John Reich, who said:

 

“This institution failed due to a liquidity crisis, although this institution was already in distress, I am troubled by any interference in the regulatory process.”

 

In other words the bank failed in large part, not because of the admitedly poor loan underwriting policies they used, but because they lacked the liquidity to cover the sudden demand for cash cause by Mr. Schumer’s bank run.

 

Yep, old Microphone Moth has been at it again. It is very possible that IndyMac might have failed anyway, they were engaged in some very dumb practices like giving “Alt A” loans (loans in which the borrower is not required to provide proof of income), but there can be no doubt that the immediate failure of IndyMac was caused to a very large extent by the despicable actions of a publicity seeking, grandstanding, Liberal jerk, who, like all Liberal politicians, was far more interested in what he might gain politically from the bank’s failure than he was about what the failure might mean to the banks stockholders, employees, and customers.

 

Senator Schumer’s actions were reckless and inexcusable given his position on the Senate Banking Committee.

 

As a member of the Senate Banking Committee, Mr. Schumer was well within his rights to call IndyMac’s careless lending procedures to the regulating authorities’ attention, but his had no business and no right to make his concerns public.

 

Such an action by a Senator in a position of trust cries out for censure and investigation.

 

One has to wonder if Chuck Schumer has been selling IndyMac stock short, or if he has had any business dealings with New York based Aurelian Management, LLC or it’s president, Brian Horey. Aurelian was short-selling IndyMac shares to gain from declines in the days prior to this takeover by Federal Regulators.

 

How about it Chucky, been playing pinochle with the President of Aurelian? Maybe a few insider trading deals? Maybe a few insider secrets for a nice fat contribution to your campaign war-chest?

 

Of course, I shouldn’t imply that Aurelian or Mr. Horey has done anything wrong in my zeal to see Senator Charles Schumer taken down. As far as I know, Mr. Horey is a hardworking venture capitalist and far from being a shadowy figure in the background, Mr. Horey is not at all reticent to speak out publicly, as he did in this case.

 

I just have to ask the questions when I see coincidences like a New York speculator selling a California bank short and a New York Senator engaging in reckless behavior and causing that same bank to collapse…sending it’s stock prices spiraling even further down and profiting short-sellers, like Aurelian Management, LLC handsomely.

 

Looks like fertile ground for an investigation by the United States Attorney General’s Office…too bad their are no men working there, only gutless RINO’s.

 

There is no excusing Schumer’s actions. In his efforts to gain some publicity he behave in a reckless manner and ultimately destroyed a bank.

 

Hey Chucky, maybe you should hire yourself out to your buddies in the Taliban and al Qaeda. They need allies like you to help them destroy our economy.

[Chisoxfn]

Obviously the article is a little harsh, but the actions of the senate getting involved in some of these financial institutions is a huge joke. They don't have a f***ing clue how these companies are ran and while IndyMac and many of the large financials got involved in some risky investments that backfired, they still have the resources and abilities to recover long-term.

 

But when idiots like this senator go out and grand-stand they end up putting out statements which completely effect how the market and individuals react.

[jackie hayes]

Schumer runs his mouth, the bank has a run, fails, and its not his fault. Yet another politician who doesn't understand that words mean something.

 

http://mensnewsdaily.com/2008/07/11/chuck-...ailure-results/

Wow, talk about a total s*** article.

 

If you wanted to post IndyMac's release or Reich's comments (which are stupid enough as-is), you could have linked any number of mainstream press articles.

 

Instead, you chose the most incendiary, baseless, downright stupid take you could possibly find.

 

Shameless.

[jackie hayes]

Obviously the article is a little harsh, but the actions of the senate getting involved in some of these financial institutions is a huge joke. They don't have a f***ing clue how these companies are ran and while IndyMac and many of the large financials got involved in some risky investments that backfired, they still have the resources and abilities to recover long-term.

 

But when idiots like this senator go out and grand-stand they end up putting out statements which completely effect how the market and individuals react.

That's just wrong. For an 'average' senator, sure, but Schumer has been involved in the minutiae of banking for years and understands as well as most anyone in DC how these banks operate.

 

It's too bad we only find out now that Countrywide was a-okay before Schumer started running his mouth. Subprime lending was the tits until Chuck spooked everyone.

[mr_genius]

Schumer is a hack and has no business being on any board of consequence. The Dems are neck deep in this banking scandal, a lot of them have major investments in predatory lending. It's one the reasons the MSM won't do any real substantive coverage, they know that their party is involved heavily. The MSM is just pro-bailout, hoping it will go away.

[southsider2k5]

Wow, talk about a total s*** article.

 

If you wanted to post IndyMac's release or Reich's comments (which are stupid enough as-is), you could have linked any number of mainstream press articles.

 

Instead, you chose the most incendiary, baseless, downright stupid take you could possibly find.

 

Shameless.

 

Save the faux outrage for the New Yorker. I get treated to the same and worse in many threads, so unless you are about to carve up the Democratic thread, save it.

[Texsox]

I'm not totally clear, if he had not blown the whistle so to speak, is it possible people would have continued to invest and possibly lost money? It would seem a Senator would have an ethical obligation to point this out. From only a couple articles I read, IndyMac was in serious trouble and if the Senator didn't say something, and it was known he knew and kept quiet, the same author would have slammed him for being in cahoots with IndyMac. I'd like to read a slightly less biased report.

[Chisoxfn]

He didn't blow the whistle on anything. Everyone and there brother knew the company was in trouble, the problem was it wasn't going bankrupt. He put information out there which put concerns on the going concern of the company to the point that people put a run on the bank and they weren't able to cover that run and thus the liquidity issues put em under.

 

It may have eventually happened, but the company should have had the opportunity to save itself from some bad business deals it made. The company wasn't committing fraud or anything along those lines, it was just getting hammered because of the Alt A loans they had on there books. Again, no one is going to convince me they don't go under a year from now or 2 months from now, but the senator prevented the business nature of that to happen and instead created an unneeded panic that put a run on the bank (no different than what happened in the great depression to the banking industry, except this was tied to just one bank).

 

Hell, this isn't the first time the government has grand-standed and screwed up businesses. Just ask everyone who ever worked at Arthur Anderson or talk about the BearSterns disaster. Worse yet there is a lot of speculation that there was a large contingent of investors from New York (with significant funds) who were shorting IndyMac and saw a great windfall so there could be some shenanigans involved with this (although it is more likely some New York grandstanding at its finest, kind of like that jackass Spitzer did in numerous public suits which really didn't help anyone, rather just drew up publicity).

[FlaSoxxJim]

I'd like to read a slightly less biased report.

 

Just don't count on SS to post it.

 

[southsider2k5]

Schumer is a hack and has no business being on any board of consequence. The Dems are neck deep in this banking scandal, a lot of them have major investments in predatory lending. It's one the reasons the MSM won't do any real substantive coverage, they know that their party is involved heavily. The MSM is just pro-bailout, hoping it will go away.

 

Everyone talks about the Republicians being in the back pockets of the energy companies and it is front page news. We have Congressmen pretty much taking bribes from banks who are about to get a bailout that would end up being twice as much as we have spent in Iraq or ONE TRILLION DOLLARS. Add up all of the oil company profits, plus the Iraq war, plus all of the oil company subsidies and you still don't approach one trillion dollars. Yet no one seems to care. We have Congress people in positions of power who should be minding their words knowing that they can move markets, taking down banks. Another key figure in this scandal was helping to pick the Democrats Vice Presidential candidate. Yet no one is mentioning the effect that this will have on the debt or deficit the way that they are anything connected to the republicians like this did with Bush's $140 billion stimulus plan that today costs one third of what has been allocated for this mess so far ($400 billion).

 

Shouldn't this be front page news? Shouldn't this be something people are angry about? I'm sorry no one liberal enough for you all cares to make this a big deal. Its too bad the mainstream media hasn't dug into this story, and I'd really love to know why. It has everything they seem to like... Politicians knee deep in corporate interests, huge amounts of money, scandal, power abuse etc. Yet, this is essentially regulated to the business pages except for a headline or two. But I will bet Exxons next record profits will be front page news, again.

[NorthSideSox72]

Just for the record, the banking crisis AND the politicians embroiled in it, have in fact been front page news. Numerous times.

 

[Steve9347]

Just looking at the homepage of The Drudge Report I would swear it's time to leave the country...

[jackie hayes]

Everyone talks about the Republicians being in the back pockets of the energy companies and it is front page news. We have Congressmen pretty much taking bribes from banks who are about to get a bailout that would end up being twice as much as we have spent in Iraq or ONE TRILLION DOLLARS. Add up all of the oil company profits, plus the Iraq war, plus all of the oil company subsidies and you still don't approach one trillion dollars. Yet no one seems to care. We have Congress people in positions of power who should be minding their words knowing that they can move markets, taking down banks. Another key figure in this scandal was helping to pick the Democrats Vice Presidential candidate. Yet no one is mentioning the effect that this will have on the debt or deficit the way that they are anything connected to the republicians like this did with Bush's $140 billion stimulus plan that today costs one third of what has been allocated for this mess so far ($400 billion).

 

Shouldn't this be front page news? Shouldn't this be something people are angry about? I'm sorry no one liberal enough for you all cares to make this a big deal. Its too bad the mainstream media hasn't dug into this story, and I'd really love to know why. It has everything they seem to like... Politicians knee deep in corporate interests, huge amounts of money, scandal, power abuse etc. Yet, this is essentially regulated to the business pages except for a headline or two. But I will bet Exxons next record profits will be front page news, again.

Laughable. And you're the one talking about faux outrage.

 

Show me a credible source of your claim that Fannie and Freddie will cost the federal government $1 trillion. Not that they'll have financing available, blah blah blah, but that the END COST will be $1 trillion. You are comparing it to other costs, so unless you're just being flagrantly dishonest, that's what you should mean. Can't wait.

 

If you look at what IMB itself said in the wake of Schumer's comments, the worst case version of the story goes like this -- IMB was already teetering on the brink of failure, and Schumer's comments triggered a fairly small number of withdrawals which pushed them into an area where automatically-triggered additional regulation prevented them from being able to raise capital. They certainly would have failed anyway (they'd been losing money for a long time, reflected in the stock price plummeting 80-90% over the last 6 mo; the default rate on their mortgages was most recently at 8%, and there was little hope it would get better soon). A think-tank report blasting IMB that came out the following Tuesday would have been enough, or a moth flapping its wings in Sacramento.

 

Can't wait for you next post of Republican cant: how this all could have been avoided with lower taxes and less regulation.

[southsider2k5]

Laughable. And you're the one talking about faux outrage.

 

Show me a credible source of your claim that Fannie and Freddie will cost the federal government $1 trillion. Not that they'll have financing available, blah blah blah, but that the END COST will be $1 trillion. You are comparing it to other costs, so unless you're just being flagrantly dishonest, that's what you should mean. Can't wait.

 

If you look at what IMB itself said in the wake of Schumer's comments, the worst case version of the story goes like this -- IMB was already teetering on the brink of failure, and Schumer's comments triggered a fairly small number of withdrawals which pushed them into an area where automatically-triggered additional regulation prevented them from being able to raise capital. They certainly would have failed anyway (they'd been losing money for a long time, reflected in the stock price plummeting 80-90% over the last 6 mo; the default rate on their mortgages was most recently at 8%, and there was little hope it would get better soon). A think-tank report blasting IMB that came out the following Tuesday would have been enough, or a moth flapping its wings in Sacramento.

 

Can't wait for you next post of Republican cant: how this all could have been avoided with lower taxes and less regulation.

 

 

Google trillion dollar bailout and tell me how many hits you get.

 

How credible is CNN money and Standard and Poors. Keep in mind, this was 3 months before Fannie and Freddie were allowed to hit the discount window, and this is JUST for these two "banks". That doesn't include the money given to other banks, nor does it include the bailout that is coming down the pipeline.

 

http://money.cnn.com/2008/04/21/news/econo...sion=2008042217

 

Although few are predicting an imminent need for a bailout just yet, credit rating agency Standard & Poor's recently placed an estimated price tag on this worst case scenario -- $420 billion to $1.1 trillion of taxpayer's money.

 

About.com adds it up to $1.2 trillion

 

http://useconomy.about.com/b/2008/06/02/fe...-it-working.htm

 

This will bring the total to $1.2 trillion that the Federal government has pumped into the financial markets as a result of the Subprime Mortgage Crisis. For a complete rundown of all the Fed interventions, see Federal Reserve and the Banking Liquidity Crisis.

 

And to even give you some liberal love... How about the Huffington Post?

 

http://www.huffingtonpost.com/henry-blodge...ve_b_93052.html

 

So get ready for the Fed's next great taxpayer-funded bailout, which is now almost guaranteed: The $1+ Trillion U.S. Homeowner Rescue Plan.

 

And I am still waiting for you to start carving up all of the blatantly partisian, misleading, and blatant lies elsewhere.

 

[jackie hayes]

Google trillion dollar bailout and tell me how many hits you get.

 

How credible is CNN money and Standard and Poors. Keep in mind, this was 3 months before Fannie and Freddie were allowed to hit the discount window, and this is JUST for these two "banks". That doesn't include the money given to other banks, nor does it include the bailout that is coming down the pipeline.

 

http://money.cnn.com/2008/04/21/news/econo...sion=2008042217

 

 

 

About.com adds it up to $1.2 trillion

 

http://useconomy.about.com/b/2008/06/02/fe...-it-working.htm

 

 

 

And to even give you some liberal love... How about the Huffington Post?

 

http://www.huffingtonpost.com/henry-blodge...ve_b_93052.html

 

 

 

And I am still waiting for you to start carving up all of the blatantly partisian, misleading, and blatant lies elsewhere.

The S&P report is not available for free, so I can't look at what they are referring to. The other links are talking about $1 trillion in financing, not cost.

 

Bernanke (back in November) guessed that the final cost of the whole shebang would be in the "ballpark" of the S&L total (he said ballpark of $150 bil, though it's $250 bil or so after adjusting for inflation, so figure the ballpark is about $100 bil down the lines and $500 bil to straightaway center),

 

http://www.msnbc.msn.com/id/21694890/

 

Fannie and Freddie guarantee about $5.5 trillion in mortgage loans. Given the relatively high quality of those loans, it is absolutely ridiculous to believe the final cost will be $1 trillion. Hell, even IndyMac's most recent default rate was only 8%, and that's one of the most subprime-heavy lenders anywhere. The default rate on Fannie and Freddie's prime mortgages would have to be many, many multiples of that to approach $1 trillion. It's not even remotely plausible.

[southsider2k5]

The S&P report is not available for free, so I can't look at what they are referring to. The other links are talking about $1 trillion in financing, not cost.

 

Bernanke (back in November) guessed that the final cost of the whole shebang would be in the "ballpark" of the S&L total (he said ballpark of $150 bil, though it's $250 bil or so after adjusting for inflation, so figure the ballpark is about $100 bil down the lines and $500 bil to straightaway center),

 

http://www.msnbc.msn.com/id/21694890/

 

Fannie and Freddie guarantee about $5.5 trillion in mortgage loans. Given the relatively high quality of those loans, it is absolutely ridiculous to believe the final cost will be $1 trillion. Hell, even IndyMac's most recent default rate was only 8%, and that's one of the most subprime-heavy lenders anywhere. The default rate on Fannie and Freddie's prime mortgages would have to be many, many multiples of that to approach $1 trillion. It's not even remotely plausible.

 

If you want to use those standards there is no social security crisis because of all of those IOUs we have on file.

[jackie hayes]

If you want to use those standards there is no social security crisis because of all of those IOUs we have on file.

That makes no sense, but you keep on thinking that if you like. It's more like thinking that LTCM didn't really have investments of $1.25 trillion.

[southsider2k5]

That makes no sense, but you keep on thinking that if you like. It's more like thinking that LTCM didn't really have investments of $1.25 trillion.

 

Its makes absolute sense. That one trillion dollars has to come from somewhere. Those obligations are as real as any other obligations we have. The only thing that doesn't make sense is why people seem to be more upset about $4 gasoline than losing their houses.

[lostfan]

Its makes absolute sense. That one trillion dollars has to come from somewhere. Those obligations are as real as any other obligations we have. The only thing that doesn't make sense is why people seem to be more upset about $4 gasoline than losing their houses.

??? Cuz I'm not losing my house? I was following up until that point.

 

I'm fine on my mortgage payments so I'm not affected by it, but I still have to pay for $4 gas regardless.

Edited July 15, 2008 by lostfan

[southsider2k5]

??? Cuz I'm not losing my house? I was following up until that point.

 

I'm fine on my mortgage payments so I'm not affected by it, but I still have to pay for $4 gas regardless.

 

You'll feel better to know that you and I will be paying for the people who weren't quite so judicious in their homebuying skills.

[lostfan]

You'll feel better to know that you and I will be paying for the people who weren't quite so judicious in their homebuying skills.

Oh, yeah that. Everybody hug.

 

I put equal/more blame on the companies who gave out the loans though. So I'm just as upset at them.

[jackie hayes]

Its makes absolute sense. That one trillion dollars has to come from somewhere. Those obligations are as real as any other obligations we have. The only thing that doesn't make sense is why people seem to be more upset about $4 gasoline than losing their houses.

Yes, it comes from somewhere. But you are saying that once it's spent, it vanishes. Which is wrong.