Pat Dollard | Young Americans

No, Chuckie … THIS is why you are an idiot politician, and NOT a successful businessman …

Schumer: Don’t blame me for IndyMac failure

NEW YORK (CNN) — Sen. Charles Schumer said Sunday the Bush administration is trying to “blame the fire on the person who calls 911″ by suggesting he had a role in one of the costliest U.S. bank failures.

Federal regulators with the Office of Thrift Supervision were “asleep at the switch” when it came to IndyMac’s “reckless” behavior, the New York Democrat complained.

The OTS announced Friday that it was taking over the $32 billion IndyMac and transferring control to the Federal Deposit Insurance Corporation.

The OTS pointed the finger directly at Schumer for the failure, accusing him of sparking a bank run by releasing a letter that “expressed concerns about IndyMac’s viability.”

“In the following 11 business days, depositors withdrew more than $1.3 billion from their accounts,” the OTS said in a statement announcing the California-based lender’s takeover on Friday.

The statement included a quote from OTS Director John Reich saying, “Although this institution was already in distress, I am troubled by any interference in the regulatory process.”

Schumer, a member of the Senate Banking Committee, chairman of Congress’ Joint Economic Committee and the third-ranking Democrat in the Senate, rejected any suggestions of responsibility for IndyMac’s collapse

“OTS ought to stop pointing false fingers of blame and start doing its job to protect the future of the banking system, so that there won’t be other IndyMacs,” he said.

Schumer’s June 26 letter said he was “concerned that IndyMac’s financial deterioration poses significant risks to both taxpayers and borrowers.”

In a Sunday news conference, he said everything in his letter was already known to the public.

“IndyMac was one of the most poorly run and reckless of all the banks,” he said. “It was a spinoff from the old Countrywide, and like Countrywide, it did all kinds of profligate activities that it never should have. Both IndyMac and Countrywide helped cause the housing crisis we’re now in.”

The embattled Countrywide Financial Corp. was recently purchased by Bank of America.

Schumer argued that the “breadth and depth” of the problems at IndyMac were “apparent for years, and they accelerated in the last six months.” But OTS, he said, “was asleep at the switch and allowed things to happen without restraint.

“And now they are doing what the Bush administration always does: Blame the fire on the person who calls 911.”

The White House had no immediate response.

Schumer said OTS is “known as a weak regulator,” and added, “my job was to try and toughen them up and that’s what I tried to do.”

IndyMac, with assets of $32 billion and deposits of $19 billion, is the fifth bank to fail this year. Between 2005 and 2007, only three banks failed. And in the past 15 years, the FDIC has taken over 127 banks with combined assets of $22 billion, according to FDIC records.

IndyMac will reopen Monday with a new charter and a new name — IndyMac Federal Bank.

IndyMac borrowers line up in Calif. to withdraw their cash

By Gina Keating

PASADENA, Calif., July 14 - IndyMac Bancorp Inc (IMB.N: Quote, Profile, Research) customers lined up outside a branch at the company’s headquarters on Monday, hoping to withdraw their money after regulators seized what was once one of the largest mortgage lenders in the United States.

Several hundred people arrived around 4 a.m., five hours before the Federal Deposit Insurance Corp planned to open that branch.

Regulators seized Pasadena-based IndyMac on Friday after a bank run in which customers withdrew $1.3 billion of deposits over 11 business days, as worries about the company’s survival grew, regulators said. The bank has 33 branches in Southern California.

The FDIC said the renamed IndyMac Federal Bank will cover insured deposits, mostly up to $100,000, and initially cover 50 percent of uninsured deposits.

“I have $360,000 in this bank, and I was misled by this bank,” said Robert Clark, a Glendale resident who was waiting on line. “I gave the names of my mother, my sister and my brother on the account so I thought I would be insured. I don’t know what to do. I really don’t know what to do.”

John Bovenzi, the FDIC’s chief operating officer, talked with some customers and tried to reassure them as they waited for the doors to open.

“This bank is as safe and as sound as any bank in the country right now,” he told one depositor. Bovenzi added that the FDIC was “going to get as much money as we can” to compensate investors with uninsured deposits.

Jitesh Patel, a doctor from Burbank, said he took a day off work to get his money out.

“We have money we are afraid we are going to lose,” he said. “I wish we were a little more savvy.”

IndyMac is the fifth U.S. banking company to fail this year, and the largest since the 1980s savings-and-loan crisis.

It ended March with about $19 billion of deposits, of which roughly $18 billion were insured, and $32 billion of assets, regulators said.

Gerard Cassidy, an analyst at RBC Capital Markets, on Sunday estimated that 300 U.S. banks might fail over the next three years because of credit losses and tight capital markets.

Regulators expect the IndyMac takeover to cost the FDIC $4 billion to $8 billion. The agency’s insurance fund has about $52.8 billion.

(Reuters)