IndyMac Belly Up

I don't know if it is possible to have this discussion without the spewing of pre-packaged political rhetoric, but, here goes...

Schumer: Don't Blame Me for IndyMac Failure

If I'm reading this right, Sen. Schumer brought to public attention that IndyMac bank was teetering on the brink of disaster. What he said in his memo was true. People who had deposits acted on that information and withdrew funds in large sums (a bank run, if you will). The run caused an acceleration of IndyMac's problems - and they are now no more. The FDIC and/or the Office of Thrift Supervision (OTS) is saying that Schumer is to blame - because had he kept his mouth shut, IndyMac could have corrected their issues over time.

Shouldn't it be the job of the members of the Senate Banking Committee to bring such information to light, if their constituents - the people who elect them office - might be hurt by greedy and overzealous bankers? If they have information that the public should know - and would impact the public's ability to make informed decisions, shouldn't they say something?

Seems to me like he did a good thing...and is now getting raked over the coals.

Independent George wrote:

I don't know if it is possible to have this discussion without the spewing of pre-packaged political rhetoric, but, here goes...

If McCarthy hadn't persecuted the communists we may not be having these problems! The bastard!

I see what you are saying, but this is far from the first time Chuckie Cheese (relating to his affinity for cameras, not bad pizza) has fielded accusations of doing things for the good of Chuck vs. the good of the public.

It would seem that someone in his position should warn people of impending fiscal doom, but he should also be acting responsible enough not to cause that doom. Kind of like a fireman in a crowded theatre. What if he spots a small fire. Should he work to put out the fire without panicking the crowd and risking panic related injuries, or should he immediately yell FIRE?

Not sure what is right, but I am sure Chuckles past antics have weighed on the accusations of him causing problems.

Fair enough. Living away from NY all this time, I have become less aware of his "antics." I also see your analogy with the fireman spotting the fire.

See, my biggest problem with politicians, as a group, is that they all just seem out for themselves, their political interests, or the lobbies that have paid to have them care about their situation. There really is no one looking out for the little guy. If a random blogger had posted that IndyMac was insolvent, there would have been no rush on the banks. But, given Sen. Schumer's position and rank in the Senate, he carries a little bit of weight and people are prone to take him seriously.

While I see the dangers, I wish there were more high ranking politicians willing to speak up who don't do so only when politics and partisanship are at issue. I don't even care if the side-effect is additional camera/face time for them. That almost seems like a decent trade off.

Independent George wrote:

While I see the dangers, I wish there were more high ranking politicians willing to speak up who don't do so only when politics and partisanship are at issue. I don't even care if the side-effect is additional camera/face time for them. That almost seems like a decent trade off.

I wish your wish would come true.

A question that I can't shake, is where the hell was this Senate banking committee (and all the other government people who are supposed to regulate and oversee this stuff) when all the crap that led up to this mess was taking place? I mean I am pretty dense, yet when I started seeing ads that offered adjustable, interest only, and other absurd loans to anyone with a pulse, I just knew that at some point the shit would be hitting the fan. Didn't these government guys see that?

As an aside, years back when I worked as a bartender I got this gig working on a yacht for several days as it cruised up and down the Potomac hosting political big wigs. The owner of the yacht was a guy who headed what was destined to become one of the biggest failures in the whole S&L mess of the 80's & 90's. He certainly had the ear of several banking committee members, some of who were disgraced and brought up on ethics charges.

I relate this story only to show that I have little to no faith in these guys doing the right thing for the public.

I.e. - the government is the dude in the yellow shirt we are the dog...

I don't really disagree with anything you are saying. But, it makes it all the more disturbing that when someone does finally stand up and say something, he is taken to task for it.

When is it too early to say something (yell fire in a crowded theater)? How much time should be allowed to right the course before finally stepping up and saying - "hey...do you know what these guys are doing over here?"

Schumer says that the only things he said in his memo was information that was already publicly available. In my mind, that just means that the information that IS publicly available is in such a difficult-to-understand format that no one else thought that there was a problem. He, having some "expert" knowledge of the banking industry, needed to put that information into a usable format for people to understand.

As an equal opprtunity hater of all politicos this strikes me as a "damned if you do, damned if you don't" deal. I could just see that once the shit hit the fan Schumer would get reamed for not alerting us soon enough to the dangers of the IndyMac situation.

pastrami-on-wry wrote:

As an equal opprtunity hater of all politicos this strikes me as a "damned if you do, damned if you don't" deal. I could just see that once the shit hit the fan Schumer would get reamed for not alerting us soon enough to the dangers of the IndyMac situation.

That is leadership in a nutshell. This may sound horribly cynical, but it is no wonder being in such a universally no win situation drives politicians to looking out solely for themselves.

I'm glad someone else chimed in. I was getting tired of not arguing with just Agent 13.

Independent George wrote:

I'm glad someone else chimed in. I was getting tired of not arguing with just Agent 13.

May I suggest...

I mean I am pretty dense, yet when I started seeing ads that offered adjustable, interest only, and other absurd loans to anyone with a pulse, I just knew that at some point the shit would be hitting the fan. Didn't these government guys see that?[/quote]

Me too. Like I have long mentioned to my internet friends, the income to debt levels in the U.S. just do not add up and this is not over. No chance. I also believe that this news was delayed until after the market close for a purpose. If they had released this in the face of the FNMA issues, it would have thrown “a 10 gallon gas can on a small camp fire” and they knew it. Releasing it after the close makes the probability of a huge plunge far less. Now I wonder who is next? It would seem that the odds of this being the last bank to fail is small.

You can't go wrong putting all your money in small arms ammunition.

It's more secure than gold, and adds negotiating power to almost any situation.