Senator Schumer starts bank run

Government shuts down mortgage lender IndyMac

Excerpt:

The banking regulator said it closed IndyMac after customers began a run on the lender following the June 26 release of a letter by Sen. Charles Schumer, D-N.Y., urging several bank regulatory agencies that they take steps to prevent IndyMac's collapse.

In the 11 days that followed the letter's release, depositors took out more than $1.3 billion, regulators said.

In a statement Friday, Schumer said IndyMac's failure was due to long-standing practices by the bank, not recent events.

"If OTS had done its job as regulator and not let IndyMac's poor and loose lending practices continue, we wouldn't be where we are today," Schumer said. "Instead of pointing false fingers of blame, OTS should start doing its job to prevent future IndyMacs."

Comment: Schumer's statement was irresponsible! It will be interesting to see what bank the Fed 'forces' to buy IndyMac. As a side note, IndyMac stock was approximately $ 50 per share 2 years ago, $ 30 a year ago. IndyMac's collapse will cost the Federal government between $ 4 and 8 Billion!