Friday, September 25, 2009

Schumer IndyMac Summer 2008 letter - the only one?

It's that simple - wonder if Senator Schumer ever came across similar information upon any other financial institution and kept the letters to himself?

See Housing Wire report here
See NY Times related story link here

To be fair the subsequent US Treasury Office of Inspector General found that the letter was a "contributing factor" in the timing of IndyMac's collapse, but that "the underlying cause of the failure was the unsafe and unsound manner in which the thrift was operated." It seems however not everyone knew what Mr Schumer's office believed they knew, since the IndyMac depositors showed up en masse and withdrew substantially more (try a B$) than before the letter was publicized.

And Bloomberg gives a little more color regarding OTS resentment over the Senator's interference in the regulatory process

Schumer's letter alleged that OTS had fallen asleep and failed for years to detect "the profligate lending practices at Indymac and others including Countrywide" - and "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, a New York Democrat, said in an e-mail yesterday. `Instead of pointing false fingers of blame, OTS should start doing its job to prevent future IndyMacs." One may wonder if certain investors in Indymac-originated mortgages were themselves underwater; when a FDIC resolution and loss sharing may have helped same investors out a little more than others...we may never know or...

Yet back to the headline this may partly explain why similar letters were not penned or released: According to the NY Times archive:
As a result, he has collected over his career more in campaign contributions from the securities and investment industry than any of his peers in Congress, with the exception of Senator John F. Kerry of Massachusetts, the Democratic nominee for president in 2004, according to the Center for Responsive Politics.

The Wall St Journal gives more here:

Today Rep. Barney Frank's Financial Services Committee conducted a hearing titled Federal Reserve Oversight. Mr Alvarez, GC at the Fed testified; a goodly portion of his questioning concerned Fed disclosures or the lack thereof and one question in particular centered on whether a Congressional request for an audit of an open bank institution should as the law states now, require approval of the Fed before it could begin. I wondered how Senator Schumer's letter regarding Indymac fit within the four squares of that line of questioning...hmmmm.

Just a simple question - of what's known, knowable, unknown or unknowable in the spectrum of foreseeability; apparently something in particular caught the Senator's attention. And apparently NOTHING since has ignited the Senators pen.

No comments: