Politics Enters IndyMac Aftermath
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The California Attorney General, Edmund “Jerry” Brown, is considering a request by 51 former IndyMac bank employees to investigate New York Democratic Senator Charles Schumer’s role in the collapse of IndyMac Bank.
According to a Reuters report , the investigation request stems from a letter Schumer wrote on June 26 to the Federal Deposit Insurance Corporation (FDIC) and the Office of Thrift Supervision (OTS) that questioned the bank’s ability to survive the credit crunch. The result, say the employees, was an 11-day run on the bank, which saw $1.3 billion walk out the door before the FDIC took over the bank on July 11.
What’s interesting is who distributed copies of the letter to the press: CRC Public Relations, whose clients include many Republican organizations, including the Republican National Committee and Ragnery Publishing, which published Unfit for Command in 2004, the book about then presidential candidate and Massachusetts Senator John Kerry’s military service.
On his financial blog, The Big Picture , Barry Ritholtz has some fun with the suggestion that Schumer’s letter sank the troubled bank:
“Let's review: It wasn't the conflicts of interest, the outright fraud, or management's rampant criminality that sent Indy Mac belly up. It wasn't losing nearly a billion dollars this year alone. It wasn't the share prices tumbling 87% in 2007, and then losing another 95% this year-to-date. And of course, the loss of ~$30 billion dollars had nothing to do with this. It was the Senator's letter in June that was the cause of the collapse.”
