IndyMac Bancorp Bankruptcy Filed - Thanks Senator Schumer!

Author: Rob K. Blake | Date: August 4, 2008 | Filed In: Mortgage News

IndyMac Bancorp filed for Chapter 7 bankruptcy protection on July 31, 2008. The filing does not include the recently FDIC acquired depositor bank, IndyMac Federal Bank.

In a NY Times report, IndyMac Bancorp at the time of filing had somewhere between $50-$100 million in assets to be liquidated by the bankruptcy court. The court must decide how to divvy up what’s left between 50 creditors who are collectively owed $500 million.

Ouch!

Making Enemies the Easy Way

Did this bank failure really have to happen?

Did these primarily mortgage originating operations, who created retail depositor banking entities to raise their own capital, encroach on the business of the mega-banks and Wall Street capital raisers…inadvertently create two enemies at once?

Was it like painting a big red bulls-eye on your chest?

I think so…

Countrywide created a depositor bank…IndyMac did too…and look where they both are now.

Taking down Mozilo, the brash CEO of Countrywide, was so easy given his big mouth, lavish lifestyle, and arrogance. But even so we heard never-ending media reports about him and very little about the company’s numbers…more innuendo than substance.

And who got to buy Countrywide (after they got beat up in the press) at what everyone believes to be “fire-sale” prices…a mega-bank… Bank of America.

Coensidence? I think not…

IndyMac Collapse - Shame On Senator Schumer

Pushing IndyMac off a cliff was a little more difficult. Enter Senator Chuck Schumer, the water carrier for Wall Street and the banking industry given his powerful positions of which two are his seats on the Senate Finance Committee and the Senate Banking, Housing, and Urban Affairs Committee.

IndyMac collapsed due to a run on the depositor bank and the depositor run on the bank was jump-started on June 27th by a letter Senator Shumer wrote, forwarded to a number of regulators, and leaked intentionally to the press.

So is Senator Schumer instrumental in the collapse of IndyMac?

Sure he is ….even the director of the Office of Thrift Supervision, John Reich, blamed Shumer calling his letter the equivalent of giving the bank a “heart attack”.

The bigger question is…Why?

The answer there is not really all that complicated either. If the mega-banks or Wall Street need a competitor taken out…they get it.

It’s that simple..

Good Luck!

Author: Rob K. Blake