Did Democratic Senator Charles Schumer take down IndyMac?

“The Federal Deposit Insurance Corp. will run a successor institution, IndyMac Federal Bank FSB, starting next week, the Office of Thrift Supervision said in an e-mail yesterday. The regulator blamed U.S. Senator Charles Schumer for creating a “liquidity crisis” after a letter on June 26, in which he expressed concern that the bank may fail,” according to Bloomberg.com.

What did Schumer (pictured above) have to say for himself?

“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.'”

And the story gets even worse:  The failure will cost the federal deposit insurance program about $4 billion to $8 billion, the FDIC said. Some $1 billion of uninsured deposits are held by about 10,000 customers, the FDIC said. Those depositors will get an “advance dividend” equal to half the uninsured amount, according to the statement.

If Schumer knew that IndyMac was already in distress, his comments were especially irresponsible.

IndyMac is just the tip of the iceberg. The next domino to fall might be giant banker Wachovia. “Moody’s Investors Service on Thursday said it may cut its debt ratings on Wachovia Corp (WB.N: Quote, Profile, Research) after the bank said it expects a second-quarter loss of up to $2.8 billion,” according to Reuters.  And Wachovia just hired a new CEO – after the last one quit as the bank was busy losing a ton of money.

And now Fannie Mae and Freddie Mac are also in trouble.  “Shares of the government-chartered mortgage finance giants plummeted Thursday and are trading at levels last seen in the early 1990s. If the prices don’t recover, it will be harder for the two companies to raise more money through stock sales to compensate for losses from the housing bust. Investors are afraid their stakes will vanish if the government is forced to rescue the companie,” according to the Salt Lake Tribune.

All of this is bad news for the people of this country and even worse news for GOP presidential nominee John McCain.  The public is going to blame President George W. Bush.  And then they are going to vote for Barack Obama rather than hand the baton to another Republican.  Will Obama pull us out of this mess?  Probably not.  But the public will want change at the top – not another lame Republican.  And McCain does not inspire confidence.  Frankly I find him disturbing.

Presidential politics aside, Senator Schumer ought to be ashamed of himself.  But I doubt he is.

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"Admin" is just editors Vern Nelson, Greg Diamond, or Ryan Cantor sharing something that they mostly didn't write themselves, but think you should see. Before December 2010, "Admin" may have been former blog owner Art Pedroza.