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Shmucky Schumer -- Sen. Chuck Schumer and the IndyMac Failure

By The Neville Awards
Posted July 12, 2008

There is a special place in hell reserved for liberal low-life scum like the "esteemed" senator from New York and Neville Award winner, Sen. "Shmucky" Chucky Schumer (D).

Does the "D" after the name stand for dickhead or dumb-ass?

"Shmucky" (with apologies to Mark Levin) Schumer sent warning letters to the Federal Deposit Insurance Corp., the Office of Thrift Supervision, the Federal Housing Finance Board and the Federal Home Loan Bank of San Francisco. The letters reportedly said Schumer is concerned IndyMac "may have serious problems with its current loan holdings, and could face a failure if prescriptive measures are not taken quickly."

Chuck the Shmuck is either so stupid that he didn't know his letters to the FDIC would cause a run on the bank or he is so obsessed with having Barack Obama win in November he would deliberately collapse a bank that was already teetering so the failure could be blamed on the Republicans. With the mainstream press already in the tank for Obama the bank failure could easily be spun that way.

Well, the letters immediately caused a run on the bank that saw depositors withdraw more than $1.3 billion during the 11 days after the release.

It is very possible that IndyMac might have failed anyway. They were engaged in some very dubious practices like giving ďAlt AĒ loans (loans in which the borrower is not required to provide proof of income).

But there can be no doubt that the immediate failure of IndyMac was caused by the despicable actions of this publicity seeking, grandstanding, lib loser, who, like all liberal politicians, was far more interested in what might be gained politically from the bankís failure than he was about what the failure might mean to the bank's stockholders, employees, and customers.

Neville Update July 14, 2008 -- Feds cite Schumer in collapse of IndyMac

Excerpted from the LA Times July 13, 2008:

"An important angle in the IndyMac failure that may get lost in ominous headlines tonight and tomorrow: federal regulators pointedly cited U.S. Sen. Charles Schumer, D-N.Y., in explaining the bank's failure. In simple language, federal regulators blamed Schumer for a run on the bank.

Excerpted from the press release issued by IndyMac's regulator, the Office of Thrift Supervision: "The OTS has determined that the current institution, IndyMac Bank, is unlikely to be able to meet continued depositors' demands in the normal course of business and is therefore in an unsafe and unsound condition. The immediate cause of the closing was a deposit run that began and continued after the public release of a June 26 letter to the OTS and the FDIC from Senator Charles Schumer of New York. The letter expressed concerns about IndyMac's viability. In the following 11 business days, depositors withdrew more than $1.3 billion from their accounts."

In response Chuck the Shmuck offered up more weasley pablum in his own defense:

From Stephen Bernard, AP Business Writer July 13, 2008

At a news conference Sunday, the New York Democrat deflected blame cast upon him by regulators for causing a run on the bank that saw depositors withdraw more than $1.3 billion during the 11 days after Schumer released a letter about the possible risks of IndyMac failing.

"The regulator here was asleep at the switch," Schumer said. "The administration is doing what they always do, blaming the fire on the person who called 9-1-1." Schumer noted his letter in late June provided "no new revelations" about IndyMac, and instead pointed out the bank's problems had been building for years.

Neville Update July 15, 2008 -- From the Wall St Journal Editorial Page

The federal takeover of IndyMac Bank over the weekend could cost the Federal Deposit Insurance Corp. between $4 billion and $8 billion. But Senator Chuck Schumer, who helped to precipitate the collapse by publicizing a letter to the bank's regulator last month, has no remorse.

He was, he says, just doing his job in telling regulators that the bank "could face a collapse," a prophecy that quickly proved to be self-fulfilling. "It's what legislators are supposed to do," the New York Democrat told the Journal. Depositors who spent Monday trying to recover some of their money might beg to differ.

The Office of Thrift Supervision (OTS), whose job it actually was to regulate IndyMac, took a different view. "The immediate cause of the closing," the OTS wrote in a press release, "was a deposit run that began and continued after the public release of a June 26 letter to the OTS and the FDIC from Senator Charles Schumer of New York." The OTS added: "In the following 11 business days, depositors withdrew more than $1.3 billion from their accounts."

Mr. Schumer now argues that OTS was asleep at the switch, and that blaming him is like blaming "the fire on the guy who called 911." In fact, it's blaming the guy who poured on the gasoline. Very few banks, if any, would remain standing for long in the current tense financial environment after a Senator, in effect, told its depositors to run for the exits. In the 1930s, such tipsters were derided as rumormongers and often faced indictment for encouraging depositors to stampede banks.

Only last week, the Securities and Exchange Commission announced an investigation into the role of rumor-peddlers in the run on Bear Stearns. We somehow doubt that Mr. Schumer will receive similar SEC scrutiny for his very similar role in bringing about a liquidity crisis at IndyMac. But he may be more deserving.

Last week, Mr. Schumer's Senate colleague Chris Dodd took the spotlight to insist that everything was fine, just fine, at Fannie Mae and Freddie Mac. For how that turned out, see here. In its own way, Mr. Dodd's declaration was as irresponsible as Mr. Schumer's, given that its goal was to protect the companies from greater regulatory scrutiny of the kind long proposed by the Bush Administration.

Of course, it is much easier to talk a bank out of existence, as Mr. Schumer has now done, than to talk Fannie and Freddie into solvency. And no one is pretending that IndyMac was untroubled before Mr. Schumer wrote his letter. The bank had suffered heavy losses in its mortgage portfolio and was openly seeking new private capital to shore up its balance sheet.

But Mr. Schumer was not content merely to share his profound concern with regulators. He also leaked the June 26 letter to the press - which is more like shouting "fire" in a crowded bank than dialing 911.

Chuck the Shmuck Schumerís actions were reckless and inexcusable given his position on the Senate Banking Committee and this screams censure and investigation.

Shmuckyís actions brought a strong rebuke from OTS Director John Reich, who said:

"This institution failed due to a liquidity crisis, although this institution was already in distress, I am troubled by any interference in the regulatory process."

Chuck the Shmuck blamed IndyMac's own actions and regulatory failures for the bank seizure.

"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," Shmucky sniffed in an e-mail yesterday. "Instead of pointing false fingers of blame, OTS should start doing its job to prevent future IndyMacs. Mr. Reich, a political appointee, should be spending less time playing politics and more time doing his job."

What unbelievable New York elitism and smug arrogance on the part of the "esteemed" senator.

One wonders, beyond the obvious boon to Obama, if Chucky has been selling IndyMac stock short, or if he has had any business dealings with New York based Aurelian Management, LLC or itís president, Brian Horey. Aurelian was short-selling IndyMac shares to gain from declines in the days prior to this takeover by Federal Regulators.

Mr. Horey recently contacted us to say:

I have no relationship with Senator Schumer and we were short the stock long before he focused his energies on the bank. Please see my comments on the matter here:

Neville's Note: Fair about not shorting the stock at all in this case. We are not against shorting in principle but IndyMac was an extraordinary situation. A lot of people got hurt here because of you guys and the Smuckster...and we have the feeling that neither of you give a shit.

Inside info? At this point nothing would surprise us here at The Neville Awards.
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