California AG May Probe IndyMac Failure: Report
The nation's mortgage mess and growing string of bank failures just got very political, as if it wasn't already. A PR group that reps for the Republican National Committee and other GOP political interests circulated a copy of a letter to the press yesterday from more than 50 former IndyMac Bancorp Inc. employees, alleging that a press leak by Sen. Chuck Schumer (D-NY) caused the bank to fail. HW obtained a copy, as well. The letter was addressed to California attorney general Jerry Brown, whose office has said it it is reviewing the contents and will determine whether to pursue a formal probe in the next few weeks. "From the day the letter was made public on June 26 until the closure of the bank, a run on the bank took place and the failure became inevitable," the letter read in part. Schumer wrote in a letter to Federal regulators in mid-June that he was "concerned that IndyMac’s financial deterioration poses significant risks to both taxpayers and borrowers and that the regulatory community may not be prepared to take measures that would help prevent the collapse of IndyMac or minimize the damage should such a failure occur." The letter's leak to the press was widely condemned by bank regulators at the time, including John M. Reich, director of the Office of Thrift Supervision, who said the letter put IndyMac at risk on July 3 -- just eight days before the bank failed and was put into receivership with the Federal Deposit Insurance Corp. In the hours and days after the bank's failure, Reich suggested that Schumer's letter was the torching point for the troubled bank; Schumer's office suggested, in turn, that the bank's troubles would have existed regardless of a leaked letter. Schumer spokesman Brian Fallon questioned the motivation behind the most recent letter sent to Calif. AG Brown, given the PR firm's Republican credentials. "It certainly raises eyebrows that the firm promoting this letter is the same outfit that fueled the Swift Boat attacks and does work for the RNC," Fallon told Reuters. The PR firm in question repped a book that questioned 2004 Democratic presidential candidate John Kerry's war service record in Vietnam aboard so-called "swift boats."