Jerry Brown is the California AG, so expectations should be managed. Still, the prospect of blabbermouth Chuckie being held to account for his reckless indiscretion is worth savoring, even for a fleeting moment:
California’s attorney general is reviewing a request by former employees of IndyMac Bancorp Inc to investigate whether a New York senator triggered the bank’s collapse by releasing confidential information.
At issue is a much-publicized letter that Chuck Schumer, a Democrat, sent in June to the Federal Deposit Insurance Corp (FDIC) and Office of Thrift Supervision (OTS) questioning the company’s ability to survive.
The FDIC took control of IndyMac on July 11 after depositors withdrew more than $1.3 billion over 11 days. It was the third-largest bank failure in U.S. history. At the time, OTS Director John Reich blamed Schumer’s letter for causing the run on the bank.
In a letter to Attorney General Jerry Brown last week, 51 former IndyMac workers wrote: “From the day (Schumer’s) 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.”
Brown’s spokeswoman Christine Gasparac said on Wednesday that his office was reviewing the letter and that a decision on whether to act on it could be made as early as next week.
IndyMac is based in Pasadena, California.
After IndyMac’s collapse, Schumer accused the OTS of allowing IndyMac’s lending practices to slip. IndyMac specialized in a type of mortgage that often required minimal documents from borrowers.
Federal regulators yesterday announced a plan to systematically modify the loans of at least 25,000 homeowners with mortgages held by failed lender IndyMac in an attempt to create an industry model for assisting troubled borrowers.
Throwing a lifeline to distressed homeowners, the Federal Deposit Insurance Corp. will offer delinquent IndyMac borrowers new mortgages with interest rates as low as 3 percent. It is partly a challenge of speed: The FDIC wants to complete the modifications by mid-October, three months after it took control of the troubled California bank. It aims to sell off IndyMac’s assets by then.
“I have long supported a systematic and streamlined approach to loan modifications to put borrowers into long-term, sustainable mortgages — achieving an improved return for bankers and investors compared to foreclosure,” FDIC Chairman Sheila C. Bair said in a statement.
FDIC officials said they hoped the program would become a model for the industry and prompt other mortgage lenders to do more to work with troubled borrowers, but they did not indicate whether they would adopt this program in future bank failures. Freddie Mac has also launched a pilot program allowing for mass modifications of loans.
“I think a lot of the [mortgage lenders] will frankly welcome the initiative,” Bair said in a conference call with reporters.
In other words, thanks to the government takeover precipitated by Schumer’s big mouth, those who were paying their loans on time get screwed — and those who were on the brink of foreclosure get rewarded.
Message: Stop being so damned conscientious and start defaulting now!