Indeed such is the nature of American dog-eat-dog capitalism! Also the corruption of this government.

Peace

Author: Susan Schmidt
News Date: 10/18/08
Source: Wall Street Journal

Sen. Charles Schumer

New York Sen. Charles Schumer’s public criticism of IndyMac Bancorp last summer, which critics say helped spark a run on deposits that took under the troubled thrift, came while IndyMac’s assets were being eyed by investors who are major donors to the Democratic Senate campaign committee the senator chairs.

Sen. Schumer, chairman of a Senate banking subcommittee, was criticized at the time for publicly raising questions about the bank’s solvency and regulators’ oversight of it. What wasn’t known then was that a group of potential investors, led by Los Angeles-based Oaktree Capital Management LP, had been inside the bank looking over its books. They had already decided not to invest in the bank, but were scouting assets that might become available if the bank failed and was taken over by the government.

Sen. Schumer’s office said recently he didn’t know anything about Oaktree’s possible interest in IndyMac until after the bank failed. Oaktree Chairman Howard Marks said he never talked to the senator about IndyMac.

The bank’s demise in June now is almost a footnote in the financial-sector problems that have exploded in succeeding months. Still, Sen. Schumer’s fund-raising involvement with investors looking over the bank underscores how Democrats’ entanglements with the financial industry will make it hard for them to score political points over the market upheavals in the remaining weeks of the election.

Democrats have been on the attack over the markets crisis, blaming Republicans for a lack of oversight of the sector while they controlled both the White House and Congress for six years of this decade. Presidential nominee Barack Obama has called the mortgage crisis that prompted the market slide “a final verdict on eight years of failed economic policies, promoted by George Bush, supported by Sen. [John] McCain.” Vice-presidential nominee Joe Biden called the recent tumult the result of “that tried and true Republican response: deregulate.”

But Democrats themselves have close ties to the financial industry, as well as to the mortgage industry. Indeed, figures from the nonpartisan Center for Responsive Politics indicate that more than half the campaign contributions that the securities and investment industry has made in the past two years have gone to Democrats — more than $61 million.

Similarly, when Democrats took control of Congress after the 2006 midterm elections, the securities and investment industry also gave just over half its contributions to Democrats — more than $36 million.

That has given Republicans ammunition to fight back. Sen. McCain, the Republican presidential nominee, attacked Sen. Obama in their Wednesday night debate for failing to support moves to rein in mortgage titans Fannie Mae and Freddie Mac while taking large amounts of campaign contributions from their executives.

Sen. Schumer’s tie to Oaktree illustrates how complicated this political terrain can be for Democrats in the election.

The group of investors led by Oaktree are big political contributors, predominantly to Democrats. They have donated more than $700,000 to Senate Democrats and the Democratic Senatorial Campaign Committee during the four years that Sen. Schumer has chaired the campaign committee.

Oaktree’s Mr. Marks gave the Democrats’ Senate Campaign Committee $20,000 in late March. Executives of his firm and three other equity firms that considered investing in IndyMac along with Oaktree — Thomas H. Lee Partners, Ares Capital Management LLC and Fortress Investment Group LLC — have been generous donors to the DSCC under Sen. Schumer’s chairmanship, as have many Wall Street financial-services firms.

Mr. Marks said he is a longtime Democratic donor and has gotten fund-raising calls from Sen. Schumer. But, he said, “I know him socially. I’ve never talked business with him.”

IndyMac got into trouble in 2007, when it was stuck with $10 billion in underperforming mortgage loans it had planned to sell into the secondary market. The bank tried to stay afloat on cash advances and brokered deposits, while it came up with a new business plan and sought new capital.

Mr. Marks said his company often has tried to get a foot in a company’s door to scout for bargains. On May 28, Oak Tree submitted an initial investment proposal to IndyMac, saying it could provide $1 billion to meet IndyMac’s “liquidity and capital needs.” OakTree’s proposal said it didn’t “anticipate any changes in business strategy or management.”

The proposal was very preliminary, Mr. Marks said. “This is a routine kind of thing one had to do to do due diligence. We were interested in taking a look,” said Mr. Marks. His firm has raised $11 billion this year to invest in distressed assets. “We’re bargain hunters. And we have a long history in distress,” he said.

The investors knew after a few days of due diligence in mid-June that they weren’t interested in buying the bank, said Mr. Marks. He read from a June 22 email from Oak Tree managing director Skarden Baker, who was assessing IndyMac’s business. “I am taking the view of doing enough here to jump in if it goes to receivership,” wrote Mr. Baker.

Four days after the email was sent, Sen. Schumer released publicly letters he sent to bank regulators and to the Federal Home Loan Bank of San Francisco. “I am concerned that IndyMac’s financial deterioration poses significant risks to both taxpayers and borrowers,” the senator wrote, warning that “the bank could face a failure if prescriptive measures are not taken quickly.”

The next day, Mr. Baker called an anxious Michael Perry, IndyMac’s chief executive, according to an email Mr. Perry sent around to colleagues. Mr. Perry told IndyMac executives that he thought there was still a very faint hope for a financial infusion; Oaktree’s Mr. Marks said the message to IndyMac in that call was that Oaktree was not interested in investing.

Mr. Marks said there remains a “distant possibility” that Oaktree will be interested in buying remnants of IndyMac from the government. Now, though, the rash of institutional failures has presented his firm with a rich smorgasbord of distressed assets, he said.

On the heels of Sen. Schumer’s much publicized letter, long lines of worried depositors appeared at IndyMac. Sen. Schumer has said that his letters only pointed out weaknesses that were well known.

Schumer aide Brian Fallon said at the time that the senator’s highly unusual public letters were justified: “The home-loan bank system has an obligation to lend responsibly and police its members. But it has not been doing its job. We have found the only way to get the home-loan bank system to act appropriately and positively is to make public the concerns we’ve already expressed privately.”

hmmmm....

Hello Rayman and everyone,

you ask...Am I right to be pissed off here? Wasn’t it totally irresponsible of the Senator to cause my company to fail? He should have known better, than to raise public concerns about a regulated financial institution! Who will hold him accountable?

Well, I do not think his action is the cause of the failure, it is probably those billions in bad mortgages that sank that boat, and, yes, where were those OTS regulators while those billions were just sitting there fat and happy taking up all that free space and not paying their rent?

You and many others lost their jobs due to highly paid lazy bums who sat on their big fat sasses while their finanicial institutions crumbled due to the heavy weight of bad debts. The financial system was out of control, in, way over, it's head, lost in the confusion of their own complexity.

Sure, you can be pissed with Schumer but he was only the messenger.

If the bank had any solvency it would still be standing even with a run on deposits, imo, the bank went under due to it's insolvency, and lack of responsible oversight.

The loss of employment and finances to hundreds of people like yourself is very difficult to bear and I hope you are doing well and holding up well under the stresses.....ruth

Ruth speaks for me also here!

peace

A dandy interesting piece and I am sure those highly placed execs left the Indymac a bit richer than the lower execs and certainly their customers. It seems the actions of the AIG execs is pretty much standard procedure when it comes to failed Companies....

from nytimes....M. Dowd today

It is the best of times, it is the worst of times.

Skip to next paragraph

Maureen Dowd

The best of times because W.’s long Reign of Error is about to end.

The worst of times because, well, you know why.

In this season of darkness, as Charles Dickens described an earlier mob scene, I’m feeling as vengeful and bloodthirsty as Madame Defarge sharpening her knitting needles at the guillotine.

I even felt a little thrill go up my leg, as Chris Matthews would put it, when I heard that the Lehman Brothers C.E.O., Richard Fuld, got punched in the company gym after it was announced that the firm was going under.

I can’t wait to see the tumbrels rumble up and down Wall Street picking up the heedless and greedy financial aristocracy that plundered and sundered free-market capitalism.

Just when we thought executives of A.I.G., the insurance giant bailed out by taxpayers for $123 billion, had been shamed into stopping their post-bailout Marie Antoinette spa treatments, luxury sports suites, Vegas and California posh resort retreats, we were dumbfounded to learn that some A.I.G. execs were cavorting at a lavish shooting party at a British country manor.

London’s News of the World sent undercover reporters to hunt down the feckless financiers on their $86,000 partridge hunt as they tromped through the countryside in tweed knickers, and then later as they “slurped fine wine” and feasted on pigeon breast and halibut.

The paper reported that the A.I.G. revelers stayed at Plumber Manor — not the ancestral home of Joe the Plumber, a 17th-century country house in Dorset — and spent $17,500 for food and rooms. The private jet to get there cost another $17,500, and the limos added up to $8,000 more.

In an astonishing let-them-eat-cake moment, the A.I.G. big shot Sebastian Preil held court at the bar and told an undercover reporter, “The recession will go on until about 2011, but the shooting was great today and we are relaxing fine.”

There were at least three New Yorkers bagging birds — Jeffrey Malkovsky, a senior director at A.I.G.’s Manhattan office, Hilary James, the general manager of the Bristol Plaza Hotel, and her friend, John Roberts, an A.I.G. adviser.

Who are these looters of our loot? The New York Times should follow up the excellent Portraits of Grief it did after 9/11 with Portraits of Greed.

Payback doesn’t have to go as far as the French Revolution. The grifters shafting us don’t have to shed blood, but they do have to give the money back. As far as these self-serving corporate con men and short-selling traders are concerned, off with their headsets.

John McCain wasted his last-chance debate Wednesday by trying to stir up faux class rage against Barack Obama with Joe the Unvetted Plumber instead of tapping into the real class rage the country feels over bailing out ungrateful financiers who gambled away the life savings of working people.

’Tis a far, far better thing that New York’s attorney general, Andrew Cuomo, did when he demanded that A.I.G.’s former executives who were trying to abscond with many millions in severance payments, bonuses and golden parachutes surrender the swag. He set a good example for the feds, who slapped Mr. Fuld in the face with a subpoena.

Cuomo got A.I.G. to instantly reverse itself and cancel 160 conferences and other events that would have cost more than $8 million, as well as give up information on compensation, bonuses and other payments to determine whether they were fitting. (How could they be?)

“We stopped a $10 million severance payment to Stephen Bensinger, the chief financial officer,” Cuomo told me Friday. “Just look at the words chief financial officer. There’s a phenomenon when senior management sees the corporation deteriorating and they concoct a version of looting the company to take care of themselves.”

Even Cuomo, who has been locked in battle with A.I.G. for a long time, was stunned when he learned of the British hunting folly. At first he thought it could not be true.

“That was our partridge hunting trip,” he said. “The partridge paid the ultimate price, but the taxpayer came close.”

He is using a state “claw back” law, which he says allows him to recover contracts and rescind payments if there was unjust compensation.

Great. Now can he find the $123 billion lost by A.I.G. that we now have to plug with taxpayers’ money?

Let’s hope that if Barack Obama becomes president, the first thing he does is keep his promise to make the junketeers come to Washington (preferably by bus or carpooling) and write the U.S. Treasury a check, after which he will fire them on the spot.

Heads must roll.

here is to heads rolling! ruth

oh, another little dandy....this from DK's post....I copied that article by Tom Foremski..

This single statistic has boggled my mind because it puts into perspective the enormous size of the derivatives bubble. DK Matai, chairman of the ACTA Open in his article The Invisible One Quadrillion Dollar Equation — Asymmetric Leverage and Systemic Risk writes:

According to various distinguished sources including the Bank for International Settlements (BIS) in Basel, Switzerland — the central bankers’ bank — the amount of outstanding derivatives worldwide as of December 2007 crossed USD 1.144 Quadrillion, ie, USD 1,144 Trillion.

The population of the whole planet is about 6 billion people. So the derivatives market alone represents about USD 190,000 per person on the planet.

The value of the derivatives market is 22 times the GDP of the entire world.

This financial crisis is not about sub-prime mortgages or credit swaps. The geniuses of Wall Street have managed to create a bubble that is way beyond any real values.

Consider this:

The real estate of the entire world is valued at about USD 75 trillion.

The world stock and bond markets are valued at about USD 100 trillion.

Add up all the real estate value in the world and all the value of all public businesses in the world and you get to $175 trillion. This is just 15 per cent of the value of the derivatives market.

What’s going to happen as this bubble unravels? What’s going to happen as the value of the underlying securities on which the derivatives are based upon devalue further?

You can’t bail this bubble out. There is not enough money in the world to bail this out. The US money supply is about $15 trillion, 1.3 per cent of the bubble. I don’t have figures for the rest of the world money supply but whatever it is it might add up to a whopping 10 per cent of the derivatives bubble.

Unbelievable. All of this was done in the shadow financial markets, completely unregulated.

- - -

Please see DK Matai:

The Invisible One Quadrillion Dollar Equation — Asymmetric Leverage and Systemic Risk

Why are Markets still Falling? The Tsunami caused by Derivatives and Deleveraging

Tom Foremski reports on the business and culture of Silicon Valley and beyond. And also blogs at SiliconValleyWatcher.com See his full profile and disclosure of his industry affiliations.

Wow Ruth that is some incredible stuff!

Sickening!

peace

aren't you glad you asked if you should be pissed at Schumer?

Really, I remember way back when the all the deregulation stuff started to happen. I was working for a large fortune 500 Co. and they started to change our pension plans giving us a lot more say and hands on play with how to invest the money....my thinking then was "oh, great" I know ZERO about investing money....that means now I have to either learn it myself, go to one of those 1000 financial consultants who opened their offices, literaly, overnight, and, who plastered a computer printed degree on their wall for (EXPERT ADVICE)(wink,wink) or leave it be and hope for the best"....now, I know that in this Company of many many thousands of employees...probably about 98 percent of the folks were like me in their knowledge and experience of investing money....meaning about 98% of the Nation's working force was as ignorant as new born babes when it came to WALL ST investing.....so my thinking was this......"WE the people are SCREWED. PERIOD".......well, it has taken about 20 years give or take 5 or 6 for my "natural instincts" to have proven itself once again when it comes down to the "nature of my fellow man," and my fellow man's taste for the "quick and his/her desire for the easy making of the buck at the expense, of, well, his mother, father, child, neighbor, brother, sister"....yes...I remember the birth of the financial consultant era, and, now, I am experiencing their downfall because now when you mention Wall St....you mention investing..you mention "good investments" "great company".....you remember you heard that all before, before you lost 1/2 to everything in your investments....because right up to the FEDs hauling out the books....the CEOs, CFOs were lauding the great worth of their stocks, their Company, the financial institution....

For all the damage, all the complexity of the financial deal making....all the high priced CEOs, and CFOs throught these 20 something years and all the billion dollar bullsheet offered to the average man and woman of the street, who, had, really, no choice, but to go along for the ride on the deregulaton train of our financal markets......my very simple and clear instinct was RIGHT ON THE MONEY.....we got a QUADRILLION DOLLAR SCREW JOB.

so....lesson for this sunday is.....you have instincts for a reason.....so F-ING..TRUST THEM and they are free of charge....go figure....ruth

The paragraph Raymon Mathoda leaves out...

"Sen. Schumer's office said recently he didn't know anything about Oaktree's possible interest in IndyMac until after the bank failed. Oaktree Chairman Howard Marks said he never talked to the senator about IndyMac."

No smoking gun. Not even a smouldering bush.

more...

"The proposal was very preliminary, Mr. Marks said. "This is a routine kind of thing one had to do to do due diligence. We were interested in taking a look," said Mr. Marks. His firm has raised $11 billion this year to invest in distressed assets. "We're bargain hunters. And we have a long history in distress," he said.

The investors knew after a few days of due diligence in mid-June that they weren't interested in buying the bank, said Mr. Marks. He read from a June 22 email from Oak Tree managing director Skarden Baker, who was assessing IndyMac's business. "I am taking the view of doing enough here to jump in if it goes to receivership," wrote Mr. Baker.

Four days after the email was sent, Sen. Schumer released publicly letters he sent to bank regulators and to the Federal Home Loan Bank of San Francisco."

morning craig,

yeah, the picture is ugly, but, really, when you, really, look at the paint job and the artists who contributed to the painting.....they had conArtists written all over them from the start....and my personal opinion as to why it has gone on for so long is the MALE EGO.....and it's need for constant primping....our whole society, and yes, the World's, is based on this one itty bitty....demand....the primping of the Male EGO.. your gender needs an EGO deflation.....big time, if our Universe is to survive......otherwise...we are burnt toast....sooner rather than later...

have a great day ruth

Wait, Rupert Murdoch's Wall Street Journal Identified Chuck Schumer as the root of all evil? Shocking! I'll go back and re-read the article to see if I can find any mention of the billionaires who've reaped massive profits while short-selling these banks on their way down. Oh wait, never mind.

hello Irv.

btw....all the info you wrote in your #8....is available in #2 the copy of the actual article from the WSJ....ruth

So?

The current crisis is all Schumer's fault? Kind of like blaming the observant boy for noticing the emperor's bare ass, isn't it?

"Wasn’t it irresponsible of the Senator...?"

No, it wasn't irresponsible.

Next question?

Is the ideal oversight ...

"See no evil
Hear no evil
Speak no evil"?

Another paragraph the author leaves out(Thanks ruth)...

"Schumer aide Brian Fallon said at the time that the senator's highly unusual public letters were justified: "The home-loan bank system has an obligation to lend responsibly and police its members. But it has not been doing its job. We have found the only way to get the home-loan bank system to act appropriately and positively is to make public the concerns we've already expressed privately."

No doubt Right Wing was gunning for Chuck Schumer.

And speaking of IndyMac employees...

The OTS laid the blame at Chuck Schumer's feet for writing a letter warning that, without intervention, IndyMac would...well....FAIL.

Well, it seems fifty-one former employees of the failed bank want California Attorney General Jerry Brown to officially investigate whether or not Schumer was to blame.

http://www.reuters.com/article/topNews/idUSN2045763020080820

Well, fifty-one former employees and a PR firm with some very particular ties, that is:

http://www.crcpublicrelations.com/clients.aspx

____________________
"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." [...]

...Copies of the employee letter were distributed to the press by CRC Public Relations whose clients include the National Republican Congressional Committee, National Republican Senatorial Committee and the Republican National Committee.

CRC, based in Alexandria, Virginia, was also linked to a company that published a book questioning 2004 Democratic presidential candidate John Kerry's Vietnam service on a swift boat.

Schumer spokesman Brian Fallon questioned the motivation behind the letter.

"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 said."
____________________________

Well, my eyebrows are most definitely raised. In fact, I'd say this looks like a blatant attempt to use the justice system, the media, and the court of public opinion as weapon of partisan attack. And then, when Jerry Brown finds no fault with Chuck Schumer, all the players will quickly reorganize to attack him for that.

This all stinks!

I am thinking our soldiers are fighting the wrong evil people . . .

If IndyMac were healthy, all the letters in the world would not have mattered.

They were teetering on the edge. If Schumer's letter didn't do it, the next strong breeze would have tipped them over.

How many citizens even knew about that letter?

Well, The administration openly criticised Schumer about that letter. Thus calling attention to it just in time to cause a run on IndyMac when the 99.9999999999999999999% of the population that had not heard of Schumer's letter woke up and tried to take their money out of the bank.

Blaming Schumer for IndyMac is dumb ...blaming him for the demise in Fannie and Freddie at least has some merit ...

Personally I think he released the letter because they were already in trouble, he knew it, and he wanted to get it out there before he could be blamed for hiding it after knowing about it.

Damned if you do, damned if you don't in this case.

Either way, it is not his fault they went under, they were already there.

Schumer is tough, he'll handle this just fine.

Oh, I'm sure. It's just ridiculous that, when presented with a MOUNTAIN of evidence as to the cause of all our economic woes, republican nutbags can't think past "It's the democrats' fault".

It's ridiculous and pitiful. How do these people even function in society?

Just because "the letter" precipitated the withdrawals does not mean that Schumer doomed IndyMac. It may have been that poor performance of loans and investments would have caused this paranoia eventually. Of course, some defaulting, etc. that often makes up only a small fraction of a bank's portfolio is enough to cause a run... While such runs are probably not warranted generally, people are paranoid, and people will be as paranoid in the future as they are right now.

I'm not defending Schumer because I don't know the specifics of IndyMac's dire straits, (do you?) but the news would have come out eventually. If the bank could have turned it around before anyone noticed, then the announcement by Schumer was an extremely foolish move. But if not, then it's unfair to investors to leave them in the dark. I don't know which was the case, but I don't think you do either.

"It's all Chuck Schumer's fault!" or so says John Reich of the OTC.

You see, everything was just hunky dory with IndyMac Bank. Never mind its shutting down mortgage operations, never mind the faulty business decisions (or bets, as they're known in the original Latin) or that it slashed its workforce by half, etc. Nope. Everything was fine and dandy you see, until mean old Chuck Schumer wrote a letter:

"Mr. Schumer, who has been critical of bank regulators for months, released a statement criticizing Mr. Reich’s agency.

"IndyMac’s troubles, like Countrywide’s were caused by practices that began and persisted over the last several years," he said. "If O.T.S. 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."

http://www.nytimes.com/2008/07/12/business/12indymac.html

Y'know, here's a thought: maybe Chuck was writing letters and saying alarming things about the situation with IndyMac Bank because the situation was, you know, 'alarming'.

And maybe because its ills (and their ramifications) were a perfect example of what the wholly under-regulated Wild West atmosphere of the mortgage industry hath wrought.

And maybe because he saw the bank for what it was: a dead canary...a huge, $32 billion dead canary covered in coal dust.

But yeah. If only he hadn't written that letter, all would still be swell.

IndyMac failed because it held bad debt - lots of defaulted subprime loans.

Schumer was the messenger of bad news.

The messenger didn't sink IndyMac.

And FWIW the FDIC now owns IndyMac. If its loan protfolio is good the FDIC won't lose money.

You madam are a moron.

If that is true, maybe can he write a letter about the viability of Fox News, the RNC, the Oil companies, the tobacco companies and Halliburton. Maybe it would work on them too!

Poor, poor Indy Bank. If Schumer had only left them alone and not written his letter, they'd be solvent. ANY fool knows that.

What could be the cause of the latest banking crisis?

Irresponsible lending? Nope.

Lack of regulation? Nope.

Inflation? Nada.

Chuck Schumer? Bingo!

That's right, Senator Charles Schumer has single-handedly destroyed IndyMac and thrown the housing market into depression. So says the right. Fox News and the right wing noise machine has been all over, speculating about Chuck Schumer.

So, is this a chicken and the egg scenario? Did Schumer's letter cause the bank to collapse, or did the bank of the brink of collapsing cause Schumer's letter?

"Schumer aide Brian Fallon said at the time that the senator's highly unusual public letters were justified: "The home-loan bank system has an obligation to lend responsibly and police its members. But it has not been doing its job. We have found the only way to get the home-loan bank system to act appropriately and positively is to make public the concerns we've already expressed privately."

Raises more questions.

Has Schumer's office publicly released letters to regulators regarding other borderline financial players? Are there other precedents of such loaded letters from Senators to regulators being made public in this way? Is there any record of ongoing contact between Schumer's office and the OTS regarding this matter? Did Schumer's staff warn the regulatory office that if no action was forthcoming that the letter would be released?

In the great scheme of things, Indymac was a pebble in the avalanche.

I'm much more interested in the question of why Paulson, former head of Goldman Sachs, decided to let Goldman's rival, the big boulder, Lehman Brothers, go into bankruptcy, spilling its many problems onto other financial institutions around the world, while all the other dirty players soon became part of a rescue operation. You don't think Paulson could have been settling some personal grudge? Did Lehman execs donate too much to Democrats or something? No chance of any conflict of interest here? I'd like to see some investigation of these questions.

Rayman is correct. Her skepticism about anything that excuses Schumer's responsibility in this matter is both well-informed and commendable.

The bank was vulnerable when Schumer released his letter, but it hadn't yet failed. His letter guaranteed the bank's failure.

Do you realize Schumer leaked his own letter?

I live in New York State, and have pretty good instincts about people. From the first, Schumer has disturbed me. He's a happy-seeming guy who's always seemed to have the shadow of a dagger up his sleeve. He has never rung true to me.

Comments that point, as Schumer did in self-defense, to the bank's vulnerability at the time, beg the points of the stupidity and unfairness, and possible self-interest, of his action.

There are too many people willing to back his action because it stokes their own ire at the economic situation, not because they really know what is going on, how banks work and what the true effect of Schumer's letter was.

If you think my last remark applies to you, before you get pissed with me, ask yourself why Schumer decided to play the messenger. Why -- and why at that particular moment.

If you're still pissed with me after contemplating the last, then do yourself one more favor -- look up the meaning of schadenfreude, and ask yourself if your feelings fit that word's meaning.

Schumer's and OakTree's denials of self-interest don't ring true.

The OTS (not OTC, kids) was aware of the bank's shaky position before Schumer got involved. Whether he released his letter publicly for self-interest, out of stupidity, or to wash his hands of future blame should the bank fail, his letter was the tipping point for the bank. If he hadn't released it, there is at least some possibility that the bank would not have failed.

p.s. Calling the blog author a moron is a projection of the first order. To correct that mistake, I recommend that before continuing this discussion, you look into how banks actually work.

Well, he has a tendency to do stupid things. I mean Schumer(not John.) For instance, the Op-Ed he wrote about Russia and Iran in the Wall Street Journal earlier this year. I will give him the benefit of doubt.

Again:

The OTS was aware of the bank's shaky position before Schumer got involved. Whether he released his letter publicly for self-interest, out of stupidity, or to wash his hands of future blame should the bank fail, his letter was the tipping point for the bank. If he hadn't released it, there is at least some possibility that the bank would not have failed.

He had sent a letter of concern to the proper authorities, who were in a position to respond and act, as part of their jobs.

As a member of the Senate Banking committee, he should have known the probable effect of making his letter public. Yet he did it anyway. That's why his action is being questioned and criticized.

By the way, do you know what one of his proudest achievements is, per his own web site? The passage of a bill that "modernized" US banking, securities and insurance regulations. In other words, he fought for decreased regulation, which is a primary cause of the US part of the global economic downturn. His bill codified and centralized deregulation, instead of leaving it to the experts -- the regulators -- to decide, on a knowledgeable, case-by-case basis, as had been happening.

Check this piece of drivel from a speech he gave when his bill was passed:

"...The one thing that has dominated my thinking in this area is that we not repeat an S&L crisis, we not allow insured deposits to be used for risky activities. I am proud to say that the compromise between Treasury and Federal Reserve and the structure of the bill here makes sure that when insured dollars are used for anything that might be slightly risky, that the capital requirements and fire walls will make virtually certain that we will not repeat the kind of S&L crisis that we have had in the past..."

Yeah.

Still giving him the benefit of the doubt?

Mortgage lender IndyMac of Pasadena, California had been diving down the path of illiquid insolvency for over an year. The gradual failure prompted a letter from a Senator Schumer which precipitated a run on this bank. The bank was seized by FDIC regulators subsequent to the run.... And John Reich, director of the Office of Thrift Supervision, a chronic Republican community banker who spent twelve years working for Republican Senator Connie Mack's staff, and appointed by President Bush in 2005, blames Schumer for the run on the bank. But looking at the institution's stock price over the past year, one readily sees that investors have known the place was cascading towards Armageddon for the past year. In fact, it was Reich (BTW, it's pronounced "rich," and isn't that rich?) himself who ushered in the "regulatory relief" which rolled back consumer protection and enabled thrifts to skate on thin ice through the current mortgage crisis.

Under Reich, whom Bush appointed to the FDIC board in 2002 after an undistinguished career in community banking, the Office of Thrift Supervision has largely gone AWOL until this year. It's shades of "Heckuva job, Brownie!" all over again.

Reich like Brownie hardly had the kind of c.v. that anticipated success, which unfolded far from Washington when he wasn't working for highly partisan Rep./Sen Mack. The National Bank of Sarasota, in fact, a bank with under a billion in assets while operating, doesn't exist anymore.

Just a month before the bank failure, Reich told the Senate Banking Committee:

"Thrifts' capital and loan loss provisionts keep them well-positioned to withstand further pressures. The overall safety and soundness of the industry is perhaps best illuniated by noting that there were only a dozen problem thrifts in the first quarter of this year, compared with more than 200 during the height of the thrift crisis in the early 1990s. Although the number of problem thrifts will probably increase slightly in coming months and a handful of failures could occur, we expect these seriously troubled institutions to remain few in number and small in asset size." (TS-166)
http://www.ots.treas.gov/pagehtml.cfm?catNumber=33

By no measure is Indy small in asset size. Nonetheless, when Reich became Vice Chair of the Office of Thrift, he was worried not about solvency, but about compliance. Compliance in banking is the effort a bank spends devoted to pleasing auditors and regulatory agencies. In a consumer's mind, it's protection; in a Bush Republican's mind, it's a damn nuisance.

"I know what bankers are living through," Reich said. "We had two people in a $450 million bank whose sole job was compliance." (Community Banker, September 2003)
http://findarticles.com/p/articles/mi_qa5344/is_200309/ai_n21337230

In short, he didn't feel consumer pain, he felt pain for bankers. Reich's concern about compliance led to the Office of Thrift to cut all that durn tape in compliance---an enabler of the rush to back assets with unreasonably optimistic scenarios. An enabler of IndyMac, in short.

Even by 2006 Reich admitted to Massachusetts Banker that the dismantling of consumer protection via streamlining compliance had gone too far.

"My first two or three months on the job, I visited our regional offices around the country. And one of the common threads of concern was, as we dismantled in earlier years our centralized management of compliance and consumer protection, we wound up with no go-to people so to speak, on questions pertaining to policy issues on compliance and consumer protection." (Massachusetts Banker, Page 21 of an ugly html page.) Here's a tiny url: http://tinyurl.com/5jp5yu

While the idea of a country club bumpkin heading an important government agency smacks of Heckuva-job-Brownie-ism, the way the mortgage meltdown unfolding is in truth more redolent of the Enron catastrophe. Top-drawer auditors kept signing audits at IndyMac and its cousin Countrywide while government regulators looked the other way and free-market swooners cheered them on.

Countrywide, in fact, in order to go gung-ho into flimsily-backed mortgages, dropped its auditor of thirty years in 2003, bringing in KPMG, which may emerge as the Arthur Anderson of the mortgage debacle.

With Reich like Brownie bent on providing Congress with rosy scenarios even while the house is on fire, it's hard to appraise if more banks that banked on mortgage brokers as their cash cows are going to fail. (In California, where speculators and lenders have thrived since the gold rush, banks are known to "lead with credit" more avidly than banks elsewhere in the country, and sometimes this has paid off--see 1990's Silicon Valley e.g., and it's not an accident that both Countrywide and IndyMac are LA-adjacent based banks). But when Reich tries to point a finger at Senator Schumer for stating the obvious, anyone with a bank account backed by the FDIC---which is pretty much everyone---shouldn't let him get away with it.

Incorrect, John. Schumer made his concerns known privately, which was responsible and wise. It was the release of his own letter to the public where he is at fault. That action was irresponsible and unwise. In the 11 days subequent, depositors withdrew over $100,000,000 per day, which is what led to OTS taking over at the point they did. If this had been allowed to play out normally, there was some possibility the bank could have been saved, or when it went down, not to go down so hard. Schumer was irresponsible, and possibly worse -- not in writing the letter, but in releasing it publicly.

"Still giving him the benefit of the doubt?"

Sure.

Chuck Schumer wrote an op-ed in the NYT in 1987 opposing repeal of Glass-Steagall.

"Citing the pressures of rigorous worldwide competition in financial services, large American banks are pleading for the repeal of the Glass-Steagall Act, a law that keeps banks out of the more volatile and risky world of securities transactions. Their entreaties should be resisted. The reasons the act was passed are still valid, and it has not interfered with our ability to compete internationally.

The Glass-Steagall Act of 1933 evolved from the bitter experience of the Depression, when American banking was in shambles. Left free to speculate in the 1920's, banks naturally looked where profits seemed highest, and were inevitably drawn into risky propositions. When a few banks failed, depositors nationwide panicked. Runs on banks pushed this country over the brink of financial disaster."

http://query.nytimes.com/gst/fullpage.html?res=9B0DEFDB1231F935A1575BC0A961948260&scp=17&sq=Glass-Steagall+Act&st=nyt

Chuck was right.

He's a pretty popular target for bashing on the left, but he's right a lot more often than he's wrong. Schumer has a pretty good understanding of the financial markets.

& that name Phil-"nation of whiners"-GRAMM keeps coming up:

"On November 12, 1999, President Bill Clinton signed into law the Gramm-Leach-Bliley Act, which repealed the Glass-Steagall Act of 1933."

http://en.wikipedia.org/wiki/Gramm-Leach-Bliley_Act

He still should have been careful.

IndyMac may have been doomed anyway. How exactly did Schumer's letter help? Anyone who had more than $100k FDIC insured in there was an idiot anyway.

So by jumping on a tenuous situation he may have cost the FDIC some billions it may need later on.

Even worse was former Federal Reserve Bank pres. Poole. Exactly how helpful was it for a former fed bank pres. to say that Fannie and Freddie were "insolvent"? That worked out real well.

The financial system is in meltdown. American taxpayers have limited resources to try to restore sanity. Triggering panic is not helpful.

cheers

From Chucky's web site, about the 1999 legislation:

"...A member of the Banking committee in the House and the Senate, Chuck worked for a decade to pass the 1999 Financial Services Modernization legislation, which modernizes regulations governing the US banking, securities and insurance industries. He played a key role in drafting language to ensure that financial companies serve traditionally underserved areas and has exposed unequal lending practices of banks and predatory lending practices of subprime lenders in minority communities. Chuck is currently the Ranking Member of the Banking committee's Economic Policy subcommittee..."

This para refers to the Gramm-Leach-Bliley Financial Services Modernization Act. Schumer's name doesn't appear on the bill's title, but he fought to get it passed.

Also from his web site, about the same legislation (as is the quote I pasted in #27):

"...This bill is vital for the future of our country. If we didn't pass this bill, we could find London or Frankfurt or years down the road Shanghai becoming the financial capital of the world. That has grave implications for all of America, where financial services are one of the areas where jobs are growing the most quickly, where our technology is way ahead of everyone else, where our capital dominates the world. And it would be a shame if because Congress has been unable to act that all those advantages were frittered away as they well could be in a global world by our failure to realize the problems that our existing antiquated laws cause us..."

This was his mindset 9 years ago.

John Reich's laissez-faire nonfeasance was what enabled the failure of IndyMac Bank, which he then handed off to the FDIC. Mr. Reich then engaged in classic psychological projection and blamed that failure on Chuck Schumer for (unlike Mr. Reich) actually fulfilling his official responsibilities and performing oversight. That was an insult to all of us who depend on the FDIC, which Mr. Reich's incompetence unnecessarily taxed.

Schumer's and others' successful fight for the 1999 deregulation legislation set the scene for commercial banks' entry into investment banking, sloppy lending practices, and overleveraged investment vehicles, which over next nine years created the stage on which IndyMac's failure played out.

afternoon everyone,

came across this in my reading...I guess it is all a matter of perspective as to Schumer's actions....if you happen to have been an unsecured creditor with IndyMac you are probably relieved....
this is one responder comments to an article calling Schumer's actions irresponsible...

I have nothing but praise for Senator Schumer. What he did, in reality, was issue a legitimate warning to IndyMac's unsecured creditors that they are at risk in continuing to do business with the bank.

FDIC supposedly has a policy that there should be no "Walking Dead Banks". Yet I fear that decisions have been made, administratively, not to allow any significant financial institution to fail before the Fall elections.

The problem with that approach is that the FDIC has very clear policies on what happens if they seize a bank. While depositors up to $100,000 are insured, unsecured creditors of the banks are not paid. The seizure harms many innocent people and companies who do business with the Walking Dead Bank within the weeks or months before the seizure:

Construction loan borrowers who are depending on the bank to make a series of disbursements to pay for construction costs as they are incurred, but who, upon the bank's failure, do not receive full loan pay out and are left with mechanics lien claims and possible bankruptcy of their own;

Home buyer mortgage loan applicants who spend time and money to go through the loan process only to have it stopped part way, causing the buyer/borrowers in process to lose their purchase contract deposit when the bank won't close the loan because the bank has failed;

Buyers in escrow who are in contract with the failed bank to buy REO, with those buyers losing their buyer's purchase deposit which is in the bank's coffers, while FDIC decides to cancel the contract and not close after the seizure;

Landlords for bank branches who renew leases in good faith, and perhaps pay for tenant improvement renovations, thinking that they have a good credit tenant, when in fact FDIC will ultimately cancel the lease prematurely and stop paying rent;

Vendors who sell everything from xerox copies to computer services to printing jobs to night time cleaning services all of whom receive nothing for their accounts receivable from the failed bank.

Allowing a "Walking Dead Bank" to continue to do business, and make FDIC-rescindable contracts with innocent third parties and thereby take funds, goods or services with no intention of payment for them, is actual fraud under the law of most states. However, as shown by what FSLIC and FDIC did in the 1980's, when the party "doing the fraudulent inducement" is a federallly insured Walking Dead institution, there is no consequence suffered by the officers of that Walking Dead Bank. They are perpetrating frauds, to the detriment of others, to keep the bank operating beyond the date it becomes insolvent.

One economic statistic never disclosed in the days of the "S&L Crisis" is how much money unsecured creditors lost when the Walking Dead S&Ls were seized.

Senator Schumer should be commended for protecting the interests of IndyMac's unsecured creditors by telling the truth about what is going on.

John M. Reich's comments, as head of the federal Office of Thrift Supervision, clearly show that his organization promotes the perpetration of frauds on insolvent banks' unsecured creditors, in the name of having a stable banking system. Is that an "Unlawful taking in violation of the 4th Amendment?" If not, at the very least it is immoral and reprehensible conduct by federal officials."

hmmmmmm.....ruth

Schumer's responsibilities include prudence, which requires he pursue his concerns privately, though official channels, not through the media.

Prudence is a key element of banking and investment intelligence. It seems to have gotten short shrift in recent years.

The 1999 legislation -- which Schumer not only supported but fought for -- undermined regulations that kept prudence a strongly-active principle despite mankind's innate greed.

"...but who, upon the bank's failure, do not receive full loan pay out..."

Had Schumer not PUBLICIZED his letter when he did, the bank would not have failed when it did. Perhaps it would have failed a week later, or next year. Or perhaps never. But his publicizing his letter made it an impossibility that the bank could survive. This is why he was wrong. He was unfair to a bank that was trying its best to meet its obligations, and that was already being carefully watched by regulatory agencies. The 11-day subsequent run made it impossible for the bank to meet its obligations.

OK, you see a car going down the street, and a wheel is wobbling. God, it looks as if the wheel is going to come off and the car will crash!! How to handle this? Try to signal to the driver, and others who might help, so they can get the car stopped safely and the wheel fixed, if possible. That was Schumer's first approach, and it was a good one.

However, he then decided to shout out to the public about what was happening. They ran up and formed a mob around the car. It couldn't get to the side of the road. It did its level best not to hit anyone. But near the end, some people were hit, and the car itself is a wreck, because that wheel did come off before it stopped.

Heigh-ho, that is why Schumer is irresponsible.

And let's not forget he loosened some of the bolts on the wheel in 1999.

If Schumer's views reversed from 1987 to 1999 they could certainly be malleable in 2008, which he seems to be; for more 'regulation'.

I also think one can find a few articles that point to IndyMac and fraud in relation to their loan policies, appraisals etc.......that have been going on for years, long before Schumer's letter of warning...it was going to go under, for sure, just as there will be many more banks that will go under for the very same reasons in the coming months...if anything millions of people, now, have a chance to check out their banks, their investments, their unsecured funds because the whistle was blown on IndyMac....

Yes, the letter caused a run on that bank at that particular time and day and most likely woke up an industry and it's customers to the firestorm ahead giving them time to pack up some of their holdings for safe keeping..

No, I think Schumer...was right on the money...or should I say....on the billions in bad debt.

have a great day everyone, ruth

Basing ones position toward this subject on geographic location and a subjective self evaluation of ones instinctive ability to "read" a person (people) coupled with; offensive comments made from a pre-defensive stance, suggestions of superiority in the knowledge of banking and a condescending general tone; may lead some to believe that the entire "argument" or position of such a person is coming from deep seated insecurities.

Anyway at the end of the day it's just different points of view. Some will get red in the face about their point of view and others will express their point of view, order a latte and move on. This stuff is better then SNL, Mad TV or the myriad of late night talk shows.

It's like saying someone's going to die sooner or later, so what does it matter if you shoot them now...

What Schumer did was wrong, plain and simple. Nothing wrong with his having the concerns, or notifying the agencies in charge of the situation about his concerns. What was wrong was his sharing that information publicly. That took the situation from one that was one the edge, but still being managed, to one that was out of control.

Imaginary Scenario: You have $1000 in the bank, and you have a car insurance payment of $800 due in two days, and your cards are maxed, and you need to have your car for work most days, although you can get there by bus via a long, time-consuming route, and you are the only one in your family working, and your job is the only source of cash flow available for your entire family.... and a friend tells your husband to watch out because in two days after you pay for the insurance there will be only $200 in the bank, and your husband goes to the bank tomorrow and withdraws the $1000...

Consequences: You lose your car insurance. You don't even have money for the bus or food. You lose your job.

How would you feel about your friend at that moment?

Well, yes, it's your husband's money as much as it is yours...

...but to keep things going, if you prioritize, and then you scrimp, you can do it.

But when all the money's out of the bank and there's nothing to fall back on, what waits in the wings is starvation, not prioritizing and scrimping.

This is a rough picture of how Schumer's letter affected IndyMac.

Friend = Schumer, husband = public, you = IndyMac management.

LPB, sometimes what seems like this or that to you is what it really is. Come live in NY State for a decade, work on Wall Street for about half that time. If you do that, then when people write comments about a serious subject that you know something about, and it's clear that not only do most commenters not know what they're writing about from experience, but none of them have even bothered to research the thing on the web, you too will hold your breath for as long as you can, then finally explode.

It may seem insecure to you, but I assure you it was simply saying saying to hell with politeness, let's get the facts out there, and support the blogger, who told a true tale and was being unfairly countered.

ruth and LPB, if you think I'm so wrong, think again about the fact that Mr. Current-Regulation Schumer was one of the strongest supporters of the 1999 deregulation legislation. That stuff is primarily what put us in this mess in the first place.

How do you reconcile that fact with your positions, either supporting Schumer's Indymac action, or deriding my comments? Info about his support for the legislation is on Schumer's own web site.

All I'm getting now is a sense of your schadenfreude, not concern for the truth. And LPB, if ya got somethin' ta say to me, say it to my face. I can take it.

Attacking and criticizing Schumer for making the letter public is fine. But what is not fine is attacking him and his character... for voting and supporting the 1992 Gramm deregulation Act(which was strictly voted on party lines when it was first introduced in the Sneate -- just one Dem voted in its favor, and his name is not Schumer taht ultimately passed 92-8 after some changes were made. Imagine if the dems caved for the original proposal. It would have been a even bigger and sooner disaster.)

http://en.wikipedia.org/wiki/Gramm-Leach-Bliley_Act

Maybe Schumer was trying to make sure the loopholes in the de-regulation Act (See his views in 1987 NYT op-ed) are not taken advantage by the dangerous practices by a failing IndyMAc. He warned for months, with several letters privately, but the Bush Administration was not doing their job.

Anyway, there is a parallel here with Schumer and his support for Republican led de-regulation bill. There is another senator from NY who didn't just vote for a war but was also a cheerleader on the Senate floor and justified the vote with a speech repeating Bush's fearmongering talking points and justifications word for word.

Speculating about what Schumer may have thought he was doing is not a defense for his doing something that is, in its essence, against prudence.

As a Banking Committee member, he was in a position to understand what the outcome of publicizing his own letter would be. Yet he went ahead anyway.

We don't know for how many months he warned, or who he tried to get a response from. How effective was he in his private warnings? How much did he understand about the bank's real position, and the efforts that were being made to keep it stable? Not everything can be blamed on the Bush Administration, on OTS, or whomever.

His past and present opinion don't negate his having voted for deregulation as it is. HC's vote on the war doesn't undo that, either.

The man was wrong.

There is -- or there is supposed to be -- a difference between his role as a politician, and his role as a Senator serving on a committee. He used his role in the latter to advance his position as the former.

A bank failure doesn't only hurt the big boys and the people with so much money in the bank that the FDIC doesn't cover all of their deposits. It hurts the little people and businesses that were counting on commercial loans to help them meet payroll, get supplies for the next contract, etc., in other words local US economies.

It all hangs together.

On the day on which Schumer released his own letter to the public, although IndyMac was the subject of some concern and it was being watched by regulators, the bank was still holding together. Starting on the day of Schumer's release, until ten days later, IndyMac's cash reserves were depleted at the rate of $100,000,000+ a day, due solely to depositor withdrawals. On the eleventh day, the bank could no longer sustain itself as a business.

Case closed.

For his action publicizing the letter, he is worthy of contempt. This is not the first action of his that has earned that feeling from me.

"For his action publicizing the letter, he is worthy of contempt. This is not the first action of his that has earned that feeling from me."

I respect your opinion. And so do who have similar feelings about Sen. Clinton, whether they hail from the state of NY or otherwise.

And Clinton has what to do with this action of Schumer's? I'm not trying to win an argument, I'm trying to see if someone will hear the facts without bias.

Re. 43

Just to be clear. Personally, I don't harbor such feelings towards either politician for their voting record and their support for issues I don't agree with. Let's just keep the criticism of Schumer to the letter and highlight any similar past actions that fit into a pattern (his support for 1992 bill, doesn't), ie. if you want to build a consistent argument about his character.

Peace and pleasant dreams, Irv. I'm done with Schumer. My points were in support of Rayman's fine blog, which I felt was being countered from a point of partial ignorance, rather than the facts.

Good night, heath.

I guess the tone of initial reactions were based on factors other than ignorance of facts. For one, the author was a senior executive at Indymac. And she certifies "my ethical and well run employer Indymac Bank." And then supports her views by linking two partisan sources. One by WSJ (which she initially used to title her blog entry) and the other by OTS.

Later she updated the blog by changing the title to better reflect her reservations... and adds:

"...why Indymac instead of Washington Mutual or Wachovia or some Wall Street firm....all of whom really ultimately faced very similar problems?"

I don't think it is a "fine blog." Basically what she is implying is that IndyMac was a well run bank with great practices or like just another bank and was just as vulnerable as the others then(it wasn't) and suggests that Schumer may have some covert interests against IndyMac. The author uses the word Schumer "leaked" the letter, rather than the fact that he "released" his letters publicly. ("Released" was the word used by the WSJ article.)

Well, Rayman Mathoda maybe a highly ethical loyal employee but I think she is making a big mistake by speaking for the whole bank and their practices. Apparently a "well run" bank was on a steep decline like no other bank for months (that's before Schumer's public letter and the subsequent collapse.)

***

fwiw:

On June 30, 2008, the Center for Responsible Lending, a Washington think tank, released a report compiling information from various lawsuits filed by customers and former employees of IndyMac Bank, and alleged that managers and supervisors were being pressured to approve loans or risk being fired.

Indymac: What Went Wrong?
http://www.responsiblelending.org/pdfs/indymac_what_went_wrong.pdf

IndyMac a new Countrywide?
http://www.laobserved.com/biz/2008/06/indymac_the_new_coun.php

On July 16, 2008, an unnamed US Government official said that the FBI is investigating IndyMac for possible fraud. While it is not clear if the investigation began before the bank was taken over by the FDIC, the investigation appears to be focused on the company itself, and not individuals within the company.

FBI investigating Indymac for fraud
http://www.cnn.com/2008/US/07/16/fbi.indymac/index.html

FBI looking into IndyMac Bancorp, AP
http://news.yahoo.com/s/ap/20080716/ap_on_go_ca_st_pe/mortgage_investigation

Irv, a mandate to ensure public confidence is central to the functioning of any bank or investment institution, because all such institutions operate in partially-leveraged mode, matlab intangibles like good will are a key part of their value. Anything that undermines good-will before it is absolutely warranted is like throwing assets out the window, which is a betrayal of officers' and employees' responsibility to their shareholders and depositors. From the POV of a bank employee or officer, Schumer's action went against the principle of upholding public confidence and protecting bank assets. He took information available to himself as a member of the Banking Committee, and made it public unilaterally. It was a betrayal of trust, in other words. Leaked is the right word. His letter release was a political move, meant to subsidize his own future in the face of the fact that he'd supported 1999's legislation. If there were any other things going on with him sub-rosa, that would compound his betrayal. Most likely for me is he was protecting his future political behind by that move.

One more point, Irv -- if IndyMac was already a target of investigation, what purpose was served by Schumer's release of his own letter?

This question is why some are thinking that something more than Schumer's saving his own future is the reason for his release of the letter.

To add weight to their conjectures, one must remember that Schumer was a New York State legislator for a long time before he became a US legislator. New York State has one of the country's most notoriously corrupt governments. It is to state government corruption what the Red Socks used to be to season losers. That tradition of corruption is the reason why New York State had, for a while, a governor so corrupt and cynical that he had once waged a public war on a type of crime in which he himself eventually participated extensively, as a buyer: the sex trade.

morning all,

a little info...

Clinton signs banking overhaul measure

November 12, 1999
Web posted at: 3:28 p.m. EST (2028 GMT)

WASHINGTON (CNN) -- The biggest change in the nation's banking system since the Great Depression became law Friday, when President Bill Clinton signed a measure overhauling federal rules governing the way financial institutions operate.

"This legislation is truly historic and it indicates what can happen when Republicans and Democrats work together in a spirit of genuine cooperation," Clinton said at a White House signing ceremony. The event brought together the president and several Republican members of Congress who have been among Clinton's sternest critics -- a sign of the bipartisan support that eventually developed for the package.

Congress passed the bipartisan measure November 5, opening the way for a blossoming of financial "supermarkets" selling loans, investments and insurance. Proponents had pushed the legislation in Congress for two decades, and Wall Street and the banking and insurance industries had poured millions of dollars into lobbying for it in the past few years.

"The world changes, and Congress and the laws have to change with it," said Senate Banking Committee Chairman Phil Gramm (R-Texas), who has fought for years for the overhaul. Gramm said the bill would improve banking competition and stability.

"This is a bill that is bipartisan, bicameral and tri-institutional," said Rep. Jim Leach (R-Iowa), chairman of the House Banking and Financial Services Committee. He noted that the House, Senate and White House had worked together on the compromise that became law.

Clinton said the measure will "save consumers billions of dollars a year through enhanced competition." He said it also would protect consumers' rights and require banks to expand the availability of funds for community development.

At stake is an estimated $350 billion that Americans spend annually on fees and commissions for banking, brokerage and insurance services. Proponents say the legislation will save consumers some $15 billion each year, offering them greater choice and convenience and spurring competition. Consumer groups and other opponents maintain it will bring higher prices and jeopardize consumers' financial privacy.

The overhaul measure is one of the few major pieces of bipartisan legislation to emerge from the Republican-controlled Congress this year.

Clinton's support for the legislation comes despite warnings from Democratic critics and consumer activists that it could lead to price-gouging of consumers and the erosion of their privacy by newly formed financial conglomerates that are too big and powerful.

"The bill is anti-consumer and anti-community," advocate Ralph Nader declared. "It will mean higher prices and fewer choices for low-, moderate- and middle-income families across the nation."

In addition, he said, "Personal privacy will be virtually eliminated" under provisions allowing affiliated businesses of the newly merged companies to share customers' personal financial data as they offer one-stop shopping.

And up until a few weeks ago, the Clinton Administration itself had threatened a veto of the legislation as it took various forms that raised a series of White House objections. In recent months, the administration objected most sharply to the issue of rules requiring that banks make loans in minority and low-income communities where they operate.

Gramm, an outspoken conservative who opposes the rules, last year managed to kill a similar bill that would have overhauled the community lending laws. The White House insisted that banks be required to have a strong track record in local loan-making as a condition for being allowed to expand into other financial activities.

The big breakthrough came in the wee hours of October 22 when administration officials -- including Treasury Secretary Lawrence Summers -- and key Republican lawmakers reached a compromise after negotiating for days behind closed doors. The White House then lifted its longstanding veto threat.

"It was sweaty, it was tense, but it had momentum," Sen. Charles Schumer (D-New York) said of the final bargaining session. He and Sen. Christopher Dodd (D-Connecticut) whose states are home to Wall Street and the banking industry (New York) and the insurance industry (Connecticut), helped broker the agreement.

Looks like the bill has much support....

I still think Schumer's letter was right on....but as you point out....if I had lost my job...or my money.....I would be pissed at him....and it goes the other way too, if I was able to save myself from a loss due his informataion I would be very happy.

have a great day everyone, ruth

oh, wanted to say voting for deregulation is not voting for corruption, it is not voting for letting "Walking dead banks" take advantage of people's good faith, it is not voting for stealth....

deregulation is not the problem......corruption, dishonesty, and stealth is the problem...

anyway....frankly, I do not know what Schumer's motivation was based on(to actually just cover his own sass or to really say enough is enough with the abuse and lax of the bankers and the regulators)....he made the call to release his letter in a public manner instead of keeping in behind the scene.....and, yes, he crossed a line professionally in doing that, under normal circumstances,.....but these are not "normal circumstances" as we are seeing, now, with the fall of more and more....banking and investment institutions....

frankly, I have experienced loss of investments when a company I had stock in went under due to that company's lying about it's actual worth on the books....and I was pissed, but, I was never sorry that the truth had come to light about the whole situation....

have a great day all....ruth

i was born and raised in New York. I'm 49 years old and have seen people close to me loose their shirts on Wall Street multiple times.

Like I said, "Some people will get red in the face defending their point of view".

The more evidence one can find is the more stuck they become in their point of view.

In the end no matter how passionate one is in arguing their view point it is still one point in 6 million views.

i was born and raised in New York. I'm 49 years old and have seen people close to me loose their shirts on Wall Street multiple times.

Like I said, "Some people will get red in the face defending their point of view".

The more evidence one can find is the more stuck they become in their point of view.

In the end no matter how passionate one is in arguing their view point it is still one point in 6 billion views.

How are things in Höngg these days?

Hey concerned or cwc:

The family is healthy. No one seems to ever speak of the possibility of terrorist attacks and so far the prices of most goods have not risen. Oh and the chocolate and water are as good if not better then last year. How's LA?

from p-55...

"How's LA?"...ask an ole reg of multiple...

what LA are u referring to LPB? an igloo? damn!

Hey baby D;

Didn't quite get your post but hey that's nothing new.

Same tired song and gigger.