Sen. Charles Schumer vs IndyMac

The fallout of Sen. Chuck’s comments is that IndyMac gets taken over by the Fed’s. 

Federal regulators said they had taken control of the troubled California-based IndyMac Bank on Friday in one of the biggest bank closures in US history.

The regulatory Office of Thrift Supervision said it had placed the Pasadena-headquartered bank, worth an estimated 32 billion dollars, under the control of the Federal Deposit Insurance Group.

The bank will re-open next Monday as the IndyMac Federal Bank, the Office of Thrift Supervision (OTS) said in a statement.

IndyMac bank had been sent into free-fall after comments by Democratic Senator Charles Schumer last month concerning the bank’s health prompted a flood of customer withdrawals.

Sen. Chuck’s careless comments destroyed IndyMac today.  Lets face it, all of the banks are hurting so what was Sen. Chuck’s motives?  There needs to be an investigation into Sen Chuck’s personal finances. 

OTS regulators said the closure was prompted by withdrawals of 1.3 billion dollars made by the bank’s customers since June, when doubts were raised publicly about the institution’s long-term viability.

“The institution failed today due to a liquidity crisis,” OTS director John Reich said Friday.

The decision had been anticipated after IndyMac’s share price collapsed. The company announced this week it had halting lending and was planning to shed 3,800 jobs, more than half of its work force.

At its peak in 2006, the company, which had been reeling under the foreclosure crisis, employed 10,000 people. The latest lay-offs would have reduced the work force to around 3,400.

“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 OTS said in a statement.

Reports said IndyMac’s collapse was the second biggest in US history behind the 1984 failure of the 40-billion-dollar Continental Illinois Bank.

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