Sen. Chuck’s reckless statements about IndyMac are now starting to affect other mortgage lenders.
Since Sen. Chuck has single handedly destroyed IndyMac and caused an old fashion run on the bank. His comments have now started a sell off of other mortgage lenders stock pushing there stock values down as much as 35% in a single day. This may have affectively be the begining of a run on financail stocks.
The fallout of IndyMac Bank prompted investors to dump the stocks of many mortgage lenders, precipitating the steepest one-day decline in banking shares since 1989, on Tuesday.
Southern California fixtures Downey Financial Corp. and First Fed Financial Corp., were among the hardest hit, with their stock prices down 24 percent and 19 percent respectively, according to the Los Angeles Times.
Meanwhile, shares of Washington Mutual Inc., the biggest savings and loan, fell nearly 35%.
There was widespread fear among the banks that depositors would begin to pull their funds out, creating risks for even a reasonably healthy bank in a hurry. Every bank is in a tuff position with real estate values falling so quickly and the glut foreclosures on their books. Many of the foreclosures could have been avoided if the banking guidelines had not been tightened up so much and so quickly.
IndyMac was shut down Friday by federal regulators during a run on deposits. The federal Office of Thrift Supervision (OTS) reported that 1.9 billion in consumer deposits were withdrawn.
The bank reopened Monday as IndyMac Federal Bank, which was said by bank executives as safe and sound, but depositors still lined up outside the bank to get their money back.
IndyMac, based in Pasadena, Los Angeles, is the largest bank in California ever to be taken over by regulators and the second largest bank failure in U.S. history.
IndyMac, which was already in trouble because of subprime mortgages it had with people with bad or no credit history, had been operating under close regulatory scrutiny since January.
It lost 614.8 million dollars in 2007 and 184.2 million dollars during the first quarter of this year, largely as the result of bad home loans.
The company’s stock, which traded as high as 50 dollars a share in 2006, traded for as low as 28 cents Friday.
These comments made by Sen. Chuck can criple any business when there value is cut so drastically do to what one man said. With the public being so emotional and main stream media’s misunderstanding of the banking industry why does this guy continue to talk. What is it going to take to shut this guy up. I have to wonder who is putting money in Sen. Chuck campane fund. People that are close to retirement are going to be hurt and hurt badly by Sen. Chuck’s comments. I hope he sleeps well at night.