That makes them the stupid rich, or a small business. On a personal level there is no reason to keep more than 100k per bank account in the US. On a business level though you have to because it gets too difficult to balance revenue and expenses.

Cassy,

I think it'd be great if you'd write a piece on just how much damage Chuck Schumer has done during his Congressional tenure.

IndyMac was in a steady decline for over a year, Charles Schumer pointed that out a couple of weeks ago, and that means he caused the decline??? Does this mean that the sailor who yelled, "Captain! An iceberg!!" was responsible for the Titanic going down?

"Maybe, just maybe, things like this could be avoided if the Democrats would stop meddling with the free market."

Crack analysis there, Cassy. Your opinion is highly respected.

That's right Steve... And Schumer was responsible for Fannie Mae and Freddie Mac tanking too!

Who would have thought that there was such a simple reason behind such a seemingly complex problem?

Do you seriously believe that too much regulation caused (or contributed to the cause of) the credit and housing markets tanking, Cassy? Are you really that utterly oblivious?

If the regulation is designed and implemented by people who have no real knowledge of what they're trying to do - but know that what they SEEM like they're trying to do is far more important than what's actually done - then yes, too much regulation can be a bad thing.

Let's try a little example here. Suppose someone in Washington gets the bright idea that we're using too much gas. They manage to get a law passed that mandates a 3 gallon tank in gasoline powered vehicles, 6 gallons in diesel. They tell us that it will save us gas, because the tank is much smaller.

They have done something about the problem. Was it the right thing? Was it the best thing? Was it something that shouldn't have been considered in the first place? But it WAS something that could be pointed at and used as an example - "See? We're working to save gas!"

More governmental regulation does not always equal a good result, Hypie. And sometimes, (like Prohibition) the backlash results are worse than the original problem.

I don't know, but if some person in charge of supervising the supervisors of banks says that the supervisors need to do something before my bank fails, I am gonna pull my money out of there. No matter how much I have.

OTS director of the Office of Thrift Supervision, John Reich, threw Schumer a hanging curve with that comment, which Schumer promptly hit out of the park.

However, Schumer's job will get a bit more interesting on Monday when the market tries to digest the Indymac failure while attempting to swallow $3,000,000,000 in new notes being sold by Freddie Mac. A failure of this offering would portend the wipeout of all FannieMae and FreddieMac shareholder value ($15,000,000,000) and federal intervention to stabilize (read: bailout) some of the combined companies $5,000,000,000,000 ( that's trillion)in liabilities.

As a ranking member of the Senate Banking, Housing and Urban Affairs Committee, Schumer has no one to throw under the bus in a failure of this magnitude. It happened on his watch and he will have plenty of explaining to do.

IndyMac is a flea bite compared to the problems presented by Fannie Mae and Freddie Mac.

Cassy, I think the answer would have been for Chucky and his pals to have swooped in and taken over, saving IndyMac from itself. After all, they're SOOO good at doing.....uhh......well.......wait a minute......nothing.

These assclowns couldn't run a lawnmower but know the best ways to run banking (hey Chris Dodd, how's that new mortgage treating you, btw?), social security, and hopefully healthcare. Doesn't that just instill confidence.

JLawson, I know that regulation is often ill-conceived, heavy-handed, and poorly executed. (The best example with which I'm familiar is the failed gun registry in Canada, promised to cost $20 million but now exceeding $1 billion and having zero effect on gun crime.) However, real estate and credit markets most certainly do require careful stewardship. Greenspan had a pretty laissez-faire approach compared to his successor, and how did that work out these past few years? Seems like he's left Bernanke a pretty big shitpile from which to try and dig the U.S. economy out from under, and it seems like he could have done something to mitigate the pending economic downturn.

You're exactly right Hugh. I'm curious how he'll explain why Freddy and Fanny have been allowed no SEC oversight by congress.

Free Market. What a quaint term.

Deregulation allowed speculation which caused the devastation.

Thanks Phil Gramm!

Now you don't have to miss the days of Herbert Hoover! Happy days are here again!

Wow Cassy, what are you smoking?! Can I have some?

Oh my God! You people have a narrow piece between your brain and moouth if you think one person, senator or not, was responcible for the collapse of a bank. GOD help us from the rest of you! Amen

Actually, Gordie if you look at what was written this was the straw that broke the camels back.

if John Doe on the street says that company "A" is in real danger of going under, no one cares.

if Senator John Doe in charge of the oversight committee that regulates the business says that company "A" is in real danger of going under, everybody cares.

See a difference?

Funny, I seem to remember Democrats foaming at the mouth, accusing George Bush of aiding the fraud at Enron because he never publicly accused "Kenny Boy" Lay of fraud, nor did he warn investors in advance that Enron was bound to fail.

Now, poor Chucky Schumer does "the right thing" and the result is a billion-dollar bank failure. Real people, losing real money.

See, words mean things. Actions have consequences.

So, know-it-all Democrats, what should be done when a company is in dire financial straits? Say nothing, and let the chips fall where they may, or predict imminent doom and force a financial collapse?

Mike is correct. An uninformed public is necessary in propping up banks teetering on the brink. Bank mismanagement is not the culprit here, it's those know-it-all Democrats who are to blame.

See, words mean things.

yeah, like 'bring 'em on', right?

Mike is exactly right. Words mean things and they do have consequences. The works the lefties commented on demonstrate how utterly cowardly they are to accept accountability for the actions. ww

"However, real estate and credit markets most certainly do require careful stewardship."

Won't disagree with you much there, Hypie - but when most legislative oversight in Washington is accomplished through knee-jerk reflex, you've got to wonder if the hammer should be swung so hard in the first place. If I recall correctly, a major problem with the real estate market was due to the government urging the loan brokers to loosen their mortgage standards, since tight credit was seen as discriminatory.

And that was BAD! Everyone should have the same chance at a mortage, right? Even if they can't qualify via regular means or even manage the payments, correct?

But with everything so interconnected, it should have been clear that a batch of bad loans would affect the real estate market negatively.

It should have been. But hindsight's always 20-20, isn't it?

When government acts to correct a perceived social problem, there's at least a 50% chance it'll generate unexpected and unwanted results. Government helped regulate home loans so the 'non-traditional' buyer could qualify... and it sure seemed like a good idea at the time!

Lawsuit against Chucky for $10 billion is in order.

" Americans keep voting Schmucky Shroomer and company into office."

Yes, the same mentally inept dumbo's that will vote for Barak Hussein Osama.

You are clueless. We had a completely free market during the 1800s'. What did we get? Crashes about as bad as the great depression every 20 years and monoplies. Charles Dickens "A Christmas Carol" just wasn't a story, it was a way of life. Believe me, you don't want to go back there, because with your brain, you'd be on the bottom.

You are clueless. We had a completely free market during the 1800s'. What did we get? Crashes about as bad as the great depression every 20 years and monoplies. Charles Dickens "A Christmas Carol" just wasn't a story, it was a way of life. Believe me, you don't want to go back there, because with your brain, you'd be on the bottom.

Guzundheit Histamine!

And all this time I thought Dickens story was set in England.

Weekly World News Headlines:

Walmart Shopper Abducted by Space Aliens

Amazing Diet Pill Melts Fat

Bank Collapse Schumer's Fault

Weekly World News Headlines:

Walmart Shopper Abducted by Space Aliens

Amazing Diet Pill Melts Fat

Bank Collapse Schumer's Fault

Adrian Browne discovered to be correct.

Some strange analysis going on here folks. Very unclear how one letter from Chuck Schumer can do much of anything when the Congress and the Presidency have been controlled by Republicans for the majority of the last several decades. So Hugh S, the disasters that plague the mortgage industry have been brewing for years, if not decades. It is ridiculous to say this is Schumer's watch. This financial disaster is DIRECTLY related by corporate deregulation promulgated by Republicans. And when the house of cards comes tumbling down GUESS who comes running back to ask the American Taxpayer to pick up the tab?

maybe, just maybe things like this wouldn't happen if the corporatists and lame rip-off oilmen who wouldn't recognize morals and family values if they bit them on the ass didn't set up this country for the rape of it's assets by the military industrial complex, corporations and Dubbya and his buddies.

Of course, the Clinton's weren't (and aren't) much better. They helped establish the deregulated atmosphere that allowed the Crawford Village IDIOT's buddies to plunder like the political barbarians they are.

The facts are that this is yet another example of how excessive concentration of wealth at the top; too much credit; over-investment in the stock market; and a devalued currency at the hands of the federal reserve is coming together to create stagflation. In 1920s, it was the weather (the dust bowl) that slammed the last nail into the coffin of the economy and resulted in the Great Depression. This time, it's Iraq, Katrina and floods, along with the deregulated speculation of real estate and oil futures that will bring you the next big one.

Let's just hope that Obama approaches his administration much like FDR. With his own flavor of the New Deal, to bring jobs through infrastructure and alternative energy, the country may survive. McCain, completely useless when it comes to anything not military and as a total pandering politician, will only be more of the same.

McCain = 4 more years of Dubbya and his vandals, all of whom should be impeached.

nobushthirdterm.com

I'd comment at length on how the Democrats continue to meddle with the economy, but I think I'll go spend my Bush-approved stimulus check instead.

So Hugh S, the disasters that plague the mortgage industry have been brewing for years, if not decades. It is ridiculous to say this is Schumer's watch.

JamesL

Go back and reread my comment. I do not anywhwere say that the disasters that plague the mortgage industry occurred exclusively on Schumer's watch. I said this:

As a ranking member of the Senate Banking, Housing and Urban Affairs Committee, Schumer has no one to throw under the bus in a failure of this magnitude. It happened on his watch and he will have plenty of explaining to do.

I was clearly talking about FannieMae and FreddieMac. Schumer has been a ranking member of the Senate Banking committee for years and has been in Congress for decades. FannieMae and FreddieMac are unique constructs of Congress. If they fail, they will fail on Schumer's and Dodd's watch because they are the majority Party and control the relevant committees. They will have to create a solution, as opposed to pointing fingers.

Also James:

This financial disaster is DIRECTLY related by corporate deregulation promulgated by Republicans.

The operation of FannieMae and FreddieMac, which as I said above are uniquely congressional constructs, have been a bipartisan disaster going back at least 15 years. My point is this: Schumer will have no Republican appointed regulators (such as the OTS) to blame for this failure. The deregulation straw man that you so easily foist on Republicans is a myth. Democrats have agitated for easier credit standards for borrowers for years; the market complied and gave us subprime and alternative mortgages, many of which found their way into Congress' favorite honey pot....FannieMae and FreddieMac. Does the name Jim Johnson sound familiar, JamesL? Obama's appointment to his Veep Selection Committee? Id this one of your Republican deregulators:

http://www.ofheo.gov/media/pdf/FNMSPECIALEXAM.PDF

Here are the money quotes:

[Fannie Mae] failed to disclose to OFHEO in a timely manner a post-employment agreement with former CEO James Johnson that provided him with substantial compensation in addition to that already provided upon his termination as a Fannie Mae employee....

Shortly after the release of the September 2004 OFHEO report, an article in the December 23, 2004, Washington Post entitled "High Pay at Fannie Mae for the Well-Connected," suggested that 1998 compensation for former Fannie Mae CEO James Johnson "was [reported to be] $6 million to $7 million a year," in 1998. The total compensation in 1998 for Mr. Johnson was, in fact, substantially more.

An initial review of the 1999 Fannie Mae Proxy Statement "Summary Compensation Table" suggests the source of the Washington Post figure on 1998 compensation for Mr. Johnson. A close read of that proxy, including footnotes, shows that the Table itself listed only a small portion of the actual 1998 long-term compensation of Mr. Johnson. Mr. Johnson used a program available to only very senior Fannie Mae executives (Executive Vice President and above) to defer a sizable amount of earned Performance Share Plan shares. Fannie Mae disclosed in a footnote to the Summary Compensation table that Mr. Johnson deferred 111,623 shares; the actual value of the shares did not show up in the Summary Compensation Tabl

Do yourself a favor and go to opensecrets.org and study for a while on who gets money from the financial industry....You'll find a lot of Dems on that list of recipients who sheparded "deregulation" through Capitol Hill.

Privatize the profits and socialize the risk.
Ah, love that Republican free market economics.

Before you know it the oil industry will start crying they need to bailed out.

Cass

So the greatest system of wealth creation the world has ever seem, the US economy, is susceptible to the words of a single US senator? Amazing.

BTW, did you figure out the difference between revenue and profit while working at this bank of yours?

http://wizbangblog.com/content/2008/03/30/another-good-year-for-planned-parenthood.php

Privatize the profits and socialize the risk.

Rob, Democrats will be leading the charge to bail out bankrupt mortgage lenders, starting with the two biggest: FannieMae and FreddieMac.

Socilaizing profits and privatizing risk is their specialty....ask Maxine Waters to explain your oil company example to you.

JamesL -

Back in '73 - nobody would have thought an offhand joke by Johnny Carson would have caused a run on toilet paper. Yet it happened.

(History on that event...)

I'd think that large depositors at IndyMac would be normally fairly secure in their choice - but to have Sen. Schumer come out and declare his concerns... I can understand their worry, and their decision to move their funds elsewhere. One person's comments CAN have an inordinate effect on an industry - whether it's about toilet paper, or high finance.

This is stunning even though it was expected.

http://news.yahoo.com/s/ap/mortgage_giants_crisis

The United States government is not only going to guarantee the obligations of FannieMae and FreddieMac but it is going to make equity investments directly from the Treasury into both of these entities. Current shareholders are toast....and that is the way it should be.

http://www.bloomberg.com/apps/news?pid=20601087&sid=aSNZaHL2vs4A&refer=home

Meanwhile, Chuck Schumer tries to spin this as positive:

""Senator Charles Schumer, a Democrat from New York who chairs the congressional Joint Economic Committee, expressed support, saying the plan ``will maximize confidence in Fannie and Freddie while minimizing potential costs to U.S. taxpayers.'' "

What Schumer doesn't say, but well knows, is that the U S Treasury is one step closer to bringing 5+ trillion dollars on to the US government balance sheet as a result of mismanagement and possibly fraud at FannieMae and FreddieMac.

More oversight and regulation might have prevented that. Less certainly would not have.

"More oversight and regulation might have prevented that."

Might. I'm glad to see you're uncertain about something, Hyperbolist - it means you CAN learn that government intervention/control/regulation may NOT be an infallable cure-all for everything that can possibly go wrong - and that you've got to watch very closely to make sure the supposed 'cure' isn't worse than the disease.

Cassie,

You're not whining are you? This isn't a real bank failure, since it was caused by someone writing a letter it must be a mental bank failure.

Thank God George Bush and the GOP congress put an end to that horrible 8-year nightmare of peace and prosperity from the Clinton Administration. What ever happened to that trillion-dollar surplus that was in place when GWB took over, anyway?

Why is it that Dems always seem to be close by when things are being leaked that arent supposed to? The reason certain things are branded as 'Confidential' is because, well, (I'll type slow for you libbies), they are confidential.

What Schumer did was totally irresponsible, and yes, he is a major reason why IndyMac collapsed. Not many banks can survive the withdrawal of $1.3 bil in a week and a half.

I know Dems NEVER take responsibility for what they do(see Jefferson, Wm), but, the man needs to learn to STFU.

How many of the people who quickly withdrew their $$ from IndyMac acted only because the NY mouthpiece yet again wanted to hear himself talk?

What ever happened to that trillion-dollar surplus that was in place when GWB took over, anyway?

It went back down the rabbit hole it came from. It never existed.

http://www.accountability-central.com/single-view-default/single-view-lexis-nexis/article/indymac-what-went-wrong-new-report-by-center-for-responsible-lending-shows-how-indymac-fueled-gro/?tx_ttnews%5BbackPid%5D=17&cHash=f634b5d95f

Interesting, as the instypundy would put it.

New York Times reported that hedge fund managers have a new champion in their effort to keep legally dodging the taxes the rest of us pay: none other than New York Senator Charles Schumer. Now you know who is Schumer's friend and why he caused the bank run on Indymac. He truly support hedge fund and private equity because they truly support him.

http://www.nytimes.com/2007/07/30/washington/30schumer.html?_r=1&oref=slogin

"Large Investor decided to pay a few bucks to a Senator in New York to force the issue."(Prospect Mortgage Backed By Sterling Fund--Private Equity Acquired The Mortgage Branches from Indymac before FDIC takeover)
http://www.housingwire.com/2008/07/03/regulators-to-schumer-weve-got-a-whole-bag-of-shhh-with-your-name-on-it/

"And do remember that there are many investment bankers located in New York, making them pretty influential constituents of Sen. Schumer."
http://www.pasadenastarnews.com/opinions/ci_9783402

"In a Sunday news conference, he said everything in his letter was already known to the public."
If it was already known to the public, what is the reason for his public letter? It is contradict to what he said previouly :"I just bring private message to the public. Do not kill the messanger." What a great liar from time to time!
http://www.cnn.com/2008/POLITICS/07/13/indymac.schumer/?iref=mpstoryview

Thousands of people were put out of a job because of the run caused by Charles Schumer's reckless mouth. Thousands more paid CD penalties because they bought into his hysteria (rather than recognizing that their funds were insured). Evidently this was the "prescriptive measure" Schumer had in mind. Like the OTS said, we'll never know if IndyMac Bank would have survived or failed, absent the panic caused by Schumer. But at least the employees would've enjoyed months (or years) more employment and health insurance coverage, shareholders might have held out some hope of eventual recovery, and the customers who pulled their CDs prematurely would've been spared the penalty consequences of overreaction. Some public servant, that guy.

Once upon the time, there was a ship which loaded too much. When it was in the middle of the river, one of the high rank sailor claimed that he was a messenger and yelled to all the passengers that the ship was going to sink. This caused many passengers rush to one side of the ship. The ship lost its balance and sunk. People lost their properties and lives. Messenger??? Is Charles Schumer this kind of messenger?