Washblog

IndyMac : Whodunnit???

For God's sake, let us sit upon the ground/
And tell sad stories of the death of Kings

"The Life and Death of King Richard II",
William Shakespeare

This is a developing story, so view it as incomplete and soon to be updated.

The question is whether Senator Charles Schumer (D-NY) caused IndyMac bank's failure or whether it was inevitable and Sen. Schumer might have given people much-needed information of a regulatory failure - albeit a little recklessly.

IndyMac!

The "Schumer dunnit" thesis is everywhere on the Internet, so I refer you to the Internet to find it. Was the Senator a little reckless? Well, let's put it this way: He handled the thing in a way regulators usually don't - and we see why not.

Look at this Wikipedia article I reference above. You'll find the counter-argument in words at the bottom of the paragraph labeled "Decline".

But what does it all mean?

Let's just add the numbers, shall we?

Here's what I think it means:

$18 billion (Deposits) X 37% (% Brokered Deposits  - CDs and such) = Approx. $6 Billion (Brokered Deposits)

Now, the Indymac "death roll":

June 30, IndyMac is no longered allowed to gather Brokered Deposits (Forget why - you want to read more? No, so trust me.). So as $6 billion in CDs and the like mature at about a $500 million a month, IndyMac loses about $500 million a month in deposits!

But why would that have happened?

Turns out that IndyMac was forced to own not only its own crap mortgages, but also its own crap Mortgage-Backed Securities. When Moody's and S&P downgraded those securities, IndyMac found itself in a sudden capital crisis. They fell below "well capitalized" at the stroke of a pen and when they did, they were screwed.

Did it help that depositors withdrew about $1.3 billion of $18 billion after Schumer released his letter of frustration? No.

But it looks like Indymac was about to be cut off from a source of deposits on which it was totally dependent. IndyMac was a dead duck.

The safety or our banking system rests on the quality of the debt underneath it. When huge banks like IndyMac and WaMu injected huge, goopy loads of junk down there, they destabilized themselves and, possibly, the system itself.

< King County Elections Corporate Recruiting Plan | Defending Human Rights in Snohomish County >
Display: Sort:
Dr. Housing Bubble, who focuses on California

http://www.doctorhousingbubble.com/

by eridani on Wed Jul 30, 2008 at 02:52:52 PM PST

* 1 none 0 *


Display: Sort:
ROSSI'S BIGGEST CONTRIBUTOR
Skims $ Millions
from workers comp to attack Gregoire

CLICK IMAGE

 

 

 

PNW TOPIC HOTLIST

Login

Make a new account
Username:
Password:

 HELP

Recommended Diaries

Washblog RSS Feeds

Political Contacts

Local Media

Coastal/Grays Harbor
Aberdeen Daily World
Chinook Observer
Montesano Vidette
Pacific County Press
Willapa Harbor Herald
KXRO 1320 AM

Olympic Peninsula
Peninsula Daily News
Bremerton Sun
Bremerton Chronicle
Gig Harbor Gateway
Port Orchard Independent
Port Townsend Leader
North Kitsap Herald
Squim Gazette
Central Kitsap Reporter
Business Examiner
KONP 1450 AM

Sound and Islands
Anacortes American
Bainbridge Review
Voice Of Bainbridge
San Juan Journal
The Islands' Sounder
Whidbey NewsTimes
South Whidbey Record
Stanwood/Camano News
Vashon Beachcomber
Voice Of Vashon
KLKI 1340 AM

North Puget Sound
Bellingham Herald
The Northern Light
Everett Herald
Skagit Valley Herald
Lynden Tribune
The Enterprise
Snohomish County Tribune
Snohomish County Business Journal
The Monroe Monitor
The Edmonds Beacon
KGMI 790 AM
KELA 1470 AM
KRKO 1380 AM

Central Puget Sound
King County Journal
Issaquah Press
Mukilteo Beacon
Voice of the Valley
Federal Way Mirror
Bothell/Kenmore Reporter
Kirkland courier
Mercer Island Reporter
Woodinville Weekly

Greater Seattle
Seattle PI
Seattle Times
KOMO TV 4
KIRO TV 7
KING 5 TV
KTBW TV 22
KCTS 9
UW Daily
The Stranger
Seattle Weekly
Capitol Hill Times
Madison Park Times
Seattle Journal of Commerce
NW Asian Weekly
West Seattle Herald
North Seattle Herald-Outlook
South Seattle Star
Magnolia News
Beacon Hill News
KIRO 710 AM
KOMO AM 1000
KEXP 90.3 FM
KUOW 94.9 FM
KVI 570 AM

South Puget Sound
The Columbian
Longview Daily News
Nisqually Valley News
Lewis County News
The Reflector
Eatonville Dispatch
Tacoma News Tribune
Tacoma Weekly
Puyallup Herald
Enumclaw Courier-Herald
The Olympian
KAOS 89.3 FM
KCPQ 13
KOWA FM 106.5
UPN 11

Cascade/Okanogan
Ellensburg Daily Record
Levenworth Echo
Cle Elum Tribune
Snoqualmie Valley Record
Methow Valley News
Lake Chelan Mirror
Omak chronicle
The Newport Miner

Spokane/Palouse
The Spokesman-Review
KREM 2 TV Spokane
KXLY News 4 Spokane
KHQ 6 Spokane
KSPS Spokane
Statesman-Examiner
Othello Outlook
Cheney Free Press
Camas PostRecord
The South County sun
White Salmon Enterprise
Palouse Boomerang
Columbia Basin Herald
Grand Coulee Star
Walla Walla Union-Bulletin
Yakima Herald-Republic
KIMA 29 Yakima
KAPP TV 35 Yakima
KYVE Yakima
Wenatchee World
Tri-City Herald
TVEW TV 42 Tri-cities
KTNW Richland
KEPR 19 Pasco
Daily Sun News
Prosser Record-Bulletin
KTCR 1340 AM
KWSU Pullman
Moscow-Pullman Daily News