Resolution Authority and Bailouts, Continued

Just read some interesting stuff about the demise of Washington Mutual. Why was it allowed to go under while others were spared? I understand this was during presidential transition but it still seems odd. WaMu had the same kind of predatory tactics as AIG.

The 2008 collapse of IndyMac (in California) was quite messy… http://www.cnbc.com/id/15840232?video=792991409&play=1 …and the founder of that bank (Angelo Mozilo) also created mortgage abuser, I mean, lender Countrywide. That failed too.

It was only allowed to go under in the sense that Bear was allowed to go under. It had a well-capitalized buyer in JPMorgan Chase. I wouldn’t say it was allowed to go under, really. Once a vulture acquirer showed up it didn’t need propping up. Of course, we taxpayers did help finance the acquisition, as with Bear.

The legislation being proposed now would have banks paying into an “insurance” fund. This fund would then prop up the banks when trouble arises.
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Mitch McConnell insists the legislation guarantees future taxpayer bailouts.

That’s what he’s been told to say by that Luntz guy, I s’pose.

Let’s not forget the Schmuck Schumer triggered the run on IndyMAc

The run on the bank came after a critical letter about the bank from Senator Charles E. Schumer, Democrat of New York. Federal regulators said on Friday that Mr. Schumer’s letter had prompted the collapse by causing the run and scaring away potential acquirers.

Good grief Free talk about the way back machine going all the way back to July ’08 for news.

How is it Schumer’s fault that the bank was predatory? Should he have sat back and just let it happen? Or is it that he’s a Democrat and you just had to reflexively say something mean?

jsfox

Try to follow the conversations. I din;t bring up IndyMAc, deconstrutiv did in another gratuitous shot at an evil banker. (libs have no cause unless they can demonize someone.). It cost taxpayers because if the run. But hey it makes a better story to have an evil banker than an idiot Senator.

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How is it Schumer’s fault that the bank was predatory? Should he have sat back and just let it happen

I didn’t say it was Schumers fault that as you put it the bank was predatory. I said he triggered the run on the bank which then ended up costing taxpayers money. Do you read or automatically knee-jerk protect dumb Demos at every turn?

You guys are pathetic

@freeinpa: I think it’s the oldest question in banking and government, really… if you have good reason to believe a bank is insolvent and have the authority and information to be taken credibly, do you stay quiet out of the fear your utterance will create a self fulfilling prophecy or do you have a duty to the bank’s depositors, shareholders, borrowers and lenders to speak up?

Free-While the Senator’s letter was unhelpful to Indymac’s situation and an extremely dumb move by a senator who should know better in my opinion. The underlying cause of Indymac’s demise was its unsafe, unsound business practices and failed oversight of the regulators charged with overseeing them. In other words Schumer didn’t cause a run on a sound bank. Indymac was going down anyway. Because it was being run into the ground by greedy people whom did not give a damn about their depositors.

@gyst: If Schumer’s letter persuaded you to protect your assets from Indymac exposure, wouldn’t you think his move was anything but unhelpful? I mean, I guess all interests aren’t entirely alligned here.

I’m glad that Bair is optimistic, but I will refrain from jumping for joy just yet.

..UPDATE..

Thanks!

MW: The resolution we’ve tried to create, Corker and I, means the death of the company.

EK: So resolution is more like execution.

MW: I like that! Barney Frank says, “You’ve heard of death panels? Well we’re creating death panels.”

and

MW: I know at this point in the process Republicans need to be against stuff in order to negotiate. But it’s laughable to say that $50 billion [the size of the "Orderly Resolution Fund"] is enough if a series of firms go down….But remember, this is funded by the industry. The notion that it’s taxpayer-supported is just plain wrong.

It will be interesting how the right wingers spin the a bill that provides for the industry-funded closure of failed financial companies into something that’s bad…

“If Schumer’s letter persuaded you to protect your assets from Indymac exposure, wouldn’t you think his move was anything but unhelpful?”
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destor- If I had money in that bank yes I would think that it would be helpful to know the bank was pretty much committing fraud by giving loans to people who had not proven they had the ability and income to pay.
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However, I don’t think causing a run on a bank is a good thing. And I would hope that a U.S. Senator would have other means at his disposal to expose this type of conduct.

Interesting?
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The same way they have been doing it all along. How many times have you heard McConnell’s lies repeated vs. the statements by Corker and Warner?