When asked why government should get even more power and regulatory authority after a less-than-reassuring performance throughout the financial crisis, President Obama cited the FDIC’s management of the collapse of IndyMac bank, and said that when government has enough “tools” — power and authority — it does its job well.
That would be the bank that was destroyed because of reckless comments by Sen. Chuck Schumer, according to the Office of Thrift Supervision.
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 immediate cause of the closing was a deposit run that began and continued after the public release of a June 26 letter to the OTS and the FDIC from Senator Charles Schumer of New York. The letter expressed concerns about IndyMac’s viability. In the following 11 business days, depositors withdrew more than $1.3 billion from their accounts.