Busted: Bankers and The Global Economy

July 15, 2008

Lending Crisis and Fingers of Blame

It is true that very few people actually want to be responsible in the public eye for scandal of any kind. The lending and mortgage crisis that started in the U.S.A. is one more example. Considering that a man or woman in America is supposed to be innocent until proven guilty, you’d never know it to hear the mood in good old U.S.A. Finger pointing is all the rage, trial by public accusation.

Charles Schumer, a ranking member of the Senate Banking Committee, recently penned a letter which created a panic sensation for the bank and the FDIC. IndyMac was focus of a June 26 letter announcing Schumer’s concern about financial deterioration at the bank that was formerly a hingepin for Countrywide Mortgage in the mortgage market. Schumer claims that his letter was old news. That depends who you ask.

The FDIC was inflamed by leaked news that stirred panic overtones. The Office of Thrift Management immediately began fuming. They admitted that the bank was in distress, but that Senator Schumer was instrumental in causing the bank run.

“OTS ought to stop pointing false fingers of blame and start doing its job to protect the future of the banking system, so that there won’t be other IndyMacs,” Schumer railed. “Both IndyMac and Countrywide helped cause the housing crisis we’re now in,” while claiming that OTS “was asleep at the switch and allowed things to happen without restraint.” Schumer then called the OTS a weak regulator.

Even without a trial by jury, the evidence fully supports that all regulators established by the U.S. federal government have been weak and have failed U.S. citizens, albeit the world-at-large. This weakness was supported by George Bush before his second election to office as he glowed about the strengths of banking innovation.

“And now they are doing what the Bush administration always does: Blame the fire on the person who calls 911,” piped Schumer. Appearances are that pointing fingers is what Washington does best. Monday was a rough day for the “new bank” as depositors stormed the bank, removing all the cash they could. This morning, the threat of violence loomed at the front door lobby as depositors fought over their place in line. Meanwhile, there is little doubt that the crash of IndyMac was certain. Lack of confidence brought about the result even sooner.

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