Quote:
Originally Posted by lendaddy
Yes I understand that their assets value plummeted making them insolvent and I understand that will "shut them down". My point was that I understood a "run on a bank" to be a situation where the customers lose faith in the bank and pull funds to the point they don't have enough liquid to accommodate.
Keep in mind here I'm not trying to educate you on how it is, rather on my understanding.
Aslo, regarding the's relatives you can see he alludes to the fact that they have it taken care of as the went through it fine before.
|
That is exactly what happened - Some idiot Senator sent out some public letter to the fed and the bank's customers started taking their money out.
From the LA Times:
"ndyMac, which once employed 10,000, fell prey to a classic run on the bank, and regulators singled out Sen. Charles E. Schumer (D-N.Y.) as having helped to fuel massive withdrawals. On June 26, Schumer said in letters to the FDIC, the OTS and two other federal agencies that IndyMac might have "serious problems" with its loan holdings.
"I am concerned that IndyMac's financial deterioration poses significant risks to both taxpayers and borrowers," he wrote. The bank "could face a failure if prescriptive measures are not taken quickly."
That public warning prompted depositors to pull $1.3 billion out of accounts between June 27 and Thursday.
"This institution failed today due to a liquidity crisis," John M. Reich, director of the OTS, said at a news conference Friday afternoon. "Although this institution was already in distress, the deposit run pushed IndyMac over the edge."
Schumer said in a statement that the cause of IndyMac's failure was "poor and loose lending practices" that should have been prevented by more active regulation. Later, a Schumer spokesman said: "Mr. Reich, a political appointee, should be spending less time playing politics and more time doing his job."
"
http://www.latimes.com/business/la-fi-indymac12-2008jul12,0,6071779.story