IndyMac Swift Boaters Strike Back!

Question: How any idiots does it take to change a light bulb at IndyMac?
Answer:    51


This one is too good to pass up — be sure you read the punch line after the excerpt via Reuters:

California’s attorney general is reviewing a request by former employees of IndyMac Bancorp Inc to investigate whether a New York senator triggered the bank’s collapse by releasing confidential information.

At issue is a much-publicized letter that Chuck Schumer, a Democrat, sent in June to the Federal Deposit Insurance Corp (FDIC) and Office of Thrift Supervision (OTS) questioning the company’s ability to survive.

The FDIC took control of IndyMac on July 11 after depositors withdrew more than $1.3 billion over 11 days. It was the third-largest bank failure in U.S. history. At the time, OTS Director John Reich blamed Schumer’s letter for causing the run on the bank.

In a letter to Attorney General Jerry Brown last week, 51 former IndyMac workers wrote: "From the day (Schumer’s) letter was made public on June 26 until the closure of the bank, a run on the bank took place and the failure became inevitable."

Who is behind this "groundswell" of (former) IndyMac workers? It turns out that the employee letter was distributed to the media by CRC Public Relations — yes, the group whose clients include the National Republican Congressional Committee, National Republican Senatorial Committee and the Republican National Committee.

And, CRC was the PR firm behind the company that published a book questioning 2004 Democratic presidential candidate John Kerry’s Vietnam service on a swift boat.  Yes, those despicable, embarrassing festering boils on the Americans body politics: Liars, cheats traitors all.

Let’s review: It wasn’t the conflicts of interest, the outright fraud, or management’s rampant criminality that sent Indy Mac belly up. It wasn’t losing nearly a billion dollars this year alone. It wasn’t the share prices tumbling 87% in 2007, and then losing another 95% this year-to-date. And of course, the loss of ~$30 billion dollars had nothing to do with this.

It was the Senator’s letter in June that was the cause of the collapse.

Man, these swift boat guys are a dangerous combination of rabidly partisan, utterly ethicless, economically clueless — and about as dumb as lawn furniture. They make you proud to be an American.


My Experience at Indy Mac: Fraud, Corruption, Criminality (July 2008)

Video: IndyMac CEO Interview on CNBC  (September 2006)

Idiots Fiddle While Rome Burns (July 2008)

California mulls probing senator over IndyMac crash
John Poirier
Reuters,  Aug 20, 2008 6:51pm

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What's been said:

Discussions found on the web:
  1. larster commented on Aug 21

    Well said, Barry. Next thing you know, McCain will be questiuoning Schumer’. s love of country

  2. Declan Fallon commented on Aug 21

    Time to gather a rabble and get the pitchforks out


  3. Movie Guy commented on Aug 21

    Barry, are you having memory failure on Senator Chuck Schumer’s role in loosening mortgage qualification standards?

    Talk about calling the kettle black…


    BR: How about some details please:

    Legislation, excerpt, URL — ANYTHING?

  4. Jeff M. commented on Aug 21

    You know what’s truly scary though? The amazing numbers of sheeple out there who believe this stuff and vote accordingly. We have truly become an Idiocracy. The toxic cocktail of ignorance, arrogance, and stupidity has taken over this country. We should all be afraid of the direction of this country if things don’t change soon. Far too many stupid, ignorant, arrogant people have sway over the direction of this country now. They’ve become their own voting bloc. Scary.

  5. Stuart commented on Aug 21

    Well said. They are the political equivalent to the KKK.

  6. Dr. Kenneth Noisewater commented on Aug 21

    BTW, can anyone link to a definitive debunking of the accusations of the Swift Boaters? A cursory examination of wikipedia only results in the description of the term and the controversy which created and surrounds it, not any sort of evidence that the folks making accusations against Kerry were actually lying.

  7. Stuart commented on Aug 21

    I know this is somewhat off topic but has to be called out given the outrageous nature. Didn’t Thain say just a few weeks ago that they don’t need further capital…. C’mon.. Enough already. Long past the time to hold these guys accountable.

    MER Merrill Lynch: Thain to meet South Korean sovereign fund chief – DJ (24.41 ) -Update-

    DJ reports Merrill Lynch chief executive John Thain will have meetings with South Korea’s sovereign wealth fund and key government officials during a visit to the country in the third week of September, Korean officials said.

  8. Russ commented on Aug 21


    These guys do to corrupt politicians what you (and others) do to corrupt capitalists. They call them out, shed light on their fraud, and attempt to hold them accountable.

    I don’t know your motivation for ranting about bad corporate actors, and I don’t care. Exposing them is beneficial to our system and our society. The same holds for those who expose shameful politicians.

    In some ways, these swift boaters are doing a tougher job. You’ve gained notariety and adolation for calling out capitalist crooks. These guys get nothing but insults for burning the crooked politicians.

    I seem to have missed your anger when similar folks made up stories about John McCain having an adulterous affair. Could it be you only despise political hacks of one flavor?

  9. Bob A commented on Aug 21

    “Man, these swift boat guys are ….”

    Gosh, you’d almost think they were some sort of ‘radical fundamentalist extremeists’ of some sort wouldn’t ya?

  10. David commented on Aug 21

    Well, I’m with the Dr. up there.

    Kerry could have “debunked” the Swift boat guys if he released his military records…waiting…waiting…

    Since he couldn’t have been bothered to actually prove they were as despicable as Kerry claimed they were, well, in my book for a politician that’s as good as confirming what the Swiftboat guys said.

    Of course Schumer didn’t directly cause Indymac’s failure either. It would have failed eventually, but he probably hastened its demise.

    Think of Schumer as Kevorkian.

  11. Daltrey commented on Aug 21

    You are falling for the second oldest trick — proving a negative.

    Someone who was awarded 3 purples hearts and a silver star does not have the burden of proof — it lies on the accusers…

  12. Darkness commented on Aug 21

    *Snif* Punch line?

  13. Cato commented on Aug 21

    1. Blaming Schumer for IndyMac’s failure is pretty much the same as saying: “That building would never have burned down if you hadn’t pointed out it was on fire!”

    2. Swift Boat defenders: how do you “fake” a shrapnel wound as Kerry was accused of doing? Worthless, reactionary scum.

  14. Namazu commented on Aug 21

    IndyMac are a bunch of whiny bitches, but if you’re going to reject out-of-hand any report driven by PR firms with partisan affiliations, the newspapers might as well be a lot smaller (without objection from me). Oh, and while I think what happens in Vietnam should stay in Vietnam, I’m curious to know whether you think Senator Kerry was ever in Cambodia.

  15. Jeff M. commented on Aug 21

    @Daltrey: Several posters on this one blog entry basically are proving my earlier point (see above). How sad.

  16. Jeff M. commented on Aug 21

    @m: Thanks for making my earlier point, but the FOUR posts are a tad much, no?


    B: That junk was deleted & banned

  17. Mike in NOLa commented on Aug 21

    Judging by the rabid comments, looks like BR struck a nerve.

    I suppose when fabrications about McCain’s affairs affect finance, BR will write about them.

    As to the “facts” behind the swiftboating of Kerry, see Republican-funded Group Attacks Kerry’s War Record

    The site attempts to be non-partisan in debunking campaign claims and succeeds to a large extent. BTW, it also debunks smears of McCain, although I didn’t find anything addressing the alleged affair. As it has not become a campaign issue, it may have not been considered worth spending time on.

    What really should be investigated are Fannie’s and Freddie’s large contributions to, and political influence over, members of Congress.

  18. GB commented on Aug 21

    If you go to CRC’s website one of the case studies they promote is EverBank in FL which didn’t get hurt by subprime loans (well not yet anyways) Maybe they should have talked to IndyMac about bad loans. lol.

  19. CH commented on Aug 21

    @Dr. K.N.: You have a situation with vague differences in memories of a traumatic event 35 years later, and you’re looking for definitive proof one way or another? I suspect both camps were/are a bit off, and given the histories of the various parties and level of vitriol, I doubt you’re going to get either side to change it’s story.

    It pretty much depends on what evidence you choose to believe: just google “swift boat story” or “swift boat lies” or something like that, read a few sites taking into account their partisan bent, and make your own decision. That’s about the best you’re going to get. And you won’t change anyone opinion in the end.

    As for the release of the military records proving anything… I thought it had already been “determined” (/sarcasm) that Kerry had his commanding officers in his back pocket due to his connections, thus any proof not in the GOP’s favor would have been swiftly discounted anyway.

    @Russ: McCain’s adultery has been pretty extensively researched.,0,6546861.story

    Again, 25 years ago, largely he said, she said. Few people are going to change their minds on whether it was adultery or something else.

    Or did you mean Vicki Iseman?

  20. Donkei commented on Aug 21

    The only way to ever hope to get at the truth of a claim is to try to understand its context and the possible motivations of the one making it.

    It should go without saying that every claim made in the political sphere should be viewed with a gimlet eye.

    But that’s what a free market for speech, etc. is about. Lay your claim and let the market evaluate it.

    To turn it around: Would the outcome for Indymac have been any different had Schumer not weighed in?

    How about John Kerry? Would he have been elected had he not been “swift-boated”? The political market could have just rejected the swift-boater’s claims and elected him anyway, or not. We can’t know with any precision whether the swift-boaters had any real impact at all.

    IMO, Kerry would not have been elected regardless of believability of the swift-boaters–he was at best a mediocre candidate running against an incumbent during a sorta time of war. Not good odds, no matter what sort of attacks are made against you.

    And Indymac would have failed anyway, as will Fannie and Freddie, soon enough, and it won’t be because of the short-sellers or any other market commentaters. The immediate cause will be that the residential mortgage market turned against them, but that has been helped along by a management that has never understood risk.

  21. Francois commented on Aug 21

    “Kerry could have “debunked” the Swift boat guys if he released his military records…waiting…waiting…”

    If you bother to read the stories at the time, the fact is that Kerry only big mistake was to rely on the advice of his campaign manager (can’t recall her name now), in spite of his gut feeling that this was just wrong. He paid a heavy price for that, didn’t he?

    So, I’m going to go with my pure gut feeling here.

    On a broader level, the fact is that Democrats MUST develop a love for street-fighting. That is, goes lower than the Republicans, become allergic to GOP belts: every time they see one, they must feel an irresistible urge to hit below it, Kung-Fu style, and repeatedly until the opponent is gasping for air and mercy on the floor.

    I’d rather have a civilized debate about REAL issues any day of the week. Alas, republicans have become totally addicted to innuendo, character assassination, and swift-boating. Who can blame them? It works…something that tells us a lot more about who we are as Americans (not very flattering isn’t it?) than how dirty they can get.

    BTW, for the Dems, it is the ONLY way they’ll be able to get traction with a mainstream media that has, for all intents and purposes, become a puppet of the right-wing forces in this country. Maim, attack, make up stuff, sling the brown stuff until it sticks like Crazy Glue.

    The motto of Democratic operatives must become:

    “Chaos, confusion, despair among the enemy; fear, uncertainty and doubt among voters. My job here is done”.

    As an FYI, I hate every word I’m writing right now. But I’m very conscious of the fact that voters won’t become smarter and republicans won’t change their modus operandi anytime soon.

    Life sucks at times, but this is the one we got for now.

  22. jg commented on Aug 21

    Barry, stick to economics, and lay off the politics. The Swift Boaters did the nation a great service by torpedoing JFK with plain and simple facts.


    BR: This is my source of facts:

    If you have another source that is more reliable and objective, please provide it.

  23. Francois commented on Aug 21

    “Question: How many idiots does it take to change a light bulb at IndyMac?”

    The answer is a tad more complicated than the one you offered Barry.

    It takes 1 to hold the bulb, and 50 to rotate the ladder.

  24. Francois commented on Aug 21

    “The Swift Boaters did the nation a great service by torpedoing JFK with plain and simple facts”

    jg…don’t use big words you obviously don’t know anything about. Your head could explode.

  25. edhopper commented on Aug 21

    “Barry, stick to economics, and lay off the politics. The Swift Boaters did the nation a great service by torpedoing JFK with plain and simple facts.”

    Because the nation has done SO well with a second Bush term.

  26. JIM RASSMANN commented on Aug 21

    Even the far right WSJ OpEd page was repulsed by the Swift Boaters:


    Shame on the Swift Boat Veterans for Bush
    John Kerry saved my life. Now his heroism is being questioned.

    WSJ, Tuesday, August 10, 2004 12:01 a.m. EDT

    I came to know Lt. John Kerry during the spring of 1969. He and his swift boat crew assisted in inserting our Special Forces team and our Chinese Nung soldiers into operational sites in the Cau Mau Peninsula of South Vietnam. I worked with him on many operations and saw firsthand his leadership, courage and decision-making ability under fire.

    On March 13, 1969, John Kerry’s courage and leadership saved my life.

    While returning from a SEA LORDS operation along the Bay Hap River, a mine detonated under another swift boat. Machine-gun fire erupted from both banks of the river, and a second explosion followed moments later. The second blast blew me off John’s swift boat, PCF-94, throwing me into the river. Fearing that the other boats would run me over, I swam to the bottom of the river and stayed there as long as I could hold my breath.

    When I surfaced, all the swift boats had left, and I was alone taking fire from both banks. To avoid the incoming fire, I repeatedly swam under water as long as I could hold my breath, attempting to make it to the north bank of the river. I thought I would die right there. The odds were against me avoiding the incoming fire and, even if I made it out of the river, I thought I’d be captured and executed. Kerry must have seen me in the water and directed his driver, Del Sandusky, to turn the boat around. Kerry’s boat ran up to me in the water, bow on, and I was able to climb up a cargo net to the lip of the deck. But, because I was nearly upside down, I couldn’t make it over the edge of the deck. This left me hanging out in the open, a perfect target. John, already wounded by the explosion that threw me off his boat, came out onto the bow, exposing himself to the fire directed at us from the jungle, and pulled me aboard.

    For his actions that day, I recommended John for the Silver Star, our country’s third highest award for bravery under fire. I learned only this past January that the Navy awarded John the Bronze Star with Combat V for his valor. The citation for this award, signed by the Commander of U.S. Naval Forces, Vietnam, Vice Admiral Elmo Zumwalt, read, “Lieutenant (junior grade) Kerry’s calmness, professionalism and great personal courage under fire were in keeping with the highest traditions of the United States Naval Service.” To this day I am grateful to John Kerry for saving my life. And to this day I still believe that he deserved the Silver Star for his courage.

    It has been many years since I served in Vietnam. I returned home, got married, and spent many years as a deputy sheriff for Los Angeles County. I retired in 1989 as a lieutenant. It has been a long time since I left Vietnam, but I think often of the men who did not come home with us.

  27. Jeff M. commented on Aug 21

    This nation is in a sorry, sad state. Let’s get off the politics (lord knows we’ll have enough of that this fall), but can anyone honestly say that Kerry (who I did not support but had to vote for him because he was clearly the lesser of two evils) would have done a worse job than the current moron in WH? Please, people restore my faith in the American people with some intelligent responses.

  28. DL commented on Aug 21

    IndyMac would have gone under with or without Schumer.

    However, there are probably a lot of banks out there which are teetering on the edge, and can manage to scrape by, or to get taken over via an orderly transaction, PROVIDED that there isn’t a run on the bank by depositors.

    I do think that influential politicians are in a position to exacerbate a tenuous situation at a bank, and are worthy of criticism if they choose to do so.

  29. mikkel commented on Aug 21

    There is a pretty objective way of deciding that it wasn’t Schumer that killed IndyMac:

    It’s called Indymac, Federal Bank.

  30. Michael Dobbs commented on Aug 21

    Records Counter a Critic of Kerry
    Fellow Skipper’s Citation Refers To Enemy Fire
    Thursday, August 19, 2004; Page A01

    Newly obtained military records of one of Sen. John F. Kerry’s most vocal critics, who has accused the Democratic presidential candidate of lying about his wartime record to win medals, contradict his own version of events.

    In newspaper interviews and a best-selling book, Larry Thurlow, who commanded a Navy Swift boat alongside Kerry in Vietnam, has strongly disputed Kerry’s claim that the Massachusetts Democrat’s boat came under fire during a mission in Viet Cong-controlled territory on March 13, 1969. Kerry won a Bronze Star for his actions that day.

    But Thurlow’s military records, portions of which were released yesterday to The Washington Post under the Freedom of Information Act, contain several references to “enemy small arms and automatic weapons fire” directed at “all units” of the five-boat flotilla. Thurlow won his own Bronze Star that day, and the citation praises him for providing assistance to a damaged Swift boat “despite enemy bullets flying about him.”

    As one of five Swift boat skippers who led the raid up the Bay Hap River, Thurlow was a direct participant in the disputed events. He is also a leading member of Swift Boat Veterans for Truth, a public advocacy group of Vietnam veterans dismayed by Kerry’s subsequent antiwar activities, which has aired a controversial television advertisement attacking his war record.

    In interviews and written reminiscences, Kerry has described how his 50-foot patrol boat came under fire from the banks of the Bay Hap after a mine explosion disabled another U.S. patrol boat. According to Kerry and members of his crew, the firing continued as an injured Kerry leaned over the bow of his ship to rescue a Special Forces officer who was blown overboard in a second explosion.

  31. Jeff M. commented on Aug 21

    The fact that we’re even STILL debating the Swiftboaters’ and JK tells a lot about our collective priorities and intelligence. More “bread & circus” for the masses, which is just what the establishment wants. Good grief. Somewhere Corsi and his enablers must be smiling today as he collects the proceeds from his smear on Obama (full disclosure: I don’t like this crap when done to McCain either, it’s a complete waste of time and energy). Why do we continue to be distracted by this nonsense with everything that’s going on?

  32. John McCain commented on Aug 21

    McCain condemns anti-Kerry ad
    8/5/2004 12:59 PM (AP)

    Republican Sen. John McCain, a former prisoner of war in Vietnam, called an ad criticizing John Kerry’s military service “dishonest and dishonorable” and urged the White House on Thursday to condemn it as well.

    “It was the same kind of deal that was pulled on me,” McCain said in an interview with The Associated Press, referring to his bitter Republican primary fight with President Bush.

    “I wish they hadn’t done it,” McCain said of his former advisers. “I don’t know if they knew all the facts.”

    Asked if the White House knew about the ad or helped find financing for it, McCain said, “I hope not, but I don’t know. But I think the Bush campaign should specifically condemn the ad.”

    Later, McCain said the Bush campaign has denied any involvement and added, “I can’t believe the president would pull such a cheap stunt.”

  33. David Merkel commented on Aug 21

    If a Senator’s letter could push a company over the edge, it proves one thing — you were playing too close to the edge. Companies that are well-capitalized, or have free cash flow don’t have to worry about naysayers — they can take corrective measures, while weak companies can’t.

  34. mcgruder commented on Aug 21

    you are in the Street game long enough to know that a PR firm will do or say anything for a client as long as they are paid. think of all the corporate shills who attack investigative reporters or short-sellers…and then get all quiet once the DoJ or even the SEC levels charges.

    Its just part and parcel of 21 st century life.

    Re swift-boats: get a grip, respectfully.
    Kerry made his war record the centerprice of his candidacy. When at least one of his purple hearts turned out to be for little more than scrape, and there were embellishments left and right (recall the Christmas in Cambodia bit), his record came under question.

    dont you think if Kerry was truly innocent of the charges he might just have, I dont know, released his records and engaged them head on?

  35. Michael Dobbs commented on Aug 21

    Swift Boat Accounts Incomplete
    Critics Fail to Disprove Kerry’s Version of Vietnam War Episode
    Sunday, August 22, 2004; Page A01

    When John F. Kerry rescued Jim Rassmann from the Bay Hap River in the jungles of Vietnam in March 1969, neither man could possibly have imagined that the episode would become a much-disputed focus of an American presidential campaign 35 years later.

    For Kerry, then a green and gangly Navy lieutenant junior grade and now the Democratic challenger to a wartime Republican president, that tale of heroism under fire has become integral to his campaign. A centerpiece of public rallies, videos and a new campaign advertisement, it has helped distinguish the candidate from his Democratic primary rivals and from President Bush, who spent the war at home as a member of the Texas Air National Guard.

    For the Massachusetts senator’s critics, who include three of the five Swift boat skippers who were present that day, the incident demonstrates why Kerry does not deserve to be commander in chief. They accuse him of cowardice, hogging the limelight and lying. Far from displaying coolness under fire, they say, Kerry was never fired upon and fled the scene at the moment of maximum danger.

    Establishing the facts is complicated not merely by fading memories and sometimes ambiguous archival evidence, but also by the bitterly partisan nature of the presidential campaign.

    An investigation by The Washington Post into what happened that day suggests that both sides have withheld information from the public record and provided an incomplete, and sometimes inaccurate, picture of what took place. But although Kerry’s accusers have succeeded in raising doubts about his war record, they have failed to come up with sufficient evidence to prove him a liar.

    Two best-selling books have formed the basis for public discussion of the events of March 13, 1969, as a result of which Kerry won a Bronze Star and his third Purple Heart. The fullest account of Kerry’s experience in Vietnam is “Tour of Duty” by prominent presidential historian Douglas Brinkley. It was written with Kerry’s cooperation and with exclusive access to his diaries and other writings about the Vietnam War. “Unfit for Command,” by John E. O’Neill, who succeeded Kerry as commander of his Swift boat, and Jerome R. Corsi, lays out a detailed attack on Kerry’s record.

  36. Tom C commented on Aug 21

    Partisan nonsense is detestable. Unless you agree with it. Then it’s non-partisan, objective.

  37. Mark commented on Aug 21

    My view is that both of these idiots — Obama (Senator since Nov ’04) and McCain (80 years old 8 years from now) — are completely unqualified for the office of President of the United States. I look forward to my “None of the Above” write-in vote in November.

    Why in the world wasn’t a **real** leader _and_ statesman put in the chocks to run for president, like, say, Colin Powell, …or Robert Gates…or….etc.??

  38. Charles Whitman commented on Aug 21

    Anyone happen to have the HOME ADDRESSES of the Swift Boat crew. This info might prove useful. Just sayin’

  39. Dave commented on Aug 21

    I live in Los Angeles, and we I drove past two IndyMac banks on the way to work on the Monday of the “run” it was a little surreal. However, everyone with any sense and money in IndyMac moved their money when Countrywide went belly up.

    Schumer only problem is that he told the truth.

  40. Mark E Hoffer commented on Aug 21

    The fact that we’re even STILL debating the Swiftboaters’ and JK tells a lot about our collective priorities and intelligence. More “bread & circus” for the masses, which is just what the establishment wants. Good grief. Somewhere Corsi and his enablers must be smiling today as he collects the proceeds from his smear on Obama (full disclosure: I don’t like this crap when done to McCain either, it’s a complete waste of time and energy). Why do we continue to be distracted by this nonsense with everything that’s going on?

    Posted by: Jeff M. | Aug 21, 2008 11:14:32 AM

    Jeff, w/o Doubt.

    we need to get over it, the past is a Carcass that no longer hunts.

    we could spend the rest of our lives squabbling about Yesterday, that’s no way to face the Future.

    Peep should break out Maslow’s hierarchy of needs, and start at the base.

  41. Mark E Hoffer commented on Aug 21

    Why in the world wasn’t a **real** leader _and_ statesman put in the chocks to run for president, like, say, Colin Powell, …or Robert Gates…or….etc.??

    Posted by: Mark | Aug 21, 2008 12:00:48 PM


    opinions vary, though C. Powell, of My Lai, is noone that anybody should recognize as a “Leader”
    if only that was the worst of his detractions..CP is a little more than a bucket-hauler.

  42. Strider commented on Aug 21

    Glad to see you’ve removed those partisan comments. You moderate centerists are so fair.


    BR: I don’t give a flying fuck about fair, I only care about accuracy, reality, and getting at the truth.

    You want fair? GYOFB

  43. Movie Guy commented on Aug 21

    Movie Guy – Aug 21, 2008 9:38:22 AM – Barry, are you having memory failure on Senator Chuck Schumer’s role in loosening mortgage qualification standards? Talk about calling the kettle black.

    Barry Ritholtz: How about some details please Legislation, excerpt, URL — ANYTHING?

  44. Movie Guy commented on Aug 21

    Schumer pulled the same public disclosure stunt on Countrywide Bank. It’s a wonder that it didn’t topple over as well.

    [BR: Is there anything in that letter that was non-public? It all looks like it was SEC filings and Fed reports — all available online. I don’t get your beef here.]

    A Copy Of Senator Schumer’s Letter to the Federal Home Loan Bank of Atlanta

    November 26, 2007

    Ronald A. Rosenfeld Chairman Federal Housing Finance Board 1625 I Street NW Washington, DC 20006

    Dear Chairman Rosenfeld:

    I write to express my serious concern over the lending practices of the Federal Home Loan Bank of Atlanta, specifically in regard to the significant volume of advances made to Countrywide Bank. I am concerned that the loans being pledged by Countrywide to secure these advances may pose a risk to the safety and soundness of the FHLB system as a whole. I urge you to conduct a careful review of FHLB Atlanta’s collateral evaluation policies, as well as Countrywide’s pledged collateral, in an effort to determine the risk that Countrywide’s collateral poses to the FHLB system. During the current market crisis, it is important that the FHLB system perform its critical mission safely without imposing additional risks on an already strained market.

    According to the most recent SEC filings, FHLB Atlanta had made $51.1 billion in advances to Countrywide Bank, representing 37 percent of the Bank’s total outstanding advances as of September 30, 2007 and far exceeding advances made to the next largest borrower. Countrywide had pledged $62.4 billion of mortgages as collateral for the FHLB advances, representing 78 percent of its total mortgage loans held for investment at the bank.

    I find these numbers alarming as reports continue to emerge about how Countrywide’s reckless and predatory lending practices were a leading contributor to today’s foreclosure crisis. Moreover, it is my understanding that Countrywide’s loans held for investment at the bank have been far from immune from the credit deterioration that has resulted from unsound lending. Countrywide reportedly held $27 billion of “pay option ARMs” as of September 30, 2007, accounting for over one-third of the loans held for investment by the bank. Countrywide’s option ARMs were (and may still be) often underwritten with less than full documentation – according to UBS Warburg data prepared for the Wall Street Journal, 91 percent of Countrywide’s option ARMs underwritten in 2006 were “low doc.” It has been reported that delinquencies on Countrywide’s pay option ARMS are skyrocketing, jumping nearly 75 percent in the last quarter.

    Given this rapid deterioration in the credit quality of Countrywide’s option ARMs, I urge you to conduct a review of the loans that are being held as collateral for FHLB advances in an effort to determine if FHLB Atlanta has adequate collateral to secure these advances. I would also like an explanation of how any second lien mortgages during a time of property price declines could be viewed as adequate collateral for large FHLB advances.

    Furthermore, I believe that you should consider preventing any further or continuing overnight advances based on collateral that does not meet the joint financial regulators’ guidance on nontraditional and subprime mortgage products (e.g., Interagency Guidance on Nontraditional Mortgage Product Risks and joint Statement on Subprime Mortgage Lending). This quarter, Countrywide reported that 89 percent of their 2006 originations of pay option ARMs did not conform to the joint regulators’ guidance, which increases the likelihood that Countrywide is pledging loans deemed predatory by the regulators as collateral for FHLB advances. Importantly, Fannie Mae and Freddie Mac’s safety and soundness regulator has specifically prohibited any new direct or indirect investment in loans that do not meet this guidance. As the mortgage crisis threatens to get worse from here, it is critical that the FHFB do the same.

    Thank you for your prompt attention to this matter, and I look forward to working with you on these issues in the coming weeks and months. If you should have any questions, please contact David Stoopler on my staff at 202-224-6542.


    Charles E. Schumer United States Senator

  45. Greg0658 commented on Aug 21

    Stuart presents “DJ reports Merrill Lynch chief executive John Thain will have meetings with South Korea’s sovereign wealth fund and key government officials”

    what happens if Koreas books are (or become) as dismal as the USA?

    wouldn’t it force us to buy up more globalization to extract our borrowed capital? killing us more back here?

    Balanced Budgets is the only answer … right?

  46. Movie Guy commented on Aug 21

    What did Chuck Schumer do prior to March 2007 to help avert the mortgage crisis? Nothing of value in my judgment. Absolutely nothing which would have helped avoid the crisis in the first place.

    None of these guys should get a pass. And that is my point.

  47. Kimo commented on Aug 21

    The only facts NOT disputed:

    1. Kerry, when he had a chance, extended his tour of duty for one of the most dangerous duty the Navy offered.

    2. Bush, when he had a chance, NEVER went to Vietnam.

    Bush vs Kerry was a no brainer, when considering military service to their country.

  48. Greg0658 commented on Aug 21

    Last nights CNN expose’ on each candidate was very good. IMO it reported, not purported. Birth to present day – family, school, extracurricular activities, work history.

    I will hold my personal thoughts, probably should attempt an influence here for my team, like others, but won’t.

  49. odograph commented on Aug 21

    I think this must be Troll The Swift-Boaters Day, and I didn’t get the memo. (Similar fishing action at Marginal Revolution)

  50. tm commented on Aug 21

    Again, thank you for the site. I read it daily and look forward to BOTH the content and the dialog.

    I have two questions:
    1. Would the company have gone belly up if there was not a run on the bank? (yeh, I know the butheads running it were driving into the ground so the answer is probably yes)
    2. With all the bank instability, a single persons comments caused a run on a bank. How come we haven’t seen more runs? Seriously, there are more banks in serious shape. How many more runs will we see?

  51. Movie Guy commented on Aug 21

    Movie Guy | Aug 21, 2008 1:04:24 PM post.

    Barry’s comment:

    [BR: Is there anything in that letter that was non-public? It all looks like it was SEC filings and Fed reports — all available online. I don’t get your beef here.]


    Show me a news article that the general public would have had read that covered Chuck’s statements in the letter cited.

    Whenever a high government official makes the type of statements attributed to Senator Schumer and his Congressional responsibility on the Senate Banking Committee, one can expect fallout and panic.

    Average Americans aren’t reading SEC filings nor Fed reports. Come on, now…

    They’re reading the local papers and watching the Tube. And maybe some are still reading the Wall Street Journal, but not that many.

  52. Jeff M. commented on Aug 21

    BR: I don’t give a flying fuck about fair, I only care about accuracy, reality, and getting at the truth.

    You want fair? GYOFB

    THANK YOU, Barry. This is one huge problem with the MSM – they all want to APPEAR to be “fair” (so as not to offend any corporate sponsors, of course), when part of their JOB to get to the heart of the TRUTH. Screw fairness. Give me the truth any day.

  53. William B. Rood commented on Aug 21

    `This is what I saw that day’
    William B. Rood
    Chicago Tribune, August 22, 2004

    There were three swift boats on the river that day in Vietnam more than 35 years ago–three officers and 15 crew members. Only two of those officers remain to talk about what happened on February 28, 1969.

    One is John Kerry, the Democratic presidential candidate who won a Silver Star for what happened on that date. I am the other.

    For years, no one asked about those events. But now they are the focus of skirmishing in a presidential election with a group of swift boat veterans and others contending that Kerry didn’t deserve the Silver Star for what he did on that day, or the Bronze Star and three Purple Hearts he was awarded for other actions.

    Many of us wanted to put it all behind us–the rivers, the ambushes, the killing. Ever since that time, I have refused all requests for interviews about Kerry’s service–even those from reporters at the Chicago Tribune, where I work.

    But Kerry’s critics, armed with stories I know to be untrue, have charged that the accounts of what happened were overblown. The critics have taken pains to say they’re not trying to cast doubts on the merit of what others did, but their version of events has splashed doubt on all of us. It’s gotten harder and harder for those of us who were there to listen to accounts we know to be untrue, especially when they come from people who were not there.

    Even though Kerry’s own crew members have backed him, the attacks have continued, and in recent days Kerry has called me and others who were with him in those days, asking that we go public with our accounts.

    I can’t pretend those calls had no effect on me, but that is not why I am writing this. What matters most to me is that this is hurting crewmen who are not public figures and who deserved to be honored for what they did. My intent is to tell the story here and to never again talk publicly about it.

    I was part of the operation that led to Kerry’s Silver Star. I have no firsthand knowledge of the events that resulted in his winning the Purple Hearts or the Bronze Star.

    But on Feb. 28, 1969, I was officer in charge of PCF-23, one of three swift boats–including Kerry’s PCF-94 and Lt. j.g. Donald Droz’s PCF-43–that carried Vietnamese regional and Popular Force troops and a Navy demolition team up the Dong Cung, a narrow tributary of the Bay Hap River, to conduct a sweep in the area.

    The approach of the noisy 50-foot aluminum boats, each driven by two huge 12-cylinder diesels and loaded down with six crew members, troops and gear, was no secret.

    Ambushes were a virtual certainty, and that day was no exception.

    Instructions from Kerry

    The difference was that Kerry, who had tactical command of that particular operation, had talked to Droz and me beforehand about not responding the way the boats usually did to an ambush.

    We agreed that if we were not crippled by the initial volley and had a clear fix on the location of the ambush, we would turn directly into it, focusing the boats’ twin .50-caliber machine guns on the attackers and beaching the boats. We told our crews about the plan.

    The Viet Cong in the area had come to expect that the heavily loaded boats would lumber on past an ambush, firing at the entrenched attackers, beaching upstream and putting troops ashore to sweep back down on the ambush site. Often, they were long gone by the time the troops got there.

    The first time we took fire–the usual rockets and automatic weapons–Kerry ordered a “turn 90” and the three boats roared in on the ambush. It worked. We routed the ambush, killing three of the attackers. The troops, led by an Army adviser, jumped off the boats and began a sweep, which killed another half dozen VC, wounded or captured others and found weapons, blast masks and other supplies used to stage ambushes.

    Meanwhile, Kerry ordered our boat to head upstream with his, leaving Droz’s boat at the first site.

    It happened again, another ambush. And again, Kerry ordered the turn maneuver, and again it worked. As we headed for the riverbank, I remember seeing a loaded B-40 launcher pointed at the boats. It wasn’t fired as two men jumped up from their spider holes.

    We called Droz’s boat up to assist us, and Kerry, followed by one member of his crew, jumped ashore and chased a VC behind a hooch–a thatched hut–maybe 15 yards inland from the ambush site. Some who were there that day recall the man being wounded as he ran. Neither I nor Jerry Leeds, our boat’s leading petty officer with whom I’ve checked my recollection of all these events, recalls that, which is no surprise. Recollections of those who go through experiences like that frequently differ.

    With our troops involved in the sweep of the first ambush site, Richard Lamberson, a member of my crew, and I also went ashore to search the area. I was checking out the inside of the hooch when I heard gunfire nearby.

    Not long after that, Kerry returned, reporting that he had killed the man he chased behind the hooch. He also had picked up a loaded B-40 rocket launcher, which we took back to our base in An Thoi after the operation.

    John O’Neill, author of a highly critical account of Kerry’s Vietnam service, describes the man Kerry chased as a “teenager” in a “loincloth.” I have no idea how old the gunner Kerry chased that day was, but both Leeds and I recall that he was a grown man, dressed in the kind of garb the VC usually wore.

    The man Kerry chased was not the “lone” attacker at that site, as O’Neill suggests. There were others who fled. There was also firing from the tree line well behind the spider holes and at one point, from the opposite riverbank as well. It was not the work of just one attacker.

    Our initial reports of the day’s action caused an immediate response from our task force headquarters in Cam Ranh Bay.

    Congratulatory message

    Known over radio circuits by the call sign “Latch,” then-Capt. and now retired Rear Adm. Roy Hoffmann, the task force commander, fired off a message congratulating the three swift boats, saying at one point that the tactic of charging the ambushes was a “shining example of completely overwhelming the enemy” and that it “may be the most efficacious method of dealing with small numbers of ambushers.”

    Hoffmann has become a leading critic of Kerry’s and now says that what the boats did on that day demonstrated Kerry’s inclination to be impulsive to a fault.

    Our decision to use that tactic under the right circumstances was not impulsive but was the result of discussions well beforehand and a mutual agreement of all three boat officers.

    It was also well within the aggressive tradition that was embraced by the late Adm. Elmo Zumwalt, then commander of U.S. Naval Forces, Vietnam. Months before that day in February, a fellow boat officer, Michael Bernique, was summoned to Saigon to explain to top Navy commanders why he had made an unauthorized run up the Giang Thanh River, which runs along the Vietnam-Cambodia border. Bernique, who speaks French fluently, had been told by a source in Ha Tien at the mouth of the river that a VC tax collector was operating upstream.

    Ignoring the prohibition against it, Bernique and his crew went upstream and routed the VC, pursuing and killing several.

    Instead of facing disciplinary action as he had expected, Bernique was given the Silver Star, and Zumwalt ordered other swifts, which had largely patrolled coastal waters, into the rivers.

    The decision sent a clear message, underscored repeatedly by Hoffmann’s congratulatory messages, that aggressive patrolling was expected and that well-timed, if unconventional, tactics like Bernique’s were encouraged.

    What we did on Feb. 28, 1969, was well in line with the tone set by our top commanders.

    Zumwalt made that clear when he flew down to our base at An Thoi off the southern tip of Vietnam to pin the Silver Star on Kerry and assorted Bronze Stars and commendation medals on the rest of us.

  54. Grub commented on Aug 21

    Regarding the Swifties

    I think they went after Kerry so aggressively (whether fairly or not) was because of his conduct after returning home. His congressional testimony and other public pronouncements just might have pissed off his fellow sailors who didn’t quite feel that they had been members of the Genghis Kahn reenactment gang.

    Thought Experiment.
    A guy gets a job on your desk, everybody works long and hard, plays by the rules and does all right. Seven months later that guy is gone. The next time you see him is on the bube tube when he sits before congress and says under oath that the guys on that desk were all a bunch of Marty Frankel scamsters, stealing money from orphans and widows. He appears on talk shows, comedy central, Kudlow, and Countdown making the same charges. Half of your neighbors, family, and friends begin to wonder if maybe you are some kind of baby killing capable money scamming monster. Again he disappears for awhile. Later he surfaces when you hear he’s being seriously considered as the egregiously well compensated new CEO for your firm. Now, how aggressively are you going to try and keep that guy out of that seat? Would you be in the wrong if you bent the truth a bit?


    BR: Yes you would.

  55. odograph commented on Aug 21

    Grub, don’t we accept it now that young men age out of their radicalism?

    Heh, maybe that’s young liberal men. Conservatives seem to age into their craziness.

    (Sez me, the older, registered, Republican)

  56. wisedup commented on Aug 21

    Let’s raise some dust.
    Question for the readers: Is hiring lobbyists a reasonable business expense? We know that the price of a Senator is unbelievably low so shouldn’t companies be spending everything they have to “get the jam from the Govt.”?

    The counter-view is that any company getting said jam can never be rationally analyzed, i.e. its share price is a fairy story.

  57. Greg0658 commented on Aug 21

    hiring lobbyists is a business expense

    spend everything they can to “get the jam”

    its more fun than paying taxes

    and American workers fund the government machine

    the Republican view and whats wrong and why America is falling behind the rest of the world

  58. chris hoey commented on Aug 21

    Barry ,you do see very clearly and i am thankful that you speak your mind. I follow everything you say and am waiting for something to disagree with you about.It is amazing how people will take the spotlight off the actual subject and turn it onto someone who had nothing to do with the topic.

  59. flounder commented on Aug 22

    Barry, I have to dispute your contention that factcheck is non-partisan. One of the heads of Factcheck, Viveka Novak, was a key leaker of info to Karl Rove to keep him out of trouble in the Plame investigation:

    It is my experience that they do a lot of “pox on both houses” sort of stuff when blame for something should be attributed, say 80%/20% to Republicans.
    I think if you look at some of their work on the economic policies of the Presidential candidates you might agree. I know they have some post that are of the tone: “John McCain’s proposed tax policy fibs the “balancing the budget” numbers by $3 trillion, Barack Obama is off by $500,000. They are both big liars!


    BR: I am talking about the organization, not a specific person.

    And, a little context from your link:

    “Recent revelations in the CIA leak investigation indicate that Time magazine Washington correspondent Viveca Novak may have injected herself in the investigation by alerting a lawyer for White House senior adviser Karl Rove in mid-2004 that her colleague, Time White House correspondent Matthew Cooper, might be forced to disclose to a grand jury what Rove had told him about then-undercover CIA operative Valerie Plame

    That certainly does not make her a rabid partisan…

  60. Eli Rabett commented on Aug 22

    One can only hope that the California Attorney General, after investigating will charge these clowns with making a false complaint.

  61. wisedup commented on Aug 22

    for Greg0658

    you got the right answer. It appears that far too many “investors” couldn’t care less about the problem.

  62. jf commented on Aug 22

    You either help the public get to the facts, and achieve an understanding closer to objective reality, or you do not. If you actively seek to muddy the waters, if you make false and/or unsubstantiated charges directly contradicted by the bulk of the evidence, you earn my ever lasting ire.

    To quote the arbiter of all things political, “Loves it!”

  63. Tony commented on Aug 22

    I like the update, which basically means that BR is being attacked for “Exposing a partisan attack because that is partisan attack.”

    And in the vein of that attack, I don’t think BR has any obligation to point out any other partisan attack other than the one that interests him (involving an economic/financial issue).

    Just like when I call out a cars salesman for lying, I don’t have to bring up all the lies all the other cars salesmen told me.

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