Saturday July 12, 2008

SAVINGS AND LOAN SCANDAL II -- THIS TIME IT'S PERSONAL! More good economic news! Another mortgage lender goes down -- and an Administration factotum blames the whistleblower:

The director of the Office of Thrift Supervision, John Reich, blamed IndyMac's failure on comments made in late June by Sen. Charles Schumer (D., N.Y.), who sent a letter to the regulator raising concerns about the bank's solvency. In the following 11 days, spooked depositors withdrew a total of $1.3 billion. Mr. Reich said Sen. Schumer gave the bank a "heart attack."

"Would the institution have failed without the deposit run?" Mr. Reich asked reporters. "We'll never know the answer to that question."

Mr. Schumer quickly fired back.

"If OTS had done its job as regulator and not let IndyMac's poor and loose lending practices continue, we wouldn't be where we are today," Sen. Schumer said. "Instead of pointing false fingers of blame, OTS should start doing its job to prevent future IndyMacs."

Speaking of factota, the usual suspects rush to support Reich's spin. If only Charles Keating or Herbert Hoover had such a blogosphere to work with! True, it's a hard sell, but, like anything else for Republicans these days, worth a try.

UPDATE. The Ole Perfesser seems to have caught the memo, but not the enthusiasm: "Problems with the bank aren't Schumer's fault, of course, but publicity-seeking is a well-known Schumer flaw, and subjects like this call for a degree of discretion that he seems not to have demonstrated." Maybe he was pulled off-message by Schumer's evident willingness to fight back. I'm not overly fond of my senior Senator, but it's nice to see him show a bit of spine. Maybe he and his colleagues should try it more often.

UPDATE II. An L.A. Times blog says the accusation against Schumer is "an important angle in the IndyMac failure that may get lost in ominous headlines tonight and tomorrow." I don't see how, with the Wall Street Journal giving it prominent play and the rightbloggers shopping it aggressively.