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Did Schumer Cause a Bank Run?

Jul 31, 2020
Since we’re on the subject of IndyMac today, it seems the troubled lender - the subject of a scathing reportjust issued by the Center for Responsible Lending over its lending practices and the target of speculationthat it’s about to implode - also experienced a minor bank run over the weekend. IndyMac’s not blaming the run on the fact that it lost $184.2 million in the first quarter of this year, compared to a profit of $52.4 million just a year earlier. Nope, that has nothing to do with it, the bank says. There’s another culprit - Sen. Charles Schumer of New York.
A postingon the bank’s internal blog sayslettersthat Schumer sent to federal regulators last week, urging them to monitor the lender closely and warning of risks to taxpayers should bank collapse, spurred the bank run. Depositors withdrew about $100 million on Friday and Saturday after Schumer’s letter to regulators became public, the bank’s communication director wrote. Customers lined up at San Gabriel Valley branches to get their money, the Los Angeles Times said:
Rick McPherson, 64, said he grew worried after hearing news reports that IndyMac was struggling, and withdrew $1,000 he had at IndyMac.
“I’m not certain what happens when a bank fails,” said McPherson, a printer from Arcadia. “I don’t trust the economy right now.”
It’s somewhat unusual for a senator who leads a subcommittee that oversees the Federal Reserve to say out loud that he’s worried a specific bank might go under. Schumer might want to think twice next time, since the goodwill he hoped to reap for pressuring regulators has backfired a little. Still, it’s hard to blame him for all of this. IndyMac isn’t the only lender struggling right now, and there are a lot of concernsabout bank failures. That, more than anything, explains why some customers wasted no time in taking their money out.
Dexter Cooke

Dexter Cooke

Dexter Cooke is an economist, marketing strategist, and orthopedic surgeon with over 20 years of experience crafting compelling narratives that resonate worldwide. He holds a Journalism degree from Columbia University, an Economics background from Yale University, and a medical degree with a postdoctoral fellowship in orthopedic medicine from the Medical University of South Carolina. Dexter’s insights into media, economics, and marketing shine through his prolific contributions to respected publications and advisory roles for influential organizations. As an orthopedic surgeon specializing in minimally invasive knee replacement surgery and laparoscopic procedures, Dexter prioritizes patient care above all. Outside his professional pursuits, Dexter enjoys collecting vintage watches, studying ancient civilizations, learning about astronomy, and participating in charity runs.
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