Schumer's IndyMac Queries Raise Eyebrows

Sen. Charles E. Schumer, D-N.Y., has sent a letter to banking and thrift regulators questioning the financial viability of IndyMac Bancorp -- the nation's 11th-largest mortgage lender -- but some observers in Washington are wondering about his timing. IndyMac's shares have been trading for less than $2 since May (82 cents at deadline time), and the thrift has received several downgrades from analysts and rating agencies. A spokesman for the Office of Thrift Supervision told MortgageWire that, "We receive a lot of letters from members of Congress, but not many about specific institutions." He declined to comment further. Jaret Seiberg, an analyst with the Washington Research Group, said the letters could actually cause a run on IndyMac's deposits "and cause a failure, which is what the senator is trying to avoid." Sen. Schumer's office did not return a telephone call about the letters, which he sent to the heads of the Federal Deposit Insurance Corp. and the Office of Thrift Supervision. In the letters, he said IndyMac's "financial deterioration poses significant risks to both taxpayers and borrowers" and questioned its use of brokered deposits. A source close to the company said management at IndyMac was caught off guard by the letters, adding that, "I guess IndyMac is getting picked on" because it's in the mortgage business. The source also said IndyMac is actually reducing its use of brokered deposits. "Some of the senator's information is just wrong," the source said. IndyMac had no official comment.