IndyMac demise may have political fallout
Former IndyMac Bank workers who blame Sen. Charles E. Schumer for the collapse of the large Pasadena thrift have found an ally in their quest to hold the New York Democrat to account: a public relations firm with a Republican-heavy client list.
Schumer, chairman of Congress’ Joint Economic Committee and a vocal critic of the Bush administration, on June 26 released letters he had sent to federal bank regulators, saying IndyMac’s shaky state “poses significant risks to both taxpayers and borrowers.”
Schumer questioned whether the regulators were “prepared to take measures that would help prevent the collapse of IndyMac or minimize the damage should such a failure occur.”
A run on the bank ensued, with depositors taking out a net $1.3 billion in the following two weeks.
On July 11, the Office of Thrift Supervision seized IndyMac, making it the second-largest bank in U.S. history to go under. The agency’s director, John M. Reich, blamed Schumer for hastening IndyMac’s demise, calling the public dissemination of the letters “reckless and grossly irresponsible.”
That cry was taken up this week by a group of 51 former IndyMac employees, who said in a letter to California Atty. Gen. Jerry Brown: “Because of a malicious, politically motivated act of Charles Schumer, our lives have been shattered.”
The employees’ letter is being publicized by Alexandria, Va.-based CRC Public Relations, which sent a copy to The Times. The firm’s clients have included the Republican National Committee, the National Republican Senatorial Committee, the National Republican Congressional Committee and Regnery Publishing, which published “Unfit for Command,” the 2004 attack on Democratic Massachusetts Sen. John F. Kerry’s Vietnam service as the commander of a Navy swift boat.
Although CRC and Jennifer Seely, the author of the letter to Brown, deny any political motivations, the campaign illustrates the big role the mortgage crisis is already playing in this election year.
Democrats, including Schumer, have accused the Bush administration of doing too little to rein in aggressive lending that left millions of Americans with home loans they couldn’t afford.
Republicans, meanwhile, demanded investigations of Democratic Sens. Christopher J. Dodd of Connecticut and Kent Conrad of North Dakota, among others, after reports that they received mortgages on highly favorable terms from Calabasas-based Countrywide Financial Corp. under a “VIP” program.
CRC Senior Vice President Mike Russell said the firm took on the IndyMac case because it believed Schumer had acted irresponsibly and because Seely “wasn’t trying to gouge anybody in court.”
Schumer spokesman Brian Fallon questioned CRC’s involvement, saying, “It certainly raises eyebrows.”
The letter, signed mostly by former staffers at IndyMac’s now-shuttered mortgage operation, asks Brown to investigate Schumer and to prosecute him under a state law making it a misdemeanor to spread false and damaging statements or rumors about a bank.
Through a spokesman, Schumer denied that any of his statements were false and said IndyMac’s downfall was inevitable after years of high-risk lending. The spokesman added that the information Schumer cited about the savings bank’s financial troubles was taken from regulatory filings that are publicly available on the Federal Deposit Insurance Corp. website.
Brown, a Democrat and former California governor, is a candidate to become governor again in 2010. His spokesman, Gareth Lacy, said, “We’ll review the letter,” and declined to comment further.
Seely said that she had never worked with the media and that she used Google to find a public relations firm that could handle an issue with political overtones. She said she approached several firms, and CRC was the only one that volunteered.
A former IndyMac project manager who helped the thrift start a direct-to-consumer lending division, Seely lives in the Northern California city of Dublin in Alameda County, where her voter registration shows no party affiliation.