California Atty. Gen. Jerry Brown won’t investigate complaints by former IndyMac Bank employees that U.S. Sen. Charles E. Schumer violated state law by making comments that allegedly triggered the collapse of the big Pasadena mortgage lender.
Thomas Greene, a special assistant to Brown, wrote in a letter released Friday that there was insufficient evidence to investigate Schumer, a New York Democrat, under a California law that bars false statements and rumors about the financial condition of banks.
Jen Seely, the leader of the 51 former IndyMac employees who had asked Brown to look into the matter, said in an e-mail that she was disappointed but added, “This isn’t over.”
She suggested that the Senate Ethics Committee might take up the case.
“I am not sure who can step up to the plate and demand an investigation behind Sen. Schumer’s motives, but it needs to be done,” she said.
Through a spokesman, Schumer declined to comment. He has previously denied responsibility for IndyMac’s July 11 failure, saying loose lending practices and weak regulation were at fault.
In a letter sent to regulators in late June that he released publicly, Schumer questioned IndyMac’s ability to survive as its losses mounted. Within 11 days, depositors had withdrawn $1.3 billion from the savings and loan.
The U.S. Office of Thrift Supervision then seized IndyMac in one of the biggest bank failures in U.S. history, blaming Schumer for forcing its hand by causing the run on the bank. Echoing that accusation, Seely sent a letter to Brown last week requesting that Schumer be investigated and charged with a misdemeanor.
But the California law cited by Seely requires statements to be “untrue in fact,” Greene wrote. He added that Schumer’s comments appeared to be based on IndyMac’s own descriptions of its financial condition made in public filings.
What’s more, Greene wrote, the U.S. Constitution shields members of Congress who are speaking in their official capacity from prosecution “in cases except treason, felony and breach of the peace.”
The former IndyMac employees had an ally in their efforts to have Brown investigate Schumer. Their letter was publicized by Alexandria, Va.-based CRC Public Relations, whose clients have included the Republican National Committee and the National Republican Senatorial Committee.