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Why “The Indymac Slap in our Face. 02.08.10″ is Pure Baloney

Posted By Chris Whalen On February 22, 2010 @ 9:15 am In Bailouts,Credit,Regulation,Think Tank | Comments Disabled

For the past several months I have been hearing a lot of complaints about the FDIC giving away “taxpayer money” in the sale of IndyMac last year and how the agency was encouraging foreclosures and short sales because of loss sharing agreements with the buyers of dead banks.  Now there is a video circulating in the matrix that purports to show that the FDIC gave away a lot of taxpayer money to George Soros and various other investors as part of the resolution and sale of IndyMac to OneWest.

The chief source of these reports is from TBWS [1], which supposedly reveals how Goldman Sachs worked an unreal deal with the FDIC. (Here http://www.thinkbigworksmall.com/mypage/player/tbws/23088/1559781 [1])

Martin Andleman touched on this in his “Bringing Up the Rear” column highlighting George Soros back in October of 2009 (Bringing Up the Rear: Liberal Billionaire George Soros [2]).

Unfortunately these reports are wrong. As is often the case with generalist writers, these people got most of their facts wrong or got no facts at all.

Last Friday, FDIC Director of Public Affairs Andrew Gray said:

“It is unfortunate but necessary to respond to blatantly false claims in a web video that is being circulated about the loss-sharing agreement between the FDIC and OneWest Bank. Here are the facts: OneWest has not been paid one penny by the FDIC in loss-share claims. The loss-share agreement is limited to 7% of the total assets that OneWest services, and OneWest must first take more than $2.5 billion in losses before it can make a loss-share claim on owned assets. In order to be paid through loss share, OneWest must have adhered to the Home Affordable Modification Program (HAMP).

The producers of this video perpetuate other falsehoods. The FDIC has not requested to borrow money from the Treasury Department. Indeed, we continue to be funded by the banking industry through assessments, not by taxpayers as claimed in the video.

This video has no credibility. Regardless of the personal or professional motivations behind its production, there is always a responsibility to be factually correct and transparent. The FDIC made available a fact sheet on the day that the sale of IndyMac was announced that details the terms of the contract. It’s too bad that the creators of this video opted to premise it on falsehoods.”

Supplemental Fact Sheet [3]


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URL to article: http://www.ritholtz.com/blog/2010/02/why-the-indymac-slap-in-our-face-02-08-10-is-pure-baloney/

URLs in this post:

[1] TBWS: http://www.thinkbigworksmall.com/mypage/player/tbws/23088/1559781

[2] Bringing Up the Rear: Liberal Billionaire George Soros: http://www.thenichereport.com/bringing_up_the_rear_liberal_billionaire_george_soros_by_martin_andelman.html

[3] Supplemental Fact Sheet: http://www.fdic.gov/news/news/press/2010/onewest_lossshareb.html

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