THE FDIC SLAPS, GETS SLAPPED, THEN SLAPS BACK
All week long, officials at the Federal Deposit Insurance Corporation watched with growing dismay while the now famous February 8, 2010, Indymac YouTube video here ricocheted around the Internet. In 4 minutes 26 seconds, the clip asserted that the agency’s sale last year of the assets of the failed bank IndyMac to a group of private investors was a sweetheart deal states the New York Times here.
The video picks up this theme, stating, “The next time you ask yourself why is it so hard to get a loan modification, the answer is because there’s too much money to be made with short sales and foreclosures.”
“It is unfortunate but necessary to respond to blatantly false claims in a Web video that is being circulated” about the creation of OneWest Bank out of the assets of IndyMac, the agency’s chief spokesman, Andrew Gray, snapped back on Friday.
“The F.D.I.C. just announced it needs to start borrowing money from the Treasury.” Nonsense, Mr. Gray retorted: “We continue to be funded by the banking industry through assessments, not by taxpayers as claimed in the video.”
The unusual statement by the F.D.I.C. was an effort at rumor control and a nod to the power of online media.
It was also the latest episode in the tangled afterlife of IndyMac Bancorp, which the government seized after a run on the bank in July 2008, in one of the largest bank failures ever.
Those men are alumni of Goldman Sachs — a fact emphasized by the video, which insinuates that favoritism played a role in the F.D.I.C.’s choice of buyers. “Whoever said it’s good to have friends in high places wasn’t kidding around,” the video states.
A judge in Riverhead, N.Y., went so far as to cancel a Long Island couple’s loan obligation in November, saying OneWest, which was the loan servicer, had failed to cooperate in efforts to avoid foreclosure and calling the bank’s actions “harsh, repugnant, shocking and repulsive.”
The F.D.I.C. has been sensitive to such criticism. Last September, the agency’s chairwoman, Sheila C. Bair, urged its loss-share partners to “consider” temporary forbearance plans for loans in which the primary cause for default was unemployment, or underemployment, on the part of the homeowner.
OneWest announced in late December that it would suspend foreclosure and eviction proceedings over the holidays, and create a $10 million charity to support community development. The bank declined to comment for the Wall Street Journal article.
As of Sunday night, the video appeared to have been removed from YouTube, but it was not clear why. And whatever the accuracy of the video’s claims, its effect has been felt.
Expect more damage control from the FDIC and the banks.