Here's the press release from the Government's Office of Thrift Supervision (as an aside, what an awesome name) via LA Times:

"The OTS has determined that the current institution, IndyMac Bank, is unlikely to be able to meet continued depositors' demands in the normal course of business and is therefore in an unsafe and unsound condition. The immediate cause of the closing was a deposit run that began and continued after the public release of a June 26 letter to the OTS and the FDIC from Senator Charles Schumer of New York. The letter expressed concerns about IndyMac's viability. In the following 11 business days, depositors withdrew more than $1.3 billion from their accounts.

"This institution failed today due to a liquidity crisis," OTS Director John Reich said. "Although this institution was already in distress, I am troubled by any interference in the regulatory process."

Actually, like any good Democrat, he sees a situation to exploit, exploits it and turns a mole hill of shit into a mountain. There was shit there, before. It's not that complicated, really. Banks loosened lending requirements. The government oversight did not oversee. Consumers were approved for nasty bank loans. Consumers bought more house than they could afford. Consumers defaulted on their loans when they lost jobs, the economy got tighter. The real estate market was inflated and now people can't sell the homes they couldn't afford to begin with because the value of the market dropped out. They stop paying banks. The banks lose solvency. People worry about the safety of their money. They pull it out of the bank because of Chuck Schumer's yapper and here we are--the biggest default in the history of the OTS.

According to Mama, who is an economist, it is going to get worse:

Oh - on crude prices? Talk about being on thin ice! Airlines are cutting, drivers are cutting, and US heating oil sales will drop at least 20% compared to two years ago. It could be as much as 30%, because the supply chains are breaking down; it's not even clear that the distribution companies can keep buying the stuff. And if we can't, the demand for oil for space heating needs will be hurt in other northern areas as well. Space heating spikes oil demand by at least 4%, so between the current withdrawals and what we know will happen this winter, we're looking at a minimum 2% decline in demand over the NH winter. That's enough to blow the spot market.

Any theories about Asian countries magically stepping in and buying more are well-grounded in fantasy. China and India are tight on coal (India's trying to open up some domestic abandoned coal mines, and China is just not buying enough to prevent power shortages at current prices), much less oil. Everybody is turning to coal except the US due to our stringent environmental regulations and the stranglehold of greenies going to court. Even some of the Gulf nations are burning coal to generate power because they can import coal and export oil for a profit. There's way more support for coal pricing than oil.

So, Congress won't change things and the economy will go down the tubes. People can blame Bush and they will, but at what point will Congress take responsibility for the state of things? Charles Schumer is just one cog in the wrecked wheel. There is a reason Congress has the lowest approval rating ever.

Cross-posted at MelissaClouthier.com--it's all finished people, come check it out!