On the afternoon of Friday, July 11, regulators from the Federal Deposit Insurance Corporation (FDIC pour vous et moi) shut down the entire operations of Pasadena, California's IndyMac Bank.

This followed a letter sent on June 26 by Sen. Charles Schumer, a New York Democrat, to the Office of Thrift Supervision (OTS), where he raised concerns about IndyMac's overall solvency. Schumer had the letter publicized for all to see as it was sent.

Within eleven days of that letter, $1.3 billion had been withdrawn from IndyMac, resulting in the failure of the largest savings and loan in the second largest city in the U.S. Thanks to a senator 3,000 miles away.

Ahhh, yes, the pen is indeed mightier than the sword.

Officials and experts, including OTS Director John Reich have pointed the finger directly at Schumer, and it's not just because they're all laughing at the horrible results of his hair transplants. They have described Schumer's comments as irreponsible, with some officials going so far as to publicly call for the senator to "shut up".

While IndyMac was already in a measure of distress stemming from the poor performance of its mortgage portfolio, they were actively seeking a buyer or other source of liquidity when Schumer publicized his letter, creating this mess. It also bears noting that IndyMac was not, repeat not on the FDIC list of troubled institutions until June 2008. There are financial institutions that have been on the list for a longer period of time that are not collapsing as we watch.

Last year, Fremont General, also based in California, was in serious distress. Unlike IndyMac's "Alt-A" loans, Fremont was a major subprime player. Their losses are staggering. However, they managed to find buyers for their holdings and avoided a government takeover.

So, why did Charles Schumer point at IndyMac? Does he have a vested interest in seeing this financial institution go down in flames? It's a California institution, and he's a New York senator. Did he want to manipulate IndyMac's stock prices down to 9 cents a share so he could buy it all up?

At the Encino IndyMac branch a depositor waiting in line to close her accounts likened the run on the bank to the bank runs at the time of the Great Depression. An exaggeration fueled by emotion, perhaps, but if people like Chuck Schumer are allowed to singlehandedly create panic and instill fear from clear across the country, we will have even bigger problems.