Contrarian Pundit

The feds are finally getting serious about pursuing mortgage fraud and related crimes during the bubble era.  Yesterday it was announced that the FDIC is suing four former executives at IndyMac for negligently approving billions in ADC loans to, shall we say, less-than-credit-worthy borrowers. If you recall, Indymac was seized by the FDIC in July 2008 before the agency even had a chance to issue a cease-and-desist order.  At the time, it was the second-largest bank failure in U.S. history.

The 309-page complaint is quite a read.  My personal highlight is the “Flamingo Rule”—a phrase that should be included in the lexicon of our new Guilded Age (p. 17):

One of IndyMac’s “core values” was that “speed rules at IndyMac.” This was a firmly ingrained culture at IndyMac and, for example, was implemented by [CEO Michael] Perry through his “Flamingo Rule” requiring employees seeking his guidance to “pop in my office, quickly present the issue (in the amount of time you can ’stand on one leg!’) and get my feedback.” [Indymac's Homebuilder Division President Scott] Van Dellen implemented a similar arbitrary rule limiting discussions of loans in the loan committee to 20 minutes.  At one point, Van Dellen even attempted to implement a policy abolishing loan approval memoranda altogether.

It is unclear whether CEO Perry actually had his employees stand on one leg while seeking his wisdom.  I suppose that would make yoga the key to advancement at IndyMac, which is not necessarily a bad thing.