Multiple links to articles chronicling this sorry episode. (If Reid gets beat and the Dems retain control of the Senate, this guy could become Senate Majority Leader.)
Later, the Wall Street Journal found that some allies of Schumer had a strong incentive to see IndyMac fail:
Sen. Schumer, chairman of a Senate banking subcommittee, was criticized at the time for publicly raising questions about the bank’s solvency and regulators’ oversight of it. What wasn’t known then was that a group of potential investors, led by Los Angeles-based Oaktree Capital Management LP, had been inside the bank looking over its books. They had already decided not to invest in the bank, but were scouting assets that might become available if the bank failed and was taken over by the government.
Sen. Schumer’s office said recently he didn’t know anything about Oaktree’s possible interest in IndyMac until after the bank failed. Oaktree Chairman Howard Marks said he never talked to the senator about IndyMac…
The group of investors led by Oaktree are big political contributors, predominantly to Democrats. They have donated more than $700,000 to Senate Democrats and the Democratic Senatorial Campaign Committee during the four years that Sen. Schumer has chaired the campaign committee.
UPDATE: BigGovernment.com found another big Schumer donor who had a strong incentive to see IndyMac fall:
At the end of 2007, hedge fund billionaire John Paulson invested $15 million in the leftist non-profit, Center for Responsible Lending, their largest single donation ever. Around the same time, Paulson and his employees contributed over $100,000 to the Democratic Senatorial Campaign Committee, headed, at the time, by Sen. Chuck Schumer. Roughly six months later, CRL and Sen. Schumer both launched a highly public attack on the California-based mortgage lender, Indymac. The lender failed, wiping out the investment of thousands of people. Roughly six months after that, John Paulson, in partnership with George Soros, bought up the remnants of Indymac for pennies on the dollar.