Dodd does not expect ‘many more’ banks to fail

Senate Banking Committee Chairman Chris Dodd (D-Conn.) on Monday said he does not expect “many more” banks to fail, in the wake of last week’s implosion of IndyMac Bancorp.

Dodd, interviewed on CBS’s “Early Show,” said that Federal Deposit Insurance Corporation head Sheila Bair “has indicated there are problems” with other banks. The senator added that he is “more optimistic” about mortgage giants Fannie Mae and Freddie Mac than he is about some lenders that engaged in these “very, very bad mortgages.”

{mosads}The stock market swooned last week amid fears that Fannie and Freddie, which provide the bulk of financing for U.S. home loans, were on the brink of failure.

IndyMac’s blow-up, the second-biggest bank failure in U.S. history, threw fuel on the fire, spreading worries that the collapse of more mortgage lenders would follow.

The Bush administration on Sunday evening sought to quell investor fears over Fannie and Freddie by announcing several moves, which would require congressional approval, to bolster the mortgage giants.

Treasury Secretary Henry Paulson said he would seek authority to increase the two companies’ lines of credit with the Treasury and also get approval to allow the Treasury to buy equity in Fannie and Freddie if needed.

Meanwhile, the Federal Reserve’s board of governors voted to give the New York Fed authority to lend to Fannie and Freddie.

Dodd on Monday said that he would hold hearings on IndyMac. Sen. Charles Schumer (D-N.Y.) was accused by the head of the Office of Thrift Supervision, John Reich, on Friday of helping to spark a run on IndyMac when he publicized his letters to bank regulators ringing the alarm about the lender.

Schumer has denied that he did anything wrong.