California will not grant a request by former IndyMac Bank employees to investigate Sen. Charles Schumer for letters whose disclosure critics say caused the thrift's failure.

The state attorney general's office said in a letter Thursday that, though the New York Democrat's "statements" about the $32 billion-asset thrift "may have accelerated public concern about" its situation, this was not enough to prove he caused the failure.

Sen. Schumer has been criticized by the Office of Thrift Supervision for letters he sent in June calling on regulators to focus efforts on the ailing Pasadena, Calif., thrift and raising the prospect of its failure. The OTS said this had caused a bank run that helped lead to the thrift's July 11 failure.

A letter this month from 51 laid-off IndyMac employees asked Attorney General Jerry Brown to investigate Sen. Schumer under a law limiting statements unfavorable to a bank's financial condition.

But in response, Mr. Brown's office said the law only bars statements that are untrue "and we have no reason to believe that Senator Schumer's statements were factually false."

His office added that Sen. Schumer is protected under a clause barring prosecution of members of Congress for their public statements during a legislative session.

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