Relevant:
2008-12-23 — nytimes.com
Two months before IndyMac Bancorp collapsed in July, at a cost of $8.9 billion to taxpayers, a top federal banking regulator allowed the bank to backdate a capital infusion and gloss over its deepening problems, the Treasury Department’s independent investigator said Monday.
In what industry analysts said was an example of the excessively cozy relations between high-flying subprime lenders and federal bank regulators, the Office of Thrift Supervision’s West Coast director allowed IndyMac’s parent company to backdate an $18 million contribution to preserve its status as a “well-capitalized†institution.
Investigators reported that similar officially approved backdating appears to have occurred at other financial institutions, though they did not name them.
Not too surprising. It is pretty clear at this point that what happened -- from the Fed to the OTS to the OCC and beyond -- is that banking regulators kept lowering standards and loosening rules and enforcement until the "regulation" was practically absent. That is why the collapse is so widespread and defies remedy: with no safeguards in place, the system hit "endogenous" (collapsing from within) failure before it hit any stopgaps from regulators.
And here is the guy at OTS responsible:
Mr. Dochow played a central role in the savings-and-loan scandal of the 1980s, overriding a recommendation by federal bank examiners in San Francisco to seize Lincoln Savings, the giant savings and loan owned by Charles Keating. Lincoln became one of the biggest institutions to collapse. Mr. Keating served four and a half years in prison before his fraud and racketeering convictions were overturned. He later pleaded guilty to more limited charges, and was sentenced to the time already served.
I think we are running out of fingers to count S&L scoundrels who came back (or remained in place) to wreak havoc within banks, lenders, or the regulators themselves, a second time around.
Depressing. But perhaps the lesson here is that people will not learn their lesson if they have the luxury of not having to.
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Comments:
tvsterling at 20:45 2008-12-23 said:
The complicity of this regulator led directly to untold losses by the bank's investors. I would expect a class action suit momentarily. If government won't do it's job, sue the bastards. Permalinkadd a comment | go to forum thread
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