Regulator Let IndyMac Backdate Infusion
By MICHAEL M. PHILLIPS and JESSICA HOLZER
A senior bank regulator was removed from his job after being accused of helping mortgage lender IndyMac Bancorp alter its records so it appeared to be in better shape — weeks before it was seized by the government. The Office of Thrift Supervision has reassigned its top West Coast official, Darrel Dochow, who was also a controversial figure in the regulatory lapses surrounding the savings-and-loan crisis of the late 1980s. In a letter sent Monday to Sen. Charles Grassley, the senior Republican on the Senate Finance Committee, the Treasury Department’s inspector general wrote that the federal OTS allowed the bank to backdate records of capital infusions last spring. “The OTS is an agency that has got a particular need to reform,” said Karen Shaw Petrou, managing partner in Federal Financial Analytics, a financial-industry consulting company based in Washington D.C. But she added that all financial regulators showed lapses during the boom and were prone to “looking the other way, hoping for the best and giving institutions way too much credit for unproven assertions.” Neither Ms. Petrou nor Sen. Grassley thought the backdating incident itself was a major contributor to IndyMac’s failure. But both said they saw it as symptomatic of spotty regulation. “The role of the Office of Thrift Supervision, as the name says, is to supervise these banks, not conspire with them,” Mr. Grassley said in written statement. In the case of IndyMac, Ms. Petrou said, “you had an institution which OTS should have fully recognized was a highly risky institution at the point when the backdating took place.”