The Financial Times had a rather pithy piece (see below in full) on the fraud at IndyMac, reported in yesterday's New York Times (and re-reported here).
A reminder about what this story is all about: apparently, last May the western regional director/senior regular from the Office of Thrift Supervision, Darrel Dochow, allowed IndyMac "to record $18m of a $50m capital infusion from its holding company as first-quarter capital," which made it possible for the bank to retain its "well-capitalized" status. IndyMac failed in July.
What is most scandalous about this is that Dochow is a veteran of the S&L crisis, and actually served time for the role he played. Here's what the NYT said yesterday:
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.
Um, how did this guy get a job as a banking regulator again?
If you got your information about all this from the Financial Times, you wouldn't know a thing about Dochow's back-story. And the FT even appears to downplay the fraud: "Bankers say the practice of backdating capital has been relatively common, but backdating is typically limited to a few days or weeks, not six, as in IndyMac's case."
At least they (like the NYT) included the nice quote from Republican Charles Grassley: "The role of the Office of Thrift Supervision, as the name says, is to supervise these banks, not conspire with them."
Here is the whole article:
IndyMac allowed to backdate its capital
