Irregularity Uncovered at IndyMac - regulator allowed the bank to backdate a capital infusion

[groovedaddy]

WASHINGTON — 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.

IndyMac, based in Pasadena, Calif., was one of the nation’s biggest subprime mortgage lenders at the time. But analysts said it was already in trouble when the maneuver occurred, because of rising default rates and a big stockpile of subprime loans on its books that investors abruptly refused to buy.

http://www.nytimes.com/2008/12/23/business/23thrift.html?th&emc=th

[acmavm]

1. Don't give it another thought, it's only money.

:sarcasm:

[roseBudd]

2. DUers please click through to reward the NYTimes w/your page views, they need them...

If the fourth estate is to survive the disruption of the internet, liberals who care about investigative journalism must help papers like the Gray Lady survive.

Page views is the metric that could allows companies with the newsroom infrastructure to pursue this type of journalism to survive.

[groovedaddy]

3. Amen! Thanks for the suggestion. n.t