IndyMac Regulator Let It Backdate Capital to Skirt Penalty, Watchdog Says

[marmar]

Regulator Let IndyMac Backdate Capital, Treasury Says (Update2)
By Alison Vekshin


Dec. 22 (Bloomberg) -- IndyMac Bank’s U.S. regulator allowed the lender to backdate a capital infusion from its holding company to let the mortgage lender maintain “well-capitalized” status and escape regulatory sanctions, the Treasury Department’s watchdog arm said today.

The Office of Thrift Supervision permitted IndyMac Bank to record $18 million of a $50 million infusion received May 9 as first-quarter capital, Eric M. Thorson, the Treasury Department’s inspector general, wrote today in a letter to U.S. Senator Charles Grassley of Iowa, the top Republican on the Senate Finance Committee. IndyMac was closed by the OTS on July 11 after a run on deposits depleted its cash.

“It is unclear what information OTS had at the time and what its basis was for allowing the capital infusion to be recorded for the quarter ending March 31, 2008,” Thorson wrote to Grassley in a letter dated today. “A separate inquiry as to a motive for approving and recording this transaction in the manner it was recorded is still ongoing.”

The move came to light as part of a routine federal investigation into the failure of IndyMac, one of five OTS- regulated lenders to be shuttered this year. The regulator also oversaw Washington Mutual Inc., whose September collapse was the biggest bank failure in U.S. history.

The Federal Deposit Insurance Corp. is running a successor institution to IndyMac called IndyMac Federal Bank FSB while seeking a buyer for the failed bank’s assets. .......(more)

The complete piece is at: http://www.bloomberg.com/apps/news?pid=20601087&sid=aF2cCzfmLwFA&refer=home

[dixiegrrrrl]

1. Layer upon layer upon layer of illegal behaviors.

The more we dig, the more we find.