Reply #7: OMG connection to Keating 5, from 100 to Blame Vanity Fair

[roseBudd]

"Because he covered up for the banks instead of regulating them. Darrel W. Dochow was the West Coast director of the Office of Thrift Supervision, directly responsible for overseeing the financial health and well-being of Washington Mutual, Countrywide Financial, IndyMac Bancorp, and Downey Savings and Loan. Under his watch, all would fail or require a rescue/bailout from a larger bank. So how did Dochow manage to miss the fact that these banks were in such trouble with their subprime mortgages? Actually, he didn’t miss the problem at all but helped to cover it up: As IndyMac was about to report its first-quarter results for 2008, the bank’s auditors discovered that IndyMac didn’t have enough cash in reserve to be considered a “well capitalized” institution. This would have set off alarms at the Treasury Department, the Federal Deposit Insurance Corporation, and the Office of Thrift Supervision. Instead, during a conference call on May 9, Dochow allowed IndyMac to cook its books, backdating $18 million it received in May to make it look as if the money had been on hand at the end of March. On May 12, 2008, IndyMac filed its falsified first-quarter results; on July 11, the bank collapsed, at a cost of $10.7 billion to U.S. taxpayers. Dochow was removed from his $230,000-a-year position on December 22 but stayed on the government payroll until he retired in March 2009. But here’s the really infuriating coda to all this: 20 years earlier, during the savings and loan scandals fo the late 1980s, Dochow had been demoted from his job as a regulator at the Federal Home Loan Bank Board (the Office of Thrift Supervision’s predecessor) when it was revealed he’d stopped an examination of Charles Keating’s bank, and overrode recommendations to seize the Lincoln Savings and Loan. Keating spent four-and-a-half years in prison for his shenanigans; the savings-and-loan scandals cost the federal government more than $100 billion."