4 more thrifts backdated assets
Federal regulators said Friday that they had allowed four thrifts besides failed IndyMac Bank to improperly backdate infusions of capital.
In a letter to Treasury Secretary Timothy F. Geithner, John Reich, the director of the Office of Thrift Supervision, did not identify the four S&Ls.; The thrift regulator is an arm of the Treasury Department.
The Times reported Dec. 23 that Treasury investigators had found that Darrel W. Dochow, the agency’s Western regional director, improperly allowed IndyMac to include extra capital, a bank’s cushion against losses, in its report for the first quarter of 2008, months before the Pasadena mortgage lender failed.
Dochow has been suspended pending an inquiry.
A timeline with Reich’s letter says IndyMac’s parent, IndyMac Bancorp, provided $18 million in extra capital May 9, more than a month after the first quarter ended.
But with Dochow’s approval, and no objection from IndyMac’s auditors, the thrift recorded the money as capital as of March 31, the timeline says.
The move allowed IndyMac to report that it was “well capitalized” at the end of the first quarter, meaning it was financially strong enough to stay in business.
IndyMac, which suffered heavy losses on risky mortgages made during the housing bubble, was seized in July. Its failure is expected to cost the federal deposit insurance fund as much as $9.4 billion.
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