WASHINGTON — A senior federal banking regulator has been removed from his job after government investigators concluded that he knowingly permitted IndyMac Bancorp to present a misleading picture of its financial health in a federal filing only months before the California thrift was seized by regulators.
The Office of Thrift Supervision removed Darrel Dochow as director of its western region, where he was responsible for regulating several of the largest banks that failed or were sold in the last year, including Washington Mutual, Countrywide Financial, IndyMac and Downey Savings and Loan.
Dochow allowed IndyMac to count money it got in May in a report describing its financial condition at the end of March, according to an investigation by Treasury Department Inspector General Eric Thorson, which was described in a letter from Thorson.
Thorson wrote that the OTS, one of four federal agencies that regulate banks, allowed other companies that it oversees to perform a similar legerdemain, though he did not name those companies.
Dochow did not respond to requests for comments.
An OTS spokesman did not immediately return a call or an e-mail. In a letter to the inspector general, the head of the OTS, John Reich, described Dochow’s actions as a “relatively small factor in the events leading to the failure of IndyMac.”
Reich said he had assigned Dochow to work on “special projects and administrative issues” while Thorson completes his investigation.
The findings raise new questions about the OTS regulation of the thrift industry, including banks that concentrate on mortgage lending. Last month, the Washington Post reported that close ties between regulators and companies played a role in the collapses of several of the largest thrifts, including IndyMac. Regulators allowed companies wide latitude and failed to insist on changes even when problems became apparent.
“The role of the Office of Thrift Supervision, as the name says, is to supervise these banks, not conspire with them. Capitalization requirements are there for a reason, and the failure of IndyMac cost the federal deposit insurance system $8.9 billion,” said Sen. Charles Grassley, R-Iowa, who was briefed on the findings by Thorson. “It’s good the inspector general has opened a full- blown audit as a result of this case. Everyone ought to be paying very close attention.”
Dochow was appointed regional director in September 2007 after serving as the No. 2 official in the western region. He was paid $230,000 in 2007, according to government records.
