So why was a capital infusion to the Pasadena-based lender listed as having been received before March 31 - even though it didn’t happen until May? The infusion allowed the bank, then struggling mightily, to be classified as "well capitalized," instead of "adequately capitalized" (a difference that was a big deal at the time). By July, IndyMac was seized by the feds. The Treasury Department's inspector general is now looking into the backdating - and the role of the Office of Thrift Supervision's West Region Director Darrel Dochow. In connection with the inquiry, Dochow has been removed from his current duties (he appears to still be employed by OTS). From the LAT:
Banking experts said that IndyMac, at a minimum, should have disclosed the date change to investors and should have made its actions clear to the FDIC. Without the date change, the thrift would have been forced to ask the FDIC for a waiver allowing it to take brokered bank deposits. That would have been a red flag both to the agency and to investors that the thrift was having problems, experts said. "This seems bad on two levels," said James Barth, a former chief economist with the Office of Thrift Supervision. "Information like this should not be kept hidden. You want to protect investors and allow them to sell their shares if they want to get out, and you want to protect the FDIC so it can minimize its risk exposure by taking action sooner."
Dochow has a history. As reported by the Times earlier this year, he was the head of supervision and regulation at the Federal Home Loan Bank Board in Washington when Lincoln Savings & Loan of Irvine failed in 1989. Two years earlier, Dochow refused to shut down the place. Eventually he was demoted, only to return to a top regulatory role for reasons that are a little vague. "Any attempt to draw any parallels between the events of 2008 and 20 years ago is a stretch, at best. There is no valid comparison," an OTS flak told the Times in October. By the way, Dochow also had supervision over Washington Mutual, Countrywide and Downey Savings, all institutions that, like IndyMac, failed this year.
Here's more from the WashPost, which also has been pursuing the story:
Dochow was appointed regional director in September 2007 after serving as the No. 2 in the western region. He was paid $230,000 in 2007, according to government records. Dochow got the job shortly after playing a leading role in persuading Countrywide to move under OTS supervision, a major coup for the agency, which is funded by fees from the companies it oversees.
On May 9, Dochow met with IndyMac executives. The executives said they wanted to inject $18 million from the holding company into the thrift subsidiary, and to count that money as if it was already in hand at the end of the first quarter, according to the inspector general's report. It said that Dochow agreed. On May 12, IndyMac filed its revised documents, showing the company was still well capitalized.