A Treasury Department report says they failed to catch the warning signs leading up to the collapse of the Pasadena-based thrift - specifically an aggressive growth strategy in which loans were approved without much, if any, verification. Smack in the middle of this was a guy named Darrel W. Dochow from the Office of Thrift Supervision, who was supposed to oversee IndyMac. Dochow last week announced plans to retire. Oh. From the WSJ:

"We found that OTS identified numerous problems and risks, including the quantity and poor quality of nontraditional mortgage products," the report said. "However, OTS did not take aggressive action to stop those practices from continuing to proliferate." The report suggests OTS examiners put faith in IndyMac's management because the firm was turning profits and growing.

By the way, the report absolves Sen. Charles Schumer, who expressed concern to OTC and FDIC officials about IndyMac's financial condition. When IndyMac was taken over in July, the OTC blamed it on Schumer's public comments. But the report says Schumer's letter just made clear what the OTS and the FDIC already knew: that the bank was defunct. From Money & Co.:

Darrel Dochow, who had been the Western regional director for the OTS, told the inspector general that "there were investors who were interested in investing in IndyMac" around the time of Schumer’s letter. Dochow asserted that "interest waned after the senator’s letter was published" and the run on deposits hit. But the inspector general’s office said it checked on Dochow’s statement and talked with a principal at the investment firm that he had mentioned. "Contrary to what OTS’ West Region director told us, the principal said that Sen. Schumer’s letter did not affect the firm’s investment decision," the report says.

One more thing: the FDIC's bank insurance fund dropped at the end of last year to the lowest point in more than 25 years - and the number of banks at risk of failure nearly doubled. With the fund so low, banks will be asked to pay more in deposit insurance. (NYT)