Scandal at Treasury: Official Quits Amidst Fraud Scandal
Darrel Dochow Allowed IndyMac Bank to Cook Its Books, Investigators Say

By BRIAN ROSS, JUSTIN ROOD, and JOSEPH RHEE
March 5, 2009



The man at the center of a fraud scandal at the Treasury Department has been allowed to quietly quit and retire from his job as a government regulator, despite allegations that he allowed a bank to falsify financial records and amidst outcries from investigators who say the case shows how cozy government regulators have become with the banks and savings and loans they are supposed to be checking on.

Darrel Dochow, the West Coast regional director at the Office of Thrift Supervision who investigators say allowed IndyMac to backdate its deposits to hide its ill health, quit last Friday. Prior to his leaving, Dochow was removed from his position but remained on the government payroll while the Inspector General's Office investigates the allegations against him.

Treasury Department Inspector General Eric Thorson announced in November his office would probe how Dochow allowed the IndyMac bank to essentially cook its books, making it appear in government filings that the bank had more deposits than it really did. But Thorson's aides now say IndyMac wasn't the only institution to get such cozy assistance from the official who should have been the cop on the beat.

Investigators say Dochow, who reportedly earned $230,000 a year, allowed IndyMac to register an $18 million capital injection it received in May in a report describing the bank's financial condition in the end of March.

"They [IndyMac] were able to maintain their well-capitalized threshold and continue to use broker deposits to make loans," said Marla Freedman, an assistant Inspector General at Treasury. "Basically, while the institution was having financial difficulty, it kept the public from knowing earlier than it otherwise should have or would have."

In at least one instance, investigators say, banking regulators actually approached the bank with the suggestion of falsifying deposit dates to satisfy banking rules – even if it disguised the bank's health to the public.

The federal government took over IndyMac in July, after the bank's stock price plummeted to just pennies a share when it was revealed the bank had financial troubles due to defaulted mortgages and subprime loans, costing taxpayers over $9 billion.

Critics Point to Cozy Relationship Between Banks and Regulators
In order to backdate the filings, IndyMac sought and received permission from Dochow, according to Freedman.

"That struck us as very unusual," said Freedman. "Typically transactions are to be recorded in the period in which they occur, not afterwards. So it was very unusual."

One former regulator says Dochow's actions illustrate the cozy relationship between banks and government regulators.

"He did nothing to protect taxpayers in losses," former federal bank regulator William Black told ABC News. "Instead of correcting it [Dochow] made it worse by increasing the accounting fraud."

Meanwhile, IndyMac customers who lost their savings have launched their own website and are demanding answers from the government. They were further infuriated after learning Dochow was also the regulator in 1989 who oversaw the failed Lincoln Savings and Loan, a scandal that sent its CEO Charles Keating to prison.

"He's the person that claimed that he looked into Charles Keating's eyes and knew that Charles Keating was a good guy and therefore ignored all of the professional staff that told him that Keating was a fraud, and he produced the worst failure of the Savings and Loan Crisis at $3.4 billion. Now he's managed more than triple that," said Black, now an economics professor at the University of Missouri in Kansas City, Missouri.

Following the Lincoln scandal, Dochow was demoted and placed into a relatively obscure office, but later, inexplicably was brought back into the Office of Thrift Supervision.

Dochow declined to answer questions from ABC News.


IndyMac Customers Furious
After Ronnie Lopez was killed in Iraq, his mother Elaine invested the life insurance proceeds at IndyMac. She lost $37,000 of it.

While Dochow could end up losing his job, neither he nor his colleagues are expected to go to prison.

"This is criminal with the small 'c'," said Black. "No one within the regulatory ranks may go to jail, but they have done the worst possible disservice to the taxpayers of America."


http://abcnews.go.com/Blotter/Economy/Story?id=7009596&page=2

Deregulation of the Banks.
Thanks Phil Gramm

Gramm.

Phil Gramm and his wife wrote the bill that deregulated the banks.

His wife was a lobbyist for ENRON at the time. For her part she received a high executive position at ENRON. A short time later we had the ENRON scandal and they went belly-up.
Gramm is the McCain economic adviser who said to quit whining, this was only a mental recession.

Just last summer.....

I find it incredulous that anyone ever trusted Bush enough to vote for him. I didn't. I nearly fell over dead both times he won the Presidency.

Im guilty!
I voted for him in 2000. As soon as he started exhibiting his incompetence and lies I saw right through him.
2004, I voted Kerry!

I felt exactly the same way, I could not believe people could not see through him. At least enough of the poor and average citizens anyway, because he spoke directly up the elites pleasure zones.

We share something in common.

First he cheated, second time, the nation was terrorized with the 9/11 terrorism and didn't want someone else to handle it.

how did the bush administration not trick us. i think the list would be shorter. but i have news to u about the 9/11 attacks. that was all set up by are own gov. do some research you'll be shocked. think about how much more the security in this country picked up since then. how are privacy is gone pretty much now. the media was in on it too. rockefeller owns the media by the way. by the way rockefeller is very in with are government. by the way.

Excuse me? What kind of nonsense is this, what do they mean no one with in the regulatory ranks may go to jail?

How is it possible that one does such a thing and escapes jail time for ripping off the taxpayer. So what is to prevent those with in regulatory ranks from doing this again and again if there is no threat of prison time. I can not understand this...

As president of the New York Federal Reserve Bank, Timothy Geithner often preached that gargantuan financial firms like Citigroup should be held to the highest regulatory standards to make sure they couldn't take on too much risk.

But when it came to supervising Citigroup in recent years, the record shows that the New York Fed eased the reins as the company blew billions on subprime mortgages and other risky deals that ultimately forced the biggest bank rescue in U.S. history.

Geithner's tenure at the New York Fed – which bore the major responsibility for supervising Citigroup – covers a tumultuous span in which the sprawling conglomerate spiraled from the country's biggest banking company to one of its largest welfare cases.

Now under much closer government supervision – after a $52 billion rescue – Citigroup appears headed for dismantling amid a leadership shuffle that included last week's announced departure of former Treasury Secretary Robert Rubin as senior counselor and director.

Should the New York Fed have seen trouble coming and prevented it? As Citigroup took on risk and its capital deteriorated, what oversight did Geithner exercise? And what contacts, if any, did Geithner have about regulatory matters with Citigroup officials, including Rubin, under whom Geithner worked at Treasury in the 1990s?

lets start by putting the tax cheat geithner at the top of the list.

IndyMac is small potatoes compared to citibank.

Does anyone think that Geithner didn't show a little favor towards his old boss?

His appointment says alot about Obama.

Which Republican blogg did you retrieve that opinion from?

Google shows 158 of them...

Well, people voted for him for the same reason people voted Obama. They believed his promises. Bush campaigned on ending Clinton's wars, balancing the budget, and being against government expansion.

He ran on conservatist views. But, what we got, similar to what we are getting now, he is expanding on all these points....

The only reason i see for voting him in the second time around is the fact that everyone running was just a crooked and people could see that. The lesser evil... Sound familiar?

What do they say about making assumptions?

http://www.propublica.org/article/how-citigroup-unraveled-under-geithners-watch

A little about pro publica...

In the wake of the October 2007 announcement of ProPublica's launch, a business publication expressed concerns about the ability of the organization to maintain an independent and non-partisan editorial stance toward the subjects it investigates.[4] In addition, Slate senior writer Jack Shafer noted that Herb Sandler has given "hundreds of thousands of dollars" to Democratic party candidates over the years, as well as millions to left-leaning or progressive political advocacy organizations such as MoveOn and ACORN.

I will patiently await your reply. This should be good.

And,,,,,,????

That isnt where you pulled the article...

That is exactly where I cut that exerpt from.

Unlike most of you libs, I am not afraid of reading opposing opinions. I don't hide under my desk when I am proved to say something foolish, instead of manning up and taking responsibilty for a poor assumption.

I expected nothing less from you.

yeah and fox news claims to be unbiased as well and we all know how far to the right they lean .

Give the link.
I followed yours and I didnt see one word about CitiGroup!!

What does foxnews have to do with this thread or Fanta assuming I posted something from a right wing blog?

I just copied the link out of my previous post and the article came up.

http://www.propublica.org/article/how-citigroup-unraveled-under-geithners-watch