Bill Black on IndyMac/Thrift Fraud
The article on the fraud at IndyMac in the business section of today’s New York Times quotes UMKC professor and D&S author William K. Black. (Black wrote the cover story for our November/December 2007 issue on banking deregulation.) If you haven’t been briefed on the situation with IndyMac yet, here are the basics: an official from the Office of Thrift Supervision, Darrel W. Dochow (he is the west coast director), “allowed IndyMac’s parent company to backdate an $18 million contribution to preserve its status as a ‘well-capitalized’ institution,” according to the Times. In particular, he allowed IndyMac “to receive $18 million from its parent company on May 9 but to book the money as having arrived on March 31.” IndyMac collapsed in July.
Dochow apparently played a role in the S&L scandal of the 1980s. Black was was deputy director of the Federal Savings and Loan Insurance Corporation during that crisis. Here’s what he told the Times:
William K. Black, a senior bank regulator during the savings and loan crisis and the author of “The Best Way to Rob a Bank is to Own One,” said Mr. Dochow’s lenience highlighted the longstanding unwillingness of the Office of Thrift Supervision to take charge.
“The O.T.S. did nothing effective to regulate any of the specialized large nonprime lenders,” Mr. Black said. “So what you got was what the F.B.I. accurately described as early as 2004 as an epidemic of mortgage fraud.”
Mr. Black said that the Office of Thrift Supervision had never put IndyMac on its watch list of troubled institutions before the Federal Deposit Insurance Corporation took it over in July and booked a loss of $8.9 billion to its insurance fund.
The Times has found Black in its Roladex several times in recent months, most notably in the incendiary article back in February about John McCain’s dalliances with a lobbyist (but as we pointed out at the time, the real meat of the article was about McCain’s role in the S&L scandal; the Times quoted Black basically saying that McCain shouldn’t even still be a senator). In today’s article, though, the Times mentions the title of Black’s book–The Best Way to Rob a Bank Is to Own One.
Read the rest of the article.