Regulators on IndyMac: left hand vs. right hand

Yes, I know - AIG is eating billions like popcorn, but here's a nice example of Bush-era banking regulation, back when tens of millions of dollars was considered a lot of money.

When the hell was that?

Back when IndyMac was merely an unknown lender sliding towards oblivion.
It seemed federal regulators had different opinions of what to do.

IndyMac exposed the rift between the [Office of Thrift Supervision] and the FDIC when the OTS allowed the savings and loan to take extraordinary measures to stay afloat, and then failed to level with the FDIC about what it had done. The bank's failure cost the FDIC fund $10.7 billion.

Last spring, an OTS supervisor permitted IndyMac to count $18 million it received in May toward its regulatory filing for March. The money allowed IndyMac to claim it had a sufficient capital cushion and didn't need special permission from the FDIC to continue business as usual. Without that accounting sleight of hand, the bank would have fallen below the well-capitalized minimum threshold, triggering a ban on certain kinds of deposits absent an FDIC waiver. As a result, IndyMac earned a few more months of life before failing in July, a delay that cost both the FDIC and uninsured depositors tens of millions of dollars.

Here's the juvenile bit: The director of the OTS is telling the incoming Treasury Secretary they worked with FDIC, when they hadn't.

...ProPublica has learned that the OTS did not volunteer information about the $18 million. The FDIC learned of its existence only after it asked the OTS why IndyMac hadn't finished its financial filings for March. Even then, the OTS didn't disclose that the $18 million wasn't available in March, according to the FDIC. The FDIC discovered the truth after IndyMac failed and it took over the bank.

OTS is in a pissing match with the FDIC, props up a failing lender, and doesn't bother to tell its fellow regulators.

Quality.

(H/t ProPublica)