Regulator takes heat over IndyMac Bank failure
Critics say Darrel Dochow of the Office of Thrift Supervision and others ignored warning signs. He also had an oversight role in the 1980s savings and loan crisis.
WASHINGTON — As the mortgage crisis deepened in California last year, officials in Washington put the fate of thrifts in the West in the hands of a veteran regulator who had a memorable role in the last major crisis in the savings and loan industry.
Darrel W. Dochow 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, at the time the largest and costliest thrift failure ever.
Dochow and other regulators in Washington balked at recommendations from their regional counterparts that it be shut down two years earlier. Its collapse added billions to the taxpayer-funded bailout of the S&L industry, and its victims included thousands of elderly investors who had bought bonds from the troubled thrift.
Eventually he was relieved of his high-level duties and demoted. Now, Dochow is back on the beat as the top U.S. banking cop in the West amid another financial crisis, one that was underscored by last month's seizure and sale of Washington Mutual Bank, the biggest bank failure in U.S. history.
Critics are complaining that Dochow's approach to the mortgage meltdown as Western region director of the Office of Thrift Supervision evokes the industry-friendly treatment he and other regulators a generation ago were scored for in the Lincoln case.
Dochow declined to be interviewed for this story, but the Office of Thrift Supervision strongly defended him as a seasoned professional.
"The OTS has the highest confidence in Regional Director Darrel Dochow," spokesman William Ruberry said. "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."
Dochow and other regulators have been criticized for how they handled the July 11 collapse of IndyMac Bank of Pasadena, one of the signature events in the latest crisis, which came after a run on the bank by depositors.
Regulators at the Office of Thrift Supervision, the successor agency to the federal bank board, have blamed Sen. Charles E. Schumer (D-N.Y.) for pushing the bank over the edge by disclosing a critical letter he had written that may have triggered the run on deposits and derailed an effort by regulators to arrange a private sale or bailout.
