Justin Rood was a Washington, D.C.-based investigator for ABC's Brian Ross Unit.
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Bank Regulator Out Amid Fraud Probe
March 27, 2009 11:48 AM
A probe into fraudulent reporting by financial institutions has led to the suspension of a top Treasury Department regulator.
The Office of Thrift Supervision announced Thursday its acting director, Scott M. Polakoff, was on leave pending the findings by the Treasury Department’s Inspector General Eric Thorson, expected in the coming weeks. Polakoff was elevated to director last month, from his post as senior deputy director.
Thorson’s office has been probing how OTS regulators may have allowed failed lending giant IndyMac and others to falsify financial records that should have shown their ill health.
"Basically, while the institution was having financial difficulty, it kept the public from knowing earlier than it otherwise should have or would have," assistant Treasury Inspector General Marla Freedman told ABC News in an interview broadcast earlier this month.
Thorson's office released a report three weeks ago criticizing OTS regulators for failing to heed warning signs of IndyMac's collapse in 2008. At the time, Polakoff reportedly emailed his subordinates encouraging them to read the report and learn its lessons.
"It is critical for all of us to understand the factors that contribute to any bank failure so that we can constantly improve our examination techniques," Polakoff wrote, according to an account in the Wall Street Journal.
Polakoff 's predecessor, John Reich, retired last month amid the same probe.
The regulator who directly oversaw IndyMac, Darrel Dochow, also resigned from his job this month.
Treasury Secretary Timothy Geithner named OTS deputy director and chief counsel John E. Bowman to replace Polakoff.
March 27, 2009 | Permalink | Share | User Comments (8)
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If the state and federal examiners really do their jobs, they should uncover these misnomers, unless, the books are cooked internally, and other books are given to the examiners to review to appear current and past business activities on a daily, monthly, quarterly, bi annual and annual basis. Spot checks should be made more frequently before and after official audits are performed. Or, there are many many examiners who may be taking under the table to make extra dollars to benefit them -- don't know, not accusing, but its either the internal bank cashier, head accountant, or examiners, or all of the above. Where has the honesty in bankers gone, or has it even existed? So many answers are needed to many unanswered questions.
Posted by: Gg51 | Mar 27, 2009 12:17:57 PM
I can’t believe we have more corrupted and dysfunctional government, when will it end?
Posted by: rickyt1234 | Mar 27, 2009 12:37:04 PM
We need regulators to regulate the regulators.
Posted by: Huh | Mar 27, 2009 1:19:56 PM
We will find out that this economic disaster has deep roots in our elected leaders. The past administration created an environment that enabled the financial industry executives to enrich themselves with no regard to consequences. The SEC was declawed by putting that complete do-nothing Cox in charge. He stifled many investigations which could have mitigated this mess. Without strong regulation, the industry destroyed itself and the American economy with it.
Posted by: DaveM | Mar 27, 2009 1:42:50 PM
I've been saying all along this dog and pony show over a bonus was to cover up how bad our government was doing with things. Why isn't this front page news?
Posted by: FedUp | Mar 28, 2009 12:14:33 AM
DavidM, you have to include Congress as well for ineptness. They're the ones who do the overseeing.
Posted by: Dadoo | Mar 30, 2009 1:50:53 PM
And while this is happening, the small people get hurt and the CEO's walk away with multi-million dollar packages.
When did any one person ever deserve $20 million dollar salaries and monthly million dollar retirement packages? Firing them is just giving them a very lavish lifestyle on our dime. When do we say enough is enough?
When do we stand together? Yes we can sounds pretty hollow now doesn't it.
Posted by: bs | Mar 30, 2009 6:56:10 PM
We are expecting much of our regulators to not fall victim to the greed when they are dealing with firms that are profiting in the millions of dollars. The same can be said of the politicians.
How can we ever expect this type of environment to ever look out for us. I kknow, we need to clone Elliot Ness.
Posted by: LarryJ | Apr 1, 2009 3:34:54 PM
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