Monday, 19 January 2009

The ghost of Indymac

In the good old days, when the housing market was bubbling, regulatory reporting mishaps would go unnoticed. Today, it is a completely different world.

There is a shocking story peculating over in the US, alleging that US bank regulators encouraged a failing bank - Indymac - to falsify its records. Just one more nail in the coffin of US financial sector regulation.

At least that kind of thing can't happen here in the UK where we have the wonderful light touch of the FSA to protect us from failing banks.

A brewing fraud scandal at the Treasury Department may be worse than officials originally thought. Investigators probing how Treasury regulators allowed a bank to falsify financial records hiding its ill health have found at least three other instances of similar apparent fraud, sources tell ABC News.

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.

Treasury Department Inspector General Eric Thorson announced in November his office would probe how a Savings and Loan overseer 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.

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