A growing list of failed thrift reports is helping the Office of the Comptroller of the Currency learn how to avoid the mistakes made by the Office of Thrift Supervision.
The post-mortem reports, filed by the Treasury Department's Office of Inspector General, or OIG, may also shed light on how Treasury views the role of the OCC, which inherited hundreds of OTS-regulated thrifts in late July. Among the criticisms: the OTS should have used a swifter, heavier hand dealing with struggling thrifts.
The reviews "force on-site examiners to go overboard and implement harsher exam reports than they would otherwise," said Walter Moeling 4th, a partner at the Bryan Cave law firm in Atlanta. The reports "are something George Orwell would have loved to write about because they're really that bad."
The Office of Inspector General, or OIG, blames the OTS for some form of regulatory inadequacy in 18 of 23 material-loss reviews of failed thrifts issued this year through Sept. 20.
Most concerns relate to how long the OTS took to enforce a formal action after identifying a problem. In contrast, only one of the 13 reviews of failed banks regulated by the OCC mentions a lack of timeliness from the regulator, based on American Banker research. (AB is a sister publication to National Mortgage News.)
"It does look like the OIG is more critical of the OTS on average than other regulators," said Kip Weissman, a partner at Luse, Gorman, Pomerenk & Schick.
The OTS received a lot of flak after the massive failures of IndyMac Bank and Washington Mutual Bank in 2008. The OCC new oversees 639 thrifts once regulated by the OTS.
"The OCC is going to have to figure out how to do a credible job in supervising and regulating thrifts, and that will pose a challenge to them," said Kevin Jacques, a professor at Baldwin-Wallace College in Cleveland and a former economist at the Treasury.
Richard Delmar, counsel for the OIG, cautioned in an emailed response not to derive any conclusions from the failed thrift reviews until the office gets through its backlog. He said the OIG gave first priority to the OTS reviews because they were trying "to get as many in their hands as possible before the transfer" of the OTS into the OCC.
