Financial Finger-Pointing Turns to Regulators

But a new defense has been mounted by a bank executive: my regulator told me to do it.

This unusual rationale is presented by the bank executive in one of the few fraud suits brought against a mortgage banking official in the aftermath of the financial crisis — the one filed by the Securities and Exchange Commission against Michael W. Perry, former chief executive of IndyMac Bancorp, which failed spectacularly in mid-2008.

After being accused of fraud and misleading investors about his company’s financial health just before it collapsed, Mr. Perry set up a Web site this fall to defend himself.

In a document on the site, he said that a top official at the federal Office of Thrift Supervision, IndyMac’s overseer, directed and approved an action related to the S.E.C.’s allegations.

“It was O.T.S. who had the final say regarding IndyMac Bank’s capital levels,” Mr. Perry wrote.

He went on to say that Darrel W. Dochow, former regional director for the Western region of the agency and a financial regulator for more than 30 years, had “specifically directed” Mr. Perry to backdate IndyMac’s report to regulators to include an $18 million cash infusion that would make it appear well capitalized.

The shift masked IndyMac’s problems for any investors trying to assess its soundness and allowed it to continue attracting large deposits crucial to its operations.

The S.E.C., in its suit against Mr. Perry, contends that more details about the cash infusion should have been disclosed, though the commission did not accuse him of accounting fraud.

Mr. Dochow was not accused of wrongdoing by the commission or any other prosecutor, though his role has been criticized by the inspector general of the Treasury Department, which oversees some bank regulators. It does not appear that Mr. Perry’s argument persuaded the commission to back off. The S.E.C., as is its custom, did not elaborate.

A representative for Mr. Perry said he did not care to discuss the case further, but his lawyer described the lawsuit in an e-mail as “exceedingly weak, unfair and meritless.” Mr. Dochow, who retired as a regulator in 2009 at age 59, said: “There’s a lot more than what’s been written, but I can’t talk. I could go to jail.”

The IndyMac collapse, with its multibillion-dollar cost to the Federal Deposit Insurance Corporation fund, highlights the role played by federal overseers of financial companies in the years leading up to the crisis. It also raises questions about whether government officials should be held accountable for dubious conduct related to the failure of an institution and whether the government has avoided pursuing some cases because of the roles regulators have played. For years, some bank overseers have maintained cozy ties with the institutions they monitor, treating bankers like clients because of the fees that banks pay to be regulated.

The Justice Department could not cite any regulator that it had named in a prosecution related to the crisis. However, Mr. Dochow’s conduct was referred to Justice for possible criminal charges in 2009, according to Eric Thorson, the inspector general of the Treasury Department. Mr. Thorson said Mr. Dochow’s action “was clearly improper and wrong.” A spokeswoman for the Justice Department in Washington declined to comment on the case and on whether the department investigated regulators for possible wrongdoing.

IndyMac is not the only institution whose questionable accounting was approved by regulators in recent years, though it is by far the largest of several highlighted by the Treasury inspector general.

Even if regulators are involved in wrongdoing, they have some immunity. Internal disciplinary measures are rarely taken against regulators who perform badly in their jobs, say government officials.

Some regulatory shortcomings may be chalked up to innocent mistakes and failures to spot problems. Still, some economists and lawyers would like the government to examine regulatory actions leading up to the financial crisis to determine whether officials actively participated in improper behavior. And, they say, in cases like Mr. Dochow’s, penalties should be levied on overseers who acted improperly.

Isolde Raftery contributed reporting.

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