When Countrywide Financial felt pressured by federal agencies charged with overseeing it, they simply switched regulators

When Countrywide Financial felt pressured by federal agencies charged with overseeing it, executives at the giant mortgage lender simply switched regulators in the spring of 2007.

The benefits were clear: Countrywide's new regulator, the Office of Thrift Supervision, promised more flexible oversight of issues related to the bank's mortgage lending. For OTS, which depends on fees paid by banks it regulates and competes with other regulators to land the largest financial firms, Countrywide was a lucrative catch.

But OTS was not an effective regulator. This year, the government has seized three of the largest institutions regulated by OTS, including IndyMac Bancorp, Washington Mutual -- the largest bank in U.S. history to go bust -- and on Friday evening, Downey Savings and Loan Association. The total assets of the OTS thrifts to fail this year: $355.7 billion. Three others were forced to sell to avoid failure, including Countrywide.

In the parade of regulators that missed signals or made decisions they came to regret on the road to the current financial crisis, the Office of Thrift Supervision stands out.

http://www.washingtonpost.com/wp-dyn/content/article/2008/11/22/AR2008112202213.html?nav=rss_print/asection

When Countrywide Financial felt pressured by federal agencies charged with overseeing it, they simply switched regulators

When Countrywide Financial felt pressured by federal agencies charged with overseeing it, they simply switched regulators

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