Who Was Supervising the Thrift Supervisor?

More allegations of wrongdoing in financial services. This time it's a government agency where the fishy stuff was happening—the Office of Thrift Supervision, which regulates savings and loans and savings banks, has removed Darrel Dochow as its Western director. Why? The Los Angeles Times describes the sweet deal that Dochow cooked up with now-failed California thrift IndyMac: "In a May 9 phone call, Dochow agreed to allow IndyMac to record $50 million received that day from IndyMac's parent company as being received before March 31, the Treasury inspector general, Eric Thorson, wrote in a letter dated today to the Senate Finance Committee."

That’s a clear no-no, because, as the Wall Street Journal (which says, along with the New York Times, that the amount backdated was $18 million) reports: "[W]ithout the backdated capital contribution, IndyMac's capital ratio would have fallen to 9.98% as of March 31, barely below the 10% cutoff. Failing to hit the 10% figure would have reduced IndyMac's rating to 'adequately capitalized,' forcing the bank to get special permission from the Federal Deposit Insurance Corp. to offer brokered deposits." That higher-risk category could have left investors and regulators nervous. The New York Times recalls that "Mr. Dochow played a central role in the savings-and-loan scandal of the 1980s, overriding a recommendation by federal bank examiners in San Francisco to seize Lincoln Savings, the giant savings and loan owned by Charles Keating. Lincoln became one of the biggest institutions to collapse." The FDIC had to take over IndyMac in July, anyway, at a cost of $8.9 billion to the deposit-insurance fund.

There may be more revelations to come: Apparently, Treasury Inspector General Thorson says that the Office of Thrift Supervision had allowed other banks to backdate capital infusions. But perhaps these undesirable one-offs are obscuring a situation that shows some promise. In a review of the foreclosure situation in the United States, the Washington Post reports that Hope Now, an alliance of mortgage lenders backed by the federal government, says it kept 2.2 million homeowners out of foreclosure last year (even if many may have fallen back into trouble).

Toyota’s historic announcement that it would run an annual operating loss for the first time in seven decades continues to reverberate. The firm HIS Global Insight says worldwide car production has fallen 16 percent this quarter, according to a New York Times survey piece on the world situation. The New York Times' Clifford Krauss reports from San Antonio's Toyota Tundra truck plant, where workers are "taking classes: how to handle tools safely, how to get along with colleagues of varying backgrounds." Why? The company sold less than half the number of Tundras this November as last, so the plant, established far from supply lines in central Texas in a bid to win political influence, is now running just one shift a day. Industry consultant Maryann Keller says, "In a year like this, training people who don’t need to be trained is Toyota’s [equivalent of the Big Three’s] job bank." And it’s not just in the United States where a foreign auto company's workers are underemployed—the United Kingdom's sputtering auto manufacturing sector is at risk, says the Times of London. One engine plant in North Wales employs more than 5,000 people, and 15 percent of Toyota’s U.K. work force could be laid off.

More Bernard Madoff news continues to trickle out. The Wall Street Journal is among the only publications advancing the story on Tuesday, writing that investigators "are seeking information from the accounting firm that handled Mr. Madoff's audits for decades and are examining the role of Frank DiPascali, who dealt with client accounts and worked at Mr. Madoff's firm for more than 30 years." The Journal quotes one investor as saying, "If you wanted anything, a new account, money in, money out, you called Frank."

A trio of trend stories has you feeling for the players but looking for a bit more information. The New York Times, citing the Mall of America (the country’s largest), retail associations, and an undercover security guard, tracks an increase in shoplifting, claiming that "police departments across the country say that shoplifting arrests are 10 percent to 20 percent higher this year than last." Meanwhile, the Times alleges that the crafts retail sector, with $5.9 billion in annual revenue, is actually doing pretty well. Sarah Dyer, manager of Scrap in Portland, Ore., says, "A lot of people are doing a do-it-yourself Christmas, because of the economic downturn but also wanting to make their lives more sustainable, making stuff as opposed to buying more stuff." Some churches, on the other hand, are not so lucky. The Wall Street Journal reports from an auction sale of St. Andrew Anglican Church’s property in Easton, Md. Seven churches in the 2,000-strong Evangelical Christian Credit Union have been foreclosed this year, and many churches are struggling to raise funds to pay off expansions from previous years. Church lender N. Michael Tangen says soberly, "They had glory in their eyes that wasn't backed up with adequate business plans and cash flow." Perhaps the craftspeople and the people of God can do business together.