Mr Cooper Group Inc (COOP)

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OTS Acting Director Polakoff Put On Leave

The heat is on... Go WAMU!!! They are dropping like dead flies.


http://online.wsj.com/article/BT-CO-20090326-718651.html

WASHINGTON (Dow Jones)--The acting director of the Office of Thrift Supervision has been put on leave pending a review of the agency's role in the backdating of capital infusions by some banks, the agency said Thursday evening.

OTS said in a surprise statement that Scott Polakoff, who has been serving as acting director of the OTS, would be replaced by OTS Chief Counsel John Bowman during the review by the Treasury Department.

The OTS, a division of the Treasury Department, has come under fire after it was revealed last year that the agency had allowed IndyMac Bancorp Inc. (IDMCQ) to backdate a May 2008 $18 million capital infusion to the first quarter. IndyMac failed a few months later, a collapse that cost the Federal Deposit Insurance Corp. $10.7 billion, the costliest failure in U.S. history.

A subsequent review of the issue by the OTS uncovered four other cases of backdating by banks, cases which the agency said in a January letter to U.S. lawmakers "were not acceptable to current OTS standards." Allowing the banks to backdate capital infusions to earlier quarters could allow firms to avoid regulatory penalties for having too little capital.

The Treasury Department Inspector General is investigating the matter, and it is unclear what sparked Polakoff's sudden departure. He appeared Saturday at a community banker convention in Phoenix and was scheduled to give a speech next week to the American Bankers Association.

The replacement of Polakoff, who has been acting director since John Reich stepped down as head of the agency last month, comes at a sensitive time for the OTS. A number of the largest institutions it supervised, including IndyMac, Washington Mutual Inc. (WAMUQ) and Downey Savings and Loan, failed last year, leaving many to question whether the agency and the thrift charter is still needed.

Polakoff also has come under fire for the agency's inability to prevent the problems at American International Group Inc. (AIG). The OTS was a top regulator for the giant insurance company, which eventually needed a huge government bailout.

Polakoff increasingly has been the public face of the OTS, appearing in recent weeks before multiple congressional committees and speaking to bankers around the country.

"If we look at this exercise, this task, this challenge and any other regulators look at it from a territorial perspective, the process will fail," he told hundreds of community bankers in Phoenix on Saturday. "If, however, we look at this very important exercise with no concern as to what initials, what acronyms, what agencies remain, but instead what's best for all of you, and what's best for the economy, we will succeed."

-By Michael R. Crittenden, Dow Jones Newswires; 202-862-9273; [e-mail]