On October 31, 1989 I testified before the U.S. House Banking Committee about my findings concerning Lincoln Savings & Loan, the notorious Irvine, California–based S&L headed by Charles Keating. The previous year, I had been handpicked by the California Department of Savings and Loan to examine Lincoln’s parent company and determine whether federal examiners were whitewashing its losses.

I told the Committee that Lincoln’s massive losses and hundreds of millions of dollars of obviously unsafe and unsound loans justified its immediate seizure. And I expressed the fury that California regulators felt knowing that the Federal Home Loan Bank Board had allowed Lincoln’s parent company to sell worthless bonds to elderly California investors for six months after regulators warned it was insolvent.

Then-U.S. Representative Charles Schumer asked how the Board could possibly have allowed those sales to continue long after the bonds were proven to be worthless. We now know the resulting scandal as “The Keating Five,” after the five U.S. Senators who had received donations from Keating and had improperly lobbied federal banking officials on his behalf. Darrel Dochow, who was head of supervision for the Board, was demoted and transferred from Washington to Seattle soon after the hearings.

I had long since retired from bank investigations when version two of the S&L crisis—this time far worse— began unfolding in 2007. But I had heard from staff at the Federal Deposit Insurance Corporation (FDIC) and learned from government reports that federal examiners were inadequately trained, and review procedures were less than thorough. In the early Bush years, the FDIC adopted new policies intended to reduce banks’ “regulatory burden.” Under “MERIT” guidelines established in 2004, examiners accepted much of what banks asserted about their books without actually looking at loan files and reviewing basic documentation. Older FDIC staff called these examinations “drive bys.” I knew I had to get back to work, so I applied for an FDIC position.

In July 2008, while my application was pending, IndyMac Bank FSB collapsed, costing the FDIC at least $10 billion and uninsured depositors $500 million. IndyMac had never even been rated a problem bank before it failed.

Acting as a freelancer, I looked into IndyMac and, in a detailed report to the Senate Banking Committee, explained that IndyMac was likely insolvent a quarter earlier than the government acknowledged. The Office of Thrift Supervision (OTS), the successor to the Federal Home Loan Bank Board, had assigned a satisfactory rating to the bank even though regulators must have known it was defunct.

Later, the Treasury Department’s Inspector General confirmed my suspicions and determined that Dochow, who had become OTS’s Western District Regional Director, had improperly permitted IndyMac to backdate a capital injection to inflate its numbers. The bank stayed afloat an additional two months, during which it sucked in many of the uninsured depositors who would lose their money. Dochow had also been the primary regulator for Countrywide and Washington Mutual, two of the worst abusers of the no-documentation “liar loans” that undermined the mortgage market. He was eventually demoted from this job, too, and retired in February of 2009.

As for my job application, it was automatically rejected because I didn’t have the requisite de minimis loan-review experience within five years of applying. I appealed the ruling, and in August 2008 FDIC Chairman Sheila Bair emailed me saying she’d have the matter looked into. Fifteen months later, the U.S. Office of Personnel Management (OPM) concluded that the criterion used for my rejection was “improper” and that “OPM has required the FDIC to take corrective steps.” Thousands of experienced applicants for hundreds of critical open positions were summarily rejected, as I was.

I haven’t heard from Chairman Bair since.

Letter to the Senate Banking Committee on IndyMacMerit Guidance R-Memo 1-27-04