This was allowed because the same fellow at OTS was in charge of monitoring IndyMac as had monitored Charles Keating’s operations many years ago. Amazing, but true.

A senior bank regulator was removed from his job after being accused of helping mortgage lender IndyMac Bancorp alter its records so it appeared to be in better shape — weeks before it was seized by the government.

The Office of Thrift Supervision has reassigned its top West Coast official, Darrel Dochow, who was also a controversial figure in the regulatory lapses surrounding the savings-and-loan crisis of the late 1980s.

[snip]

In his letter, the inspector general singled out Mr. Dochow, director of the OTS West Region, for personally approving IndyMac’s request to backdate the capital injection in a phone call with the bank’s chief executive on May 9, 2008.

As chief of regulation and supervision at the Federal Home Loan Bank Board, Mr. Dochow had a role in the savings-and-loan crisis, which led to the closures of hundreds of thrifts nationwide. An aide told Mr. Dochow in 1987 that Charles Keating Jr.’s Lincoln Savings & Loan Association “is operating in an unsafe and unsound manner,” according to a 1989 Wall Street Journal article. But Mr. Dochow and other regulators held off on a crackdown.

Lincoln later collapsed, costing taxpayers billions of dollars and triggering a political scandal for the “Keating Five” senators who had intervened with regulators on the thrift’s behalf. Mr. Dochow was demoted in the wake of the scandal, but worked his way back up the OTS hierarchy.