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Investigation of top bank regulator; Geithner, Soros, IndyMac, AIG connection
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How are AIG, George Soros, IndyMac Bank, and Timothy Geithner connected? Again, we must look at the Treasury Department, the banking industry and the corruption in politics in Washington D.C.
Chief Operating Officer of the Office of Thrift Supervision Scott Polakoff has been placed on leave pending an investigation into the OTS regulators' approval of cash infusion to troubled thrifts such as IndyMac bank. Treasury Secretary Timothy Geithner will be charged with leading the investigation from his department.
Scott Polakoff was named COO of OTS in November 2005 after serving 22 years with the Federal Deposit Insurance Company. He was the Regional Director of Supervision and Consumer Protection in Chicago, IL. He then accepted the position of Acting Director of the agency in February upon the resignation of John Reich. Reich told Geithner in January about the role of the OTS in the failure of IndyMac. The OTS allowed InyMac Bank backdate a capital injection totally $18 million in May 2008 that resulted in the ability to avoid regulatory restrictions for the bank. A few months later, the bank failed and the government intervened.
In January 2009, George Soros, Christopher Flowers, Michael Dell and several other powerplayers on Wall Street purchased the failed IndyMac Bank from the FDIC. The transaction was a $9 billion loss for the Fed.
Also weighing in on the controversal and costly transaction was FDIC Deputy Director James Wigand, the lead negotiator for the transaction. He said in January:
"Unfortunately, as expected, IndyMac's liability structure, combined with aggressive real-estate lending in California, had a significant impact on losses."
A thrift is an institution that takes deposits much like a traditional bank but focuses a great deal on mortgage lending. Thrifts were formerly known as "Savings and Loans." Because of their enormous focus on mortgages and because the FDIC stresses heavily their compliance with the Community Reinvestment Act, thrifts must have 65 percent of its lending in consumer loans and mortgages. Obviously the housing crisis has hit thrift banks particularly hard.
Polakoff also had a roll to play in the AIG scandal. The OTS had a responsibility to oversee the actions of some of AIG's business operations. He released a 22 page statement on March 5, 2009 regarding his department's oversight of AIG.
"It is critically important to note that AIG's crisis was caused by liquidity problems not capital inadequacy. AIG's liquidity was impaired as a result of... [AIG Financial Products] credit default sweeps associated with collateralized debt obligations, backed primarily by U.S. subprime mortgage securites."
AP Photo Susan Walsh - House Financial Services Committee Chairman Barney Frank (D-Mass), Secretary of the Treasury Timoth Geithner, Federal Reserve Chairman Ben Bernanke
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