WASHINGTON — The failure of $2.3 billion-asset Superior Bank in Hinsdale, Ill., is less than five days old, but regulators and bank officials have already started pointing fingers at each other over who is responsible for the largest thrift collapse in more than five years.

Though the Federal Deposit Insurance Corp. has not issued an official estimate, experts say resolution of the failure could end up costing taxpayers hundreds of millions of dollars.

The Office of Thrift Supervision blamed the thrift’s management, its auditors, Ernst & Young, as well as its owners — the prominent Pritzker family, which owns the Hyatt Hotel chain, and New York developer Alvin Dworman — for backing away from a capital plan that the agency said could have restored the institution.

Other sources contended that regulators could have salvaged the situation and acted precipitously in closing and taking control of the institution. But analysts said all parties deserve some blame, and that the thrift should have been shut long ago.

Regulators, too, are already blaming each other. The FDIC said Monday that it raised several concerns about Superior two-and-a-half-years ago and that the OTS had denied its request to join an exam. This revelation came amid anticipation that lawmakers on Capitol Hill will soon call for hearings on Superior’s failure.

The OTS touched off the blame game Friday night, saying the bank had become critically undercapitalized because of a host of problems.

“It had poor internal controls, poor risk management, and its lending and accounting practices were improper,” said Scott Albinson, managing director of supervision with the OTS, in an interview. “Ultimately, the board and management did not properly oversee the activities of Superior Bank, which was engaging in a high-risk business strategy.”

Regulators cited the bank’s overreliance on residual interests — the interest retained after the securitization and sale of loans. Residuals are a notoriously hard asset type to value and helped cause the 1999 failure of the First National Bank of Keystone in West Virginia, the last comparable failure.

The FDIC said that it attempted to join an exam for Superior early in 1999 because it was concerned about these assets.

“On a regional level, we requested to participate in a January 1999 examination — that request was based on off-site monitoring of this institution because it had a notably high growth in concentration of residual assets,” an FDIC spokesman said. “The OTS denied our participation but OTS staff did discuss exam findings with us. The OTS then lowered Superior Bank’s rating to a composite rating of ‘2’ at January 1999 examination. However, based on our off-site analysis, we lowered the composite rating for our use to a ‘3.’ ” (Exam scores are based on the so-called Camels scores that range from 1 to 5, with 1 being the best.)

An OTS spokesman declined to say whether the agency denied an FDIC request, saying only that it is “our policy not to comment on supervisory matters and discuss an institution’s ratings.”

A similar conflict occurred involving Keystone, whose regulator, the Office of the Comptroller of the Currency, denied an FDIC request to join an exam. Rep. Jim Leach, then the House Banking Committee chairman, criticized the OCC for its decision and introduced legislation that would have given the FDIC more backup authority. But that bill was never acted on.

Superior’s failure was surprising because the prominent Pritzker family had agreed in May to recapitalize the institution with a $230 million cash investment. Mr. Dworman, who owned the other 50% of the holding company, had pledged to give another $95.5 million.

But the deal fell through at the last minute.

The Pritzker family issued a statement Friday that said they were “disappointed at the outcome and intend to cooperate with the regulators,” said Harold S. Handelsman, an attorney for the Pritzker Interests. “The Pritzker Interests have been willing to make additional investments of more than $250 million into Superior Bank … that would give the bank a fighting chance to survive. However, as passive investors, we are not willing to put money down a black hole of uncertain numbers and unknown losses, which appear to be the case.”

A knowledgeable source said that the Pritzkers had been unwilling to put in the money because the reported value of the residuals had dropped steeply during the past two months.

“Since the Pritzkers submitted their proposal … along with the Dwormans in May, the valuation of the residuals, according to the bank’s own numbers in July, dropped by $232 million,” said the source, who spoke on condition of anonymity. The source said that Greenwich Capital, the investment bank financing the deal, estimated the decline at over $500 million, and as a result, “the plan couldn’t possibly have worked because the bank would have been inadequately capitalized by at least several hundred million dollars.”

Though the family sent several letters detailing its problems with the deal and offering other arrangements, those proposals were rejected, the source said. The source added that regulators turned down an offer Friday from the Pritzkers for an additional $210 million in cash, in return for which the family would have no more responsibility for the institution.

Mr. Albinson retorted that “from my perspective their organization had substantial resources and I think they would have understood the volatility of those assets and that they can change over time.”

A spokesman for Mr. Dworman did not return calls seeking comment Monday.

Though there was no official total for the cost of the resolution, analysts familiar with the bank estimated the cost would be at least $500 million.

Bert Ely, an independent analyst, said it was clear that the OTS should have closed the bank much earlier than it did.

“It’s a real black eye for the OTS,” Mr. Ely said.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.