WASHINGTON — The Office of Thrift Supervision — already slated for extinction by its bosses at the Treasury Department — could face even longer odds of survival if IndyMac Bancorp fails.

Lawmakers are likely to call agency officials to Capitol Hill to explain how the $32 billion-asset Pasadena, Calif., thrift company became the industry's largest casualty.

But unlike past failures, where regulators may have accepted some blame while pinning most of it on an institution's management, the OTS could point the finger back at Congress.

Many observers said they expect the agency to note that Sen. Charles Schumer, a member of the Senate Banking Committee, contributed to customer withdrawals and complicated IndyMac's efforts to right itself when he made public statements casting doubt on the company's health.

If IndyMac fails, and speculation here continues to hold that it is likely to do so, the collapse would come at an awkward time for the OTS. Lawmakers have already begun debate on the creation of a new regulatory structure, and the Treasury has recommended the thrift agency be eliminated.

"It's never good to have a big failure on your watch," said Gil Schwartz, a partner at Schwartz & Ballen. "Everyone likes to be — especially people on the Hill — a Monday-morning quarterback on bank failures."

Lawmakers have traditionally been hard on regulators after a failure. After Superior Bank FSB's collapse in 2001, then-Senate Banking Committee Chairman Paul Sarbanes excoriated the OTS for failing to stop the $2.2 billion-asset thrift's collapse.

But IndyMac is roughly 15 times larger than Superior, and its crisis comes at a time when the markets and policymakers are worried about the health of the financial system. As such, it is likely to draw much more attention, and would automatically trigger a Treasury investigation into the activities at the bank and the proper role of its regulator.

Observers said an IndyMac collapse would lessen the agency's political standing, building support for lawmakers to eventually merge it with the Office of the Comptroller of the Currency, as the Treasury has recommended.

"You look like an ineffective regulator no matter what you did," said one bank lawyer, speaking on condition of anonymity. "If they could see this coming and didn't do anything and didn't tighten down, then they end up with blame."

The OTS would also lose one of its largest thrifts, taking a small but significant hit to its budget in the process. IndyMac accounts for roughly 4% of OTS assessments and is the agency's ninth largest institution.

While that alone would not have a disproportionate impact on the agency's funding, the concern is that other large thrifts could follow in IndyMac's wake. Several of its other top institutions — Washington Mutual, Countrywide Financial, ING Bank, Wachovia Mortgage, and E-Trade Bank — are also facing problems in the housing crisis.

"Assets leaving the OTS system clearly have an effect on the OTS assessment base, which does raise questions on the continued viability of the OTS as a stand-alone regulator," said a former OTS official, who spoke on condition of anonymity. "It raises questions as to how could they let this happen on their watch. … The real issue is did the OTS focus appropriately on all the risks in the system."

The OTS, however, defended its supervision and said the loss of IndyMac would not affect its status.

"No loss of any single institution would materially affect the operations of OTS," an agency spokesman said.

Several observers were already coming to the OTS' defense on Thursday, arguing that if IndyMac fails, its management would deserve the blame.

Tom Vartanian, a lawyer at Fried Frank Harris Shriver & Jacobson, said OTS is likely doing everything it can to save IndyMac.

"Regulators are in a position having to make very difficult judgements and it's easy to second guess those judgements after they are made," Mr. Vartanian said. "But one thing I'm sure of is whatever problems in the system exist regulators have been focused on them like lasers."

Though earlier in the week, Sen. Schumer was blaming regulators for problems at IndyMac, he changed his tune on Thursday.

"Indymac was a bank that pushed the envelope far beyond what was responsible," he said in a statement. "While the regulators should have been more vigilant, the ultimate blame for its failure lies with the bank's own management."

In letters to regulators on June 26, Sen. Schumer said the company "may have serious problems with its current loan holdings, and could face a failure if prescriptive measures are not taken quickly."

IndyMac said Sen. Schumer's comments led to withdrawals of $100 million, and steady depositor withdrawals have continued to plague the company.

IndyMac spokesman Evan Wagner called Sen. Schumer's comments "unhelpful."

"We've had a very close relationship with our regulators for a long time and have been far more transparent about our business than any other bank I can think of. I mean, we even have a blog," he said Thursday. "So, being singled out for criticism a couple weeks ago really came as a surprise and, obviously, a lot of people have started questioning their own FDIC insurance and the stability of the entire banking system since then."

But while they found Sen. Schumer's comments puzzling, most analysts said he is not the reason IndyMac is in trouble.

"Schumer may have caused some gyrations and perhaps stimulated a liquidity crisis, but the fall in the company had nothing to do with Schumer but the lending activity," said Fred Cannon, an analyst at KBW. "You can't blame Schumer for the situation. One could potentially argue that Schumer added an element of crisis to a situation that was going through an orderly process."

IndyMac announced Tuesday that it had agreed to sell most of its retail mortgage branch network to Prospect Mortgage Co. LLC. But most observers said it was unlikely to improve IndyMac's financial condition.

Details of the deal, which involved more than 60 of the thrift's non-deposit-taking branches, were not made public, but analysts said IndyMac undoubtedly sold under pressure.

"My guess is that" Prospect "got a good bargain," said Joe Garrett, a principal of the San Francisco mortgage consulting company Garrett, Watts & Co.

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