Government watchdogs have issued two more reports criticizing federal banking regulators' oversight of failed banks.

The reports, which were issued last week, said regulators could have been tougher with the $286 million-asset MagnetBank in Salt Lake City and the $223 million-asset National Bank of Ocala in Florida, which both failed on Jan. 30.

Watchdogs for the federal banking agencies have so far issued 22 so-called material loss reviews this year, which in most cases have found fault with the oversight of banks and thrifts.

In the case of MagnetBank, the Federal Deposit Insurance Corp.'s inspector general said the agency "provided ongoing supervision" of the institution but "could have provided additional supervisory attention and taken additional action."

The report said the agency should have paid closer attention during a 2007 exam to the bank's wholesale funding and concentration in commercial real estate lending, which contributed to its failure.

In an Aug. 20 letter responding to the report, Sandra Thompson, FDIC supervision director, agreed that a closer look at the bank's portfolio "could have led to earlier supervisory action."

Meanwhile, the Treasury Department's inspector general criticized the Office of the Comptroller of the Currency's oversight of Ocala, which failed largely as a result of construction and development loan losses.

The report said that even though the OCC "identified problems early at the bank," the issues were not addressed promptly, and the bank continued to receive a Camels rating of 2 from 2005 to 2006. "This proved to be an ineffective strategy, as these problems persisted and grew worse until the bank ultimately failed," the watchdog said.

In an Aug. 25 letter, Comptroller John Dugan noted the report's finding that "there were shortcomings in our execution of the supervisory process. We agree and will reinforce certain principles to our examining staff."

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