Much like other oversight reports released in the aftermath of the financial crisis, the Federal Deposit Insurance Corp.'s inspector general said the agency could have been tougher with the $2 billion-asset ShoreBank before its August failure.

The watchdog said ShoreBank, a well-connected community development lender in Chicago, suffered from high commercial real estate concentrations and poor underwriting. While the FDIC identified risks at ShoreBank, the IG said, the agency could have acted sooner.

"Taking a more aggressive supervisory approach earlier could have influenced ShoreBank's board and management to constrain excessive risk and limit expansion into higher-risk areas, and imposed a more structured means to ensure the board and management affirmatively responded to examiner concerns at a critical time," the report, which was released Wednesday, said.

Oversight reports are required in failures causing a "material loss" to the Deposit Insurance Fund, and such critiques of all the regulators — saying they could have been more aggressive — have become routine. Yet ShoreBank achieved some fame for allegations by Republican lawmakers that its ties to Democrats unduly helped its capital search. Ultimately, when it failed, its operations were sold to an entity formed by some of the same backers that had tried to save ShoreBank.

The IG, which had been asked by GOP lawmakers to investigate the allegations, said a later report would address whether there was any inappropriate influence.

In a Feb. 25 letter responding to the report, Sandra Thompson, the FDIC's director of supervision, said the agency had enhanced its CRE oversight to deal with the risks of institutions like ShoreBank.

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