The Office of Thrift Supervision's watchdog said the agency was ineffective in regulating BankUnited before the Coral Gables, Fla., thrift's 2009 failure and improperly allowed BankUnited to backdate a capital infusion.

The Treasury Department's inspector general said in a report that while the $13 billion-asset thrift's failure stemmed largely from high-risk lending, the OTS failed to clamp down on BankUnited's aggressive strategy.

"OTS did not impose limits or restrict BankUnited's concentration and growth in high-risk option" adjustable-rate mortgages, said the report, which was made public Thursday.

The inspector general report, which was required because the failure caused a "material loss" to the Deposit Insurance Fund, said the OTS also "did not adequately assess" poor underwriting at the thrift and failed to address BankUnited's "inaccurate risk-weighting."

"We also found that OTS improperly directed the thrift to backdate a capital infusion from its holding company," the IG said.

The report followed past criticism of the agency for allegedly encouraging backdating at troubled thrifts, which forced the dismissal of two senior OTS officials, former West Regional Director Darrel Dochow and former Senior Deputy Director Scott Polakoff.

Lawmakers are close to finalizing a plan in the regulatory reform bill to merge the OTS into the Office of the Comptroller of the Currency.

When it failed, BankUnited was acquired by a team of investors led by former North Fork Bank head John Kanas.

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