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State or federal regulators raised concerns about various aspects of Westsound Bank’s lending practices six times between 2000 and 2007, but regulators chose not to downgrade the bank’s overall rating until October 2007.

Had the Federal Deposit Insurance Corp. considered downgrading the bank’s rating after a critical 2006 examination, it might have curbed the Bremerton bank’s lending excesses and spurred the leadership to fix the problems, according to the FDIC’s inspector general (IG).

“In hindsight, earlier, more aggressive supervisory action” against the bank “could have mitigated, to some extent, the losses” to the FDIC, the IG said. The IG’s post-mortem report, published just months after Westsound’s May 2009 failure, is the only official review of what caused the bank to fail.

Even though the bank failed nearly four years ago, state and federal regulators have refused to provide records requested by The Seattle Times that could shed light on what happened.

Citing exemptions to public records disclosure, regulators also have blocked separate efforts in federal court by The Seattle Times and an attorney for Westsound’s former CEO to make public the 2006 and 2007 bank examinations.

— Sanjay Bhatt