As banks gambled on the risky mortgages that helped create the worst financial crisis in generations, the federal government handed out millions of dollars in bonuses to regulators at agencies who missed or ignored warning signs that the system was on the verge of a meltdown.

The bonuses, detailed in payroll data released to the Associated Press, are the latest evidence of the government’s false sense of security during the go-go days of the financial boom. Just as bank executives got bonuses despite taking on dangerous amounts of risk, regulators got taxpayer-funded bonuses for doing "superior” work monitoring the banks.

The bonuses, released in response to a Freedom of Information Act request, were part of a reward program little known outside the government. Some government regulators got tens of thousands of dollars in perks, boosting their salaries by almost 25 percent. Often, though, rewards amounted to just a few hundred dollars for employees who came up with good ideas.

During the boom from 2003 to 2006, the three agencies that supervise most US banks – the Federal Deposit Insurance Corp., the Office of Thrift Supervision, and the Office of the Comptroller of the Currency – gave out at least $19 million, records show.

Most money was spent recognizing "superior” performance. The largest share, more than $8.4 million, went to financial examiners, employees and managers who scrutinize internal bank documents and sound the first alarms. Analysts, auditors, economists, and criminal investigators also got awards.

After the meltdown, the government’s internal investigators surveyed the wreckage of nearly 200 failed banks and repeatedly found that those regulators had not done enough:

• "OTS did not react in a timely and forceful manner to certain repeated indications of problems,” the Treasury Department’s inspector general said of the thrift supervision office following the $2.5 billion collapse of NetBank, the first major bank failure of the economic crisis.
• "OTS examiners did not identify or sufficiently address the core weaknesses that ultimately caused the thrift to fail until it was too late,” the Treasury’s inspector general said regarding IndyMac, which in 2008 became one of the largest bank failures in history. "They believed their supervision was adequate. We disagree.”

Regulators said it’s unfair to use missteps, seen with the benefit of hindsight, to suggest any of the bonuses were improper.

"These are meant to motivate employees, have them work hard,” thrift office spokesman William Ruberry said.

At the OCC, spokesman Kevin Mukri noted that the national banks his agencies regulate generally fared better than others during the financial crisis.

David Barr, a spokesman for the FDIC, which handed out two-thirds of the bonuses during the boom, had no comment.