Under the terms, when loan balances swelled to 115 percent of the original amount, or when the time came for the interest rate to reset, it spelled payment shock for borrowers. Monthly installments instantly skyrocketed, often to double or triple the original amount.

To be sure, BankUnited had plenty of company among large, prestigious lenders in its love affair with option ARMs. The same toxic loans dragged down Washington Mutual, Downey Savings and even Wachovia, which bought Golden West at its peak.

PLUNGING VALUES

What no one seemed to figure on at the time was what would happen when the housing boom ended. Rising mortgage balances and plunging home values conspired to put many borrowers under water, fueling a tidal wave of defaults.

The worst part was that many of BankUnited's option ARMs were based on a borrower's ''stated income.'' These mortgages, sometimes called ''liar loans,'' were approved based on how much customers said they earned, without documentation to back it up. Sometimes the bank didn't bother to verify a borrower's assets or employment either.

Camner's rationale was that borrowers had solid credit scores and many were required to buy mortgage insurance.

But that wasn't enough to skirt the catastrophe.

During the boom, BankUnited sold many of its loans to be packaged into securities, feeding a voracious appetite for this product on Wall Street. That made them someone else's problem -- but ultimately everyone's as an overheated real estate market imploded, dragging the nation into its current economic quagmire.

With Camner doing so much business on Wall Street, the company bought an interval ownership unit at the St. Regis Hotel New York, five-star digs with butler service, to put him up.

But once Wall Street soured on mortgages, the bank had to keep the loans on its own books. And regulators allowed the risky loan concentration until it was too late.

With its portfolio of option ARMs burgeoning, BankUnited's profits soared at first. Earnings tripled to a record $83.9 million for fiscal 2006 from $27.5 million the prior year.

ACCOUNTING RULES

Under accounting rules, the bank could book the income for the full mortgage payments even when a borrower paid only the minimum. That boosted BankUnited's bottom line -- and under Camner's compensation agreement, which was tied to asset growth and profits, it fattened his bonuses.

As its star was rising, Bank United was getting generally good marks from federal regulators on loan quality, according to bank officials. And BankUnited's board -- many of them Camner's friends -- supported him.

''The regulators were giving the bank high grades, so where do you look to find problems?'' asked long-time board member Marc D. Jacobson.

``When all the information you are getting from the regulatory people, the top accountants, external auditors, internal auditors -- these are all credentialed people -- when they're all telling you you're good and you can't point to any problems, where do you look?''

Jacobson added: ``When everything is going smoothly, there are no red flags, and by the time the problems show up, it's too late.''

A spokesman for the Office of Thrift Supervision, which has been widely criticized for lax regulation during the housing boom, declined to comment on the agency's oversight.

By 2007, with the housing market collapsing, the bank's problems began to fester.

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