Colonial Bank Seized By FDIC

Colonial Bank, Alabama’s second largest bank, was seized by FDIC on Friday for insolvency. Colonial is the sixth largest bank to fail in our nation’s history, and is the largest this year.

The FDIC sold Montgomery-based Colonial's deposits, offices and $22 billion of its $25 billion in assets to BB&T Corp. of Winston-Salem, N.C., pushing that bank into eighth place in deposits nationwide. The FDIC will keep the other $3 billion in assets, presumably Colonial's most troubled loans.


The FDIC said offices will reopen on schedule as branches of BB&T, and customers can keep writing checks, using debit cards and using automated teller machines this weekend. Loan customers should make payments as usual. All deposits, even those above the FDIC's insurance levels, were bought by BB&T.

If you have questions or concerns about Colonial Bank’s seizure, you may call the FDIC from 9:00 AM to 6:00 PM at 1-800-405-8739 or visit http://www.fdic.gov%20/

BB&T is now Alabama's 4th largest bank.

This isn’t completely unexpected, as they have been having “some problems” in recent weeks.

Colonial's problems began to spin out of control earlier this year when it announced it had to raise $300 million in private money before it could access $550 million in federal bank bailout cash.

Taylor, Bean & Whitaker Mortgage Corp. of Ocala, Fla., led a group of mortgage companies that proposed to put in that money, but both sides pulled the plug Aug. 1, the same day Colonial announced it lost $606 million in the third quarter and warned it might not continue as a going concern.

On Aug. 4, federal agents raided Colonial's warehouse mortgage headquarters in Orlando and Taylor, Bean & Whitaker headquarters as part of a criminal inquiry. Later that week, the mortgage firm collapsed.

Bank of America Corp. sued Colonial Wednesday, saying Colonial was improperly holding $1 billion in assets that belonged to an affiliate of Taylor, Bean & Whitaker. A judge ordered Colonial to freeze those assets Thursday.

Hopefully, the sale to BB&T won’t mean many problems for Colonial depositors… and they do pledge that all Colonial branches will open as BB&T on Monday. This is something we’ll have to watch. Not good, people, not good. And it’s possibly indicative that the whole “our recession is over” is more than a bit optimistic. How can we be out of a recession if the causes of that recession have not been addressed?

Again… this is something to watch.

UPDATE: Indications that the economy is still weak and we should be cautious.
http://www.ft.com/cms/s/0/88eac7fc-88fa-11de-b50f-00144feabdc0.html?nclick_check=1

UPDATE: Despite unemployment rates that are expected to fall, the "hire rate" (a snapshot of new hires as a percentage of total employment) is at it's lowest point in recorded history.
http://article.nationalreview.com/?q=N2Y0ZGUyYWVmZWU0ZWJlMGNjYTA0MTNlMWQ1NjA0ODg=