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Colonial BancGroup becomes biggest bank failure of 2009 (2 failures by 7pm EST)

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UpInArms Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Aug-14-09 06:00 PM
Original message
Colonial BancGroup becomes biggest bank failure of 2009 (2 failures by 7pm EST)
Source: CBS Marketwatch

SAN FRANCISCO (MarketWatch) -- Colonial BancGroup Inc. became the largest bank failure this year Friday after the Federal Deposit Insurance Corporation seized the struggling Alabama-based lender and sold it to BB&T Corp.

The deal will knock roughly $2.8 billion off a pool of money, known as the Deposit Insurance Fund, which the FDIC maintains to guarantee bank customer deposits.

BB&T (BBT 28.45, +0.22, +0.78%) agreed to assume all of Colonial's deposits, which
totaled about $20 billion at the end of June, the FDIC said. Depositors of Colonial will automatically become depositors of BB&T and customers can continue accessing their money by writing checks or using ATMs and debit cards, the regulator stressed.

Colonial had $25 billion in assets at the end of June. That makes it the largest bank failure this year, exceeding the collapse of Florida's BankUnited Financial (BKUNQ 0.30, -0.01, -1.64%) , which had less than $13 billion in assets. See full story.

BB&T agreed to buy about $22 billion of Colonial's assets. The FDIC said it will hold on to the rest - about $3 billion worth - and will try to sell them later.

The FDIC and BB&T will share losses on $15 billion of Colonial's assets. Loss-sharing deals have become common since the financial crisis struck last year, as the FDIC tries to encourage more stable banks to take over failing institutions.

This year, 74 banks have failed this year as a lingering recession and surging unemployment leaves the industry nursing heavy loan losses. More than 1,000 banks may fail during the next three to five years, RBC Capital Markets estimated in February.

Read more: http://www.marketwatch.com/story/colonial-may-become-bi...



Failed Bank List

Bank Name					City		State	CERT #	Closing Date	Updated Date
Colonial Bank Montgomery AL 9609 August 14, 2009 August 14, 2009
Dwelling House Savings and Loan Association Pittsburgh PA 31559 August 14, 2009 August 14, 2009
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susu369 Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Aug-14-09 07:25 PM
Response to Original message
1. Interesting
Word must have hit the street earlier in the week because yesterday and today our bank was overrun with customers opening new accounts and wiring money out of Colonial to us.
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Lucky Luciano Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Aug-14-09 08:02 PM
Response to Reply #1
3. The writing was on the wall and deadly Friday was approaching
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susu369 Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Aug-15-09 07:32 AM
Response to Reply #3
7. Oh, yes
From one customer, I even heard the news was coming directly from the Colonial officers (before Friday).
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UpInArms Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Aug-14-09 09:19 PM
Response to Reply #1
5. hiya susu!
it's good to see you again!

:hug:
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susu369 Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Aug-15-09 07:29 AM
Response to Reply #5
6. Hiya back
I'm here, just don't post much. Always try to read your postings - you are so important at DU.



:thumbsup:
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FarCenter Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Aug-14-09 07:46 PM
Response to Original message
2. The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $2.8 billion.
From the press release at http://www.fdic.gov/news/news/press/2009/pr09143.html

The Pittsburgh bank is a pittance by comparison. The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $6.8 million.

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OnlinePoker Donating Member (837 posts) Send PM | Profile | Ignore Fri Aug-14-09 08:11 PM
Response to Original message
4. Bad Summer for FDIC
Edited on Fri Aug-14-09 08:22 PM by OnlinePoker
From 1 July until today, FDIC has been hit for $6.147 Billion in costs related to bank closures. It will be interesting to see 2nd quarter results (to 30 June) to see how close to zero the FDIC fund is. I'm sure they must be ready to tap the $30 Billion credit line they've got with Uncle Sam if they haven't already. For years, they never even collected the insurance premiums from member banks because they figured they had enough to weather any storm. Short-sighted like most organizations during the Bush administration.

Edit...

Oops...make that $7.015 Billion as 3 more have just shut, 2 in Arizona and one in Las Vegas (For over $700 million).
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