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Colonial Bancgroup Inc. Goes Down

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BB&T Said to Be Taking Colonial in Year’s Biggest Bank Failure

By David Mildenberg

Aug. 14 (Bloomberg) -- BB&T Corp., the North Carolina lender that bought back a $3.1 billion stake from the U.S. government, is taking over offices and deposits of Colonial BancGroup Inc., according to a person familiar with the matter.

Colonial, Alabama’s second-largest bank, is being closed by regulators today, the person said, becoming the largest U.S. bank failure of 2009 after an expansion into Florida saddled the lender with more than $1.7 billion in soured real-estate loans.

Colonial said last month there was “substantial doubt†it could survive and on Aug. 7 said its warehouse mortgage-lending business is the target of a U.S. criminal probe. The Securities and Exchange Commission issued subpoenas for documents related to accounting for loan loss reserves and participation in the Troubled Asset Relief Program, the bank said.

A call to Colonial spokeswoman Merrie Tolbert wasn’t immediately returned. “The FDIC does not comment on open institutions,†agency spokesman David Barr said in an e-mail.

Regulators are closing banks at the fastest pace in 17 years amid mounting losses on real-estate loans in the worst economic crisis since the Great Depression. The FDIC is offering to share losses with buyers of failed banks, reviving a practice used during the U.S. savings-and-loan crisis in the late 1980s.

BB&T on June 17 redeemed preferred shares that had been sold to the U.S. Treasury under TARP, joining nine other banks permitted to quit the fund.

Second-Quarter Loss

Colonial posted a $606 million second-quarter loss, its fifth straight deficit, mostly because of soured loans to developers and home builders in Florida. A planned $300 million injection by an investor group collapsed and the bank hasn’t met capital requirements to qualify for money from TARP, the $700 billion U.S. bailout program for financial firms.

Colonial was founded in 1981 in Montgomery by Chief Executive Officer Bobby Lowder, who oversaw acquisitions in Florida, Georgia, Nevada and Texas, where economic growth outpaced Alabama. Lowder stepped down as chairman in January after failing to raise capital as required by regulators.

BB&T has declined 10 percent in the past year, compared with a 30 percent fall in the 24-member KBW Bank Index. Colonial has declined 94 percent.

Colonial shares did not open this morning in New York Stock Exchange composite trading.

To contact the reporter on this story: David Mildenberg in Charlotte at dmildenberg@bloomberg.net

http://www.bloomberg.com/apps/news?pid=206...id=aXsSaA6DJw_4

Edited by MOP

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Still nothing on Jordan then? :P

Still waiting for Citi to implode.

If I had to start a new thread every time Jordan goes down, I wouldn't be able to keep up.

I shall just concentrate on banks going down.

Edited by MOP

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Amazing sign of the times that this has been up for 2 hours, attracted 2 replies, and nearly fallen off the front page.

I think it was MOP that recently posted a list of the US banks that had gone bust over the past few years - if this had happened in mid 2007, there'd be a 20 page thread on it by now.

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Another sign of worry in the banking industry?

1432 GMT [Dow Jones] BBH's Marc Chandler notes that secondary credit to depository institutions (those that don't meet ordinary requirements for the primary credit facility) stood at a record in week ending Aug. 12 - $805M, or 3x last October's levels. Chandler notes this isn't a big amount, of course, yet data seems "to be warning of some problems (in) the regional bank/thrift space." (ML)

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Clearly another green shoot.

Good to see all this positive news! :lol:

:lol: The Yanks need to get with the programme, it's obvious that they need a good dose of Gordo's special manure on their green shoots.

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Amazing sign of the times that this has been up for 2 hours, attracted 2 replies, and nearly fallen off the front page.

I think it was MOP that recently posted a list of the US banks that had gone bust over the past few years - if this had happened in mid 2007, there'd be a 20 page thread on it by now.

Bump as it is the biggest bank failure of the year.

Tbh we have had rather a lot of bank failures in the last year, not like they bring down the system anymore.

Until AIG or Citi go that is....

Or you could always start a thread saying Goldman Sachs has gone under, bet you would get a few replies for that one ;)

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