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from Rolfe Winkler:

Talking Colonial

from Rolfe Winkler:

Colonial, gone … Did FDIC tip its hand?

FDIC will seize Colonial and sell its assets to BB&T.  This is the largest bank failure since WaMu last fall.  Reuters:

The Federal Deposit Insurance Corp is taking Colonial BancGroup Inc into receivership and will sell the struggling lender's branches and deposits to BB&T Corp, Dow Jones said, citing a person familiar with the situation.The deal was approved by the FDIC on Thursday night and is expected to be announced later on Friday, the news agency reported.

from Rolfe Winkler:

Why the death of a lender matters

Earlier this evening, Reuters' Jon Stempel reported that Taylor, Bean & Whitaker has ceased lending.  That makes TBW #351 on the Mortgage Lender Implode-o-Meter.  Questions swirl about what happened.  One possibility seems to be that the company just couldn't manage its own growth.  As other lenders disappeared and TBW's FHA business exploded, it's possible they just didn't have sufficient internal controls to insure loans met FHA underwriting standards.  When the company failed to file its annual financials with the government, things started to unravel.

It's not clear how problems at Colonial Bank may have impacted the situation.  TBW was basically dependent on Colonial for all its funding.  The company tried to buy Colonial, injecting $300m of capital in order to make the latter eligible for $550m of TARP funds.  That would have kept the gravy train going.  But the deal fell apart late last week when Colonial reported dismal results while issuing a going concern warning.