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.Somehow I doubt it will remain the largest bank failure of the year, there's still four and a half months to go. As I said earlier this morning, there are still hundreds of banks in financial trouble.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.
The forced consolidation of the financial industry continues. Big banks get bigger and take over branches. The toxic debt gets passed to taxpayers. The game of three-card monte continues.
There will be many, many more failures like this in the weeks and months ahead.
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So, do you have a solution?
Enforcing the regulations already in place, turn the de facto nationalization into real receivership, and get rid of the CEOs and executives that turned our economic system into a derivatives craps table.
Sure, that'll help.
How 'bout we do away with the whole boom bust cycle?
Yeah.
Look, despite my "statist" leanings, Fed monetary policy is a disaster and has been since well before Alan Greenspan.
The Fed needs a serious overhaul in addition to the banks.
The guy who founded Colonial is Bobby Lowder. Guess what? He retired in May. I'm not surprised there is a criminal probe into the banks' loans. He sits on the Board of Trustees at my former university and he did a lot of back room, underhanded stuff then.
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