Alabama's Colonial Bank has collapsed in the sixth-biggest bank failure in American history, the Wall Street Journal reports. The lender, which had assets of $25 billion and 346 branches in five southern states, was an aggressive mortgage lender in overheated markets like Florida, and its failure will cost the FDIC $2.2 billion. Colonial's branches, deposits and remaining assets have been sold to Rival BB&T, and customers have been told to expect business as usual.
Colonial is the 77th bank to fail so far this year and the largest since WaMu went under and was sold to JP Morgan in September. The bank failed to qualify for TARP assistance, and insiders say federal regulators started looking for a buyer when the Justice Department began probing alleged accounting irregularities. Apart from BT&T, few emerged, despite the FDIC's offer to protect investors from losses. "No one wanted to touch this thing," one analyst says.