Major Bank Fails in South

Colonial's Assets Sold to Rival in 6th-Largest Collapse on Record; Blow to FDIC

Regulators seized Colonial Bank on Friday after reaching a deal to sell its branches, deposits and most of its assets to rival BB&T Corp. in the sixth-largest bank failure in U.S. history.

The demise of Colonial, a regional bank based in Montgomery, Ala., with assets of $25 billion and 346 branches in five states, signals an ominous phase in the nation's banking crisis. Even as some large institutions show signs of stabilizing, a slew of regional lenders remain on the ropes. And regulators appear to be giving up hope that some of them can be saved.

The FDIC is going to need to tap their lifeline..."The FDIC agreed to share losses with BB&T on $15 billion of the $22 billion in assets included in the deal." and yet "Colonial's collapse will cost the FDIC's dwindling deposit-insurance fund an estimated $2.8 billion, the agency said. The fund stood at just $13 billion as of March." So they are going to share $15 Billion in losses, and only had $13 billion as of March...and many banks have shuttered since then. Doesn't take a mathematician to add this one up...time to sell some more T-bills...China will keep buying, right?