A new report on the death of Montgomery-based Colonial Bank indicates that the company bet far too heavily on risky real-estate loans. The bank’s cause of death was real-estate gluttony, a label put on Colonial by the Federal Deposit Insurance Corp., in a report on the bank’s August failure. As was widely reported, Montgomery-based Colonial collapsed in the sixth-largest bank failure in American history. The FDIC said it now expects to lose $3.8 billion – rather than $2.7 billion – from the fall of a bank that had $25.2 billion in assets. I don’t believe the matter is closed at this juncture. Some of the issues raised by the FDIC report are quite disturbing. While the failure of Colonial Bank has hurt the entire state, most of the hurt is in Montgomery. It was a major blow to the Capital City.
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