Colonial became the largest US bank to fail this year after it was declared bankrupt and had the bulk of its assets taken over by rival BB&T, the government banking insurer said Friday.
After suffering no bank failures at all in 2005 and 2006, the US banking system saw three banks going under in 2007, followed by 25 in 2008.
With its bankruptcy Friday, Colonial became the 74th FDIC-insured institution to fail in the United States so far in 2009 - highlighting the extreme stress that the global financial crisis has placed on US banks.
As of the end of June, Colonial Bank's total assets were $25 billion and its total deposits were some $20 billion.
While BB&T will obtain around $22 billion dollars in assets, the FDIC said it would keep the rest "for later disposition."
FDIC Chairman Sheila Bair assured that while the last 18 months had put unprecedented strain on the financial system, the agency was performing as intended.
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