The criminal investigation into the collapse of Colonial Bank continues, according to federal investigators. Colonial Bank spectacularly crashed and burned in August of 2009. It was the largest bank failure that year, and the largest ever of an Alabama-based bank. Actually it was the 6th largest bank ever to fail in the United States, costing the FDIC’s Deposit Insurance Fund an estimated $2.8 billion. The FDIC sold the remaining assets of Colonial to the strong North Carolina-based BB&T.
The fraud investigation seems to be centered on Colonial’s Florida mortgage operation. Last month, two officers of that mortgage division pled guilty to criminal shenanigans. Further, they have agreed to testify for the government in the April trial of the mortgage division’s president.
The much discussed question in Alabama is whether former Colonial CEO Bobby Lowder will be indicted. Some say his legal exposure comes from signing off on the public filings of the Florida mortgage operation. The filings were bogus, but it has not been proven that Lowder had knowledge of that.
Lowder’s reputation as a micro manager makes some believe that he must have known what was going on in the rotten Florida operation. But again, it’s only speculation at this point.
However, Lowder does continue on the Board of Trustees at Auburn University, albeit with diminished influence. He no longer has a bank with which to make huge loans to other members of the Board of Trustees.
But he does serve as chairman of the finance committee of the board. Kind of ironic, isn’t it, that the guy who ran a large bank into the ground now presides over the finances of one of the state’s major universities.
William Bruce is an Accredited Business Intermediary and Appraiser serving business buyers and sellers in the Southeast.