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BB&T Corporation Message Board

  • kisco62 kisco62 Dec 30, 2010 10:53 AM Flag

    Please explain

    How can Colonial claim bankruptcy after they were taken over by BBT?

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    • Because Colonial wasn't taken over by BBT, their FDIC insured bank subsidiary was put into FDIC receivership. Colonial(symbol CNB)was a bank holding company (BHC) and Colonial Bank was their bank subsidiary.

      The FDIC has no authority over BHCs(which hold no insured deposits). BHCs are(mis)regulated by the Federal Reserve.

      A BHC that has its FDIC insured bank subsidary seized is usually insolvent, because non bank subsidiaries/assets are typically much less than BHC liabilities.

    • As I understand, BB&T bought most of the assets and liabilities leaving the troubled stuff for FDIC and bankruptcy court to sort out the mess. They would not buy the corporation as that would step into the place of Colonial, which I doubt anyone would be willing to do.

      • 1 Reply to dhrosier
      • That is also my understanding. BBT bought selected assets (loans) and liabilities (deposits)as well as a nice Branch network, but not the stock of Colonial. As a result, BBT did not assume financial, leagal, etc. responsibility of the corporation (Colonial). The Fed. took many of Colonial's "bad" assets.

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