Guaranty Financial Group told to turn over to FDIC for receivership

July 27, 2009 by · Leave a Comment
Filed under: Bank Failure 

Interesting little article on the 2nd largest bank in Texas being shut down.  From the article, it looks like they made a number of loans to home-builders during the recent housing bubble.  Many of these are now into default, reducing their capital level below the prescribed regulation.   This is a large failure, the bank had $16 billion in assets at last check.  That is going to put more draw on the FDIC’s already limited resources with the multitude of bank failure in 2008 & 2009.  What I did like about this is the fact that the bank was first given some time to bring itself into regulation before it was ultimately shut down, that is the trend I want to see.   I don’t like having banks play around with the accounting rules when they have obviously have too much liability for themselves and their depositors.  Strong banks must survive and the weak one will be consolidated.

News (Bloomberg):

Guaranty Financial Group Inc., the Texas bank spun off in 2007 by a forest products company, may become the biggest lender to collapse this year, wiping out investments by billionaire Carl Icahn’s funds and Omni Hotels owner Robert Rowling.

Read more