Alabama regional lender, Colonial Bank, just became the 6th largest bank failure in U.S. history and the largest since Washington Mutual last year.

Regulators seized Colonial last Friday, selling the bank’s deposits and assets to their competitor BB&T. Colonial was founded by real estate developer, Robert E. Lowder in 1981. The bank stayed true to its roots, right to the end (of the housing bubble).

In a 2006 interview, Lowder said, “We’ve always been a real estate bank. We understand real estate lending. For us, we think it’s a good safe market to be in.” Evidently, they didn’t understand the market as well as they thought. The bank sunk under the weight of $1.7 billion in losses on bad real estate loans.

The real question regarding the failure of Colonial, is what this will do to the Deposit Insurance Fund (DIF) maintained by the FDIC.

The FDIC Deposit Insurance Fund started 2008

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“You’ve got to try the crab cakes,” I told Steve McDonald. “I live in Baltimore. Why the hell would I come to Florida for crab cakes?”  We had just concluded a full day of meetings for the Investor’s Daily Edge quarterly editors’ conference and were taking our seats around the table at Dada, one of the finer establishments in Delray Beach.

The atmosphere is casual and eclectic and the food is some of the finest gourmet fare you will find anywhere. If you’re ever in this part of South Florida, don’t miss it. And order the crab cakes (Even if you think you’ve already tasted the best in the world).

But I could tell that Rusty McDougal, our resident natural resources expert, had more on his mind than a great meal and the Alexander Valley cabernet the waiter was pouring in his glass. He wanted to know

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