The third largest this year...
Fortune's Brian O'Keefe takes a big look at Bobby Lowder... it's a cool read...
We'll try to confirm or contest anything O'Keefe unearthed in the next few days...
Nothing like breaking down the loss of $164-million in paper as Colonial stock went in the toilet...
From O'Keefe:
Federal investigators are tightlipped, but they appear to be focusing on Colonial's warehouse-lending business. Warehouse lending involves extending short-term lines of credit to mortgage brokers so that they in turn can make individual loans, which are then sold, packaged, and securitized.
Over the past decade Colonial had become the biggest warehouse lender in the country. Warehouse lending allowed Colonial to rake in generous fees for keeping loans on its books for a short time. But it required immense amounts of paperwork to track the underlying loans. And that paper trail could be crucial evidence for investigators.
"What they're looking for is whether or not Colonial was way undercapitalized before they submitted the TARP application, and as a consequence was the balance sheet fraudulent," says Tony Plath, a banking professor at the University of North Carolina at Charlotte and an industry consultant. "That's one issue: Did they write down their loan book fast enough? And then No. 2, Did they take proper collateral with the loan positions they had outstanding to brokers? And I'm guessing they didn't."
Oops...Here was the latest revelation in the whole Lowder-Colonial implosion...
Now, the former chairman is getting sued for $50-million that we're sure he doesn't have just laying around in small bills these days...
((HT: WNCF-TV/Montgomery))
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