Colonial Collapses Leaving Questions for Consumers - WTVM.com-Columbus, GA News Weather & Sports

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Colonial Collapses Leaving Questions for Consumers

By Zaneta Lowe  - bio | email | Twitter

COLUMBUS, GA (WTVM) - According to the FDIC, 74 banks have failed this year and now, Colonial Bank, is the latest and the largest on that list.

The Alabama State Banking Department is currently holding Colonial Bank, while the federally approved buyout by BB&T goes through. 

Colonial is based out of Montgomery, Alabama with 355 branches in five states including many here in Georgia and Alabama.

Today's news of the bank's failure and subsequent takeover comes just one day after a judge ordered a freeze of the banks assets, the results of a billion dollar dispute with Bank of America and an investigation into the management of Colonial's 401k services. 
   

However, it seems the writing has been on the wall for some time too.  Reports indicate the Bancgroup has lost $1.67 billion dollars over the last 5 quarters. 

So where does this leave Colonial Bank's customers, or really, any banking customer in a similar situation?

We talked to experts and bank customers to find out.

"No clue at all, I just happened to be here this day," says Michele Williams, a Colonial Bank customer in Columbus when asked if she'd heard anything about the possibility of her bank failing.

Newsleader 9 got similar reactions when talking to other customers outside of local Colonial branches.  However,  there are some questions customers may want to ask right now, including what's the best way to protect their money?

"The biggest thing from a consumer prospective is if you have deposits at that bank, make sure you're under the FDIC insured limits," says Clinton Gilmore, a Certified Public Accountant with Robinson and Grimes.

We talked to Gilmore about what any consumer should do if their bank is on the brink of collapse.

Gilmore says some of the rules regarding FDIC insured limits have changed over the past year, and consumers will want to pay close attention.

"So if you've got a money market or interest bearing account, you're at $250,000 limit, per account.  Whereas, if it's non-interest bearing like a checking account, it's unlimited, but that expires at the end of 2009," explains Gilmore.
              

For investors, Gilmore says now's a good time to do some research and get more information about your financial institution's investments, including what they're doing to get possible bad loans off the books.

"If I were a shareholder, I would be concerned about how they're taking steps, the management is taking steps to quickly identify their areas and to adjust and to allow, make allowances and provisions immediately for any bad news that may be coming down."

Despite not hearing any of Friday's news about Colonial, Williams was ironically visiting the bank to pull her money out of a cd.

"It's gonna be out in a safe place, it will not be put back in a bank," says Williams.

We ask her if there's any particular reason why? 

Williams replied, "Kinda don't trust banks in general right this minute."        

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