Normally we wouldn’t rely on the phrase “third largest bank failure of the year” to impress upon you the seriousness of a situation, but since we’re at our 81st bank failure of 2009, we’re going to go with it. Meet Guaranty Bank of Texas. It has now failed.
Guaranty was the third largest bank to fail in 2009. It tied for the title of 11th largest bank failure in U.S. history with First City Bancorporation, which failed in 1988.
The estimated cost of Guaranty’s failure to the FDIC is $3 billion.
And what was Guaranty Bank’s downfall? Option adjustable rate mortgages. The bank also financed home builders in, gulp, California.
Third largest bank failure of 2009 announced [USAToday]