by Calculated Risk on 8/13/2009 10:36:00 PM

Form Bloomberg: Bank of America Wins Order on Colonial Bank Assets

U.S. District Judge Adalberto Jordan in Miami issued the order after Bank of America sued Colonial yesterday in Miami, claiming Colonial is holding the cash and loans as a custodian for Ocala Funding Inc. The order notes that the suit relates to more than 6,000 mortgages worth more than $1 billion.

“To the extent that the interests of the public are implicated in this case, they weigh in favor of requiring Colonial to honor its contractual obligations and avoiding what would amount to a $1 billion heist,” the judge said in an order posted online today.

In another action, from Ocala.com: Judge ties up over $4 million in Taylor Bean account

[Henley Holdings LLC] filed suit in the U.S. District Court for the Middle District of Florida, accusing Taylor Bean of breach of contract. It also sought temporary injunctive relief, asking the court to force Taylor Bean to immediately deposit the $4.7 million into an account at a separate bank.

Henley was worried because Taylor Bean had essentially shut its doors, and because if Colonial failed, only $250,000 of Henley money would be covered by FDIC insurance.

That same day, a federal judge granted Henley's request and ordered at least $4.4 million of the company's funds put into an interest-bearing account within the court registry.

Court records show that Taylor Bean turned over that amount the next day.

What is interesting about the second action is that apparently Colonial Bank disclosed a new FDIC Cease & Desist order dated Aug. 11th. I'm told the FDIC order instructs Colonial to obtain FDIC approval for most activities, requires "prompt and unrestricted access" to all bank documents and employees, and requires proceduces to prevent the destruction of any bank documents.