Free Republic

NEW YORK (Fortune) -- Guaranty Bank is hardly a household name. But the Austin, Texas-based thrift's looming failure is shaping up as a big headache for bank supervisors -- not to mention a black eye for Carl Icahn and others in the smart money set. Guaranty (GFG) could be soon seized by the government in what would be the biggest bank failure in a year that has already had 64 of them. Last week, the bank warned investors to expect a federal takeover after regulators forced a writedown of its risky mortgage investments and a bid to raise new capital...

AUSTIN, Texas -- Bank holding company Guaranty Financial Group Inc. said it is "probable it will not be able to continue as a going concern" as it restated results that include an additional $1.45 billion in write-downs. The moves, disclosed in a securities filing Thursday, set the stage for the Federal Deposit Insurance Corp. to take over operations of the company, including more than 160 branches in Texas and California. With about $15 billion in assets, Guaranty could become the biggest federally insured financial firm to fail this year. In May, the banking operations of BankUnited FSB in Coral Gables,...