The decline of Sea Island is a spectacular example of the perils of insider lending, which the U.S. Federal Reserve defines as making loans to bank officers, directors, or major shareholders. While overall commercial lending soared during the credit bubble, insider lending more than kept pace: According to SNL Financial, insider loans as a percentage of all commercial lending rose from 3.1% in 2001 to 3.3% in 2006. At Synovus, Sea Island Co. was the bank's biggest customer.
