WASHINGTON — The Federal Deposit Insurance Corp. should have been more aggressive in recognizing problems and forcing changes at a failed Texas bank ahead of its collapse, an internal watchdog said in a report released Tuesday.

The FDIC's office of inspector general said in its report that Franklin Bank of Houston failed primarily due to management's "high-risk business strategy." But regulators still should have done more to prevent the bank from failing, auditors said, a collapse that was estimated to cost the government's deposit insurance fund $1.5 billion.

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