Final answer:
The bank must typically attempt to collect the debt from the original borrower before pursuing the surety. Cosigners or sureties like Darius in the example are legally bound to pay only if the primary borrower defaults and all means to collect the debt from them fail.
Step-by-step explanation:
In the context of a financial capital market, when a bank issues a loan, it might require the borrower to provide a cosigner or surety as an added security measure. A cosigner is a person or entity that legally agrees to repay the loan if the original borrower defaults. Regarding the question on whether the bank must first try to collect the debt from the primary borrower before approaching the surety, the answer is generally true. Banks typically pursue repayment from the original borrower before turning to the cosigner or surety for the debt.
For instance, Darius acts as a surety for Gary's loan from First Florida Bank. If Gary defaults, it's standard protocol for the bank to first exhaust all reasonable means to collect from Gary before holding Darius responsible. This is because the primary responsibility to repay the loan lies with Gary, who received the loan benefits directly. The surety's obligation is secondary and becomes active when the main obligor fails to fulfill their obligations, and the bank cannot recover the debt from them.