Continental Illinois

About Continental Illinois

Continental Illinois National Bank failed in 1984 in what was then the largest bank failure in US history. Continental Illinois was the seventh largest bank in the US. The bank had purchased billions in energy loans from Penn Square Bank, an Oklahoma bank that failed in 1982. When energy prices fell, the loans defaulted. Continental lost 1 billion in 1984. The FDIC provided a 4.5 billion bailout, taking an 80 percent ownership stake. The bailout protected all depositors and general creditors, not just those under the 100,000 insurance limit. This created the term too big to fail. Comptroller of the Currency Todd Conover told Congress that the FDIC would not let the 11 largest banks fail. Continental Illinois was gradually divested by the FDIC and acquired by Bank of America in 1994.