Continental Illinois
About Continental Illinois
The failure of Continental Illinois National Bank in 1984 was the largest bank failure in US history at the time. The bank had made billions in risky oil and gas loans that went bad when energy prices collapsed. The FDIC bailed out Continental, guaranteeing all deposits regardless of amount and effectively nationalizing the bank. The phrase too big to fail entered the financial lexicon during the Continental Illinois crisis. The FDIC sold Continental to Bank of America in 1994. The bailout established a precedent that large banks would be rescued, encouraging risk taking. The Continental bailout was the template for the much larger rescues of 2008.
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