Continental Illinois
The Continental Illinois National Bank and Trust Company was at one time the seventh-largest bank in the United States as measured by deposits. In May 1984, the bank became insolvent due to bad loans purchased from the failed Penn Square Bank N.A. of Oklahoma. Much of these bad loans were due to flim-flam "oil" men who defrauded the bank with phony oilfields and assets. Diligence was not properly paid by John Lytle, the executive in charge of oil money lending, and the Penn sq. bank account as well. Lytle later pled guilty to an indictment per defrauding Continental of $2.25 million. The gov't accused Lytle of pocketing $585,000 in kickbacks for approving risky loan applications that any other banker would have tossed in the wastebasket. In 1988, the humbled executive was sentenced to three and a half years in a fed prison. Lytle persists to this day in saying that he was simply made a convenient scapegoat for the banks' larger failures. This eventually caused a substantial run on the bank's deposits once it became clear Continental Illinois was headed for failure. (In fact, large depositors withdrew over $10 billion of deposits in early May)
Continental Illinois was considered as "too big to fail" at that time by regulatory agencies. The Federal Reserve and FDIC feared a failure could cause widespread financial trouble and instability. To avert this, regulators prevented the loss of virtually all deposit accounts and even bondholders. The FDIC infused $4.5 billion to rescue the bank. A willing merger partner had been sought for two months but could not be found. Eventually, the board of directors and top management were removed. Bank shareholders were substantially wiped out, although holding-company bondholders were protected. To this day Continental Illinois is the largest ever U.S. bank to be bailed out by the FDIC and Federal Reserve.
The Continental Illinois continued to exist, with some 80% of its shares owned by the federal government, until BankAmerica acquired it in 1994 to broaden their Midwestern presence. In 2007, successor firm Bank of America has a retail branch and hundreds of back-office employees at Continental's former headquarters on South LaSalle Street in Chicago, Illinois. BofA operates dozens of retail branches in the Chicago area, as well as several lines of corporate and investment banking business.