Top Notable Bank Bankruptcies in U.S. History

Bank failures in the United States have had significant impacts on the economy, influencing financial regulations and reforms. The following list highlights ten of the most notable bank bankruptcies in the U.S., focusing on their causes, impacts, and the lessons learned from each case.

1. Washington Mutual (2008)

Assets: $307 billion
Failure Date: September 25, 2008

Washington Mutual, often referred to as WaMu, was the largest savings and loan association in the U.S. Its collapse was precipitated by the subprime mortgage crisis, leading to massive losses on mortgage-backed securities. The failure of WaMu was the largest bank failure in U.S. history, with assets totaling $307 billion. The FDIC sold WaMu’s assets to JPMorgan Chase, marking a significant moment in the 2008 financial crisis.

2. Lehman Brothers (2008)

Assets: $639 billion
Failure Date: September 15, 2008

Lehman Brothers, a global financial services firm, filed for bankruptcy after being unable to manage its exposure to subprime mortgages. Its collapse, with assets of $639 billion, was the largest bankruptcy in U.S. history and a pivotal event in the 2008 financial crisis. The failure highlighted the systemic risks posed by large, interconnected financial institutions and led to significant regulatory reforms.

3. Continental Illinois National Bank and Trust Company (1984)

Assets: $40 billion
Failure Date: May 17, 1984

Continental Illinois was the seventh-largest bank in the U.S. at the time of its collapse. The failure was triggered by bad loans, including significant exposure to the oil sector and risky Latin American debt. The FDIC intervened with a massive bailout, marking one of the largest bank rescues in U.S. history. This event led to the term "too big to fail."

4. IndyMac Bank (2008)

Assets: $32 billion
Failure Date: July 11, 2008

IndyMac Bank, primarily a mortgage lender, was heavily involved in the subprime mortgage market. Its collapse was one of the first major bank failures during the 2008 financial crisis. The FDIC took control and eventually sold the bank’s assets. The failure of IndyMac underscored the risks associated with aggressive lending practices and poor risk management.

5. Penn Square Bank (1982)

Assets: $500 million
Failure Date: July 5, 1982

Penn Square Bank was a small bank in Oklahoma City whose aggressive oil and gas loans led to its downfall. Its failure caused significant losses for larger banks like Continental Illinois, which had purchased loans from Penn Square. The collapse highlighted the risks of speculative lending and the need for better oversight of loan sales and participations.

6. Bank of New England (1991)

Assets: $32 billion
Failure Date: January 6, 1991

The Bank of New England's collapse was due to bad real estate loans and poor management. It was one of the largest bank failures in New England and led to significant regulatory changes. The FDIC intervened and restructured the bank, selling off its assets and subsidiaries to other institutions.

7. Drexel Burnham Lambert (1990)

Assets: $6.8 billion
Failure Date: February 13, 1990

Drexel Burnham Lambert, an investment bank, was heavily involved in the junk bond market. Its failure was caused by illegal trading practices and financial mismanagement. The collapse resulted in significant changes to securities regulation and reinforced the importance of ethical standards in financial markets.

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• Bankruptcies