Continental Illinois National Bank and Trust Company

Continental Illinois National Bank and Trust Company

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, in part, to bad loans purchased from the failed Penn Square Bank N.A. of Oklahoma—loans for the Oklahoma and Texas oil boom of the late 1970s and early 1980s. Due diligence was not properly paid by, among others, John Lytle, an executive in charge of oil lending. Lytle later pleaded guilty to a count of defrauding Continental of $2.25 million and pocketing $585,000 in kickbacks for approving risky loan applications. Lytle was sentenced to three and a half years in a federal prison. The Penn Square failure eventually caused a substantial run on the bank's deposits once it became clear Continental Illinois was headed for failure. Large depositors withdrew over $10 billion of deposits in early May 1984.

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. Until the financial crisis of 2008, Continental Illinois was 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 and purchased LaSalle Bank in 2007 to expand their Chicago business further, as well as several lines of corporate and investment banking business.

Continental Illinois Venture Corporation, an investment subsidiary of the bank, has formed a semi-independent private equity firm, CIVC Partners, with backing from Bank of America.

ee also

* Too Big to Fail policy
* Banking regulation
* Bank condition


* ['Continental%20Illinois' Continental Illinois writeup at FDIC site]
* [ Information about Continental Illinois from]

Wikimedia Foundation. 2010.

Look at other dictionaries:

  • Continental Illinois — National Bank and Trust Company of Chicago Industry Bank holding company Fate Insolvency. The bank was seized by the Federal Deposit Insurance Corporation and ultimately sold to BankAmerica (now Bank …   Wikipedia

  • Michigan National Bank — Industry Financial Services Fate merged with Standard Federal Bank Successor Bank of America N.A …   Wikipedia

  • Citizens & Southern National Bank — Citizens and Southern National Bank (C S) began as a Georgia institution that expanded into South Carolina, Florida and into other states via mergers. C S became part of NationsBank (formerly North Carolina National Bank) in 1991 when NationsBank …   Wikipedia

  • North Carolina National Bank — (NCNB) was a bank based in Charlotte, North Carolina, prior to 1960 called American Commercial Bank. It was one of the top banking institutions. History In 1957 American Trust Co.[1] [2] and Commercial National Bank merged to form American… …   Wikipedia

  • Commercial National Bank — was a bank formed in Charlotte, North Carolina in 1874, which was a predecessor to the American Commercial Bank which then helped form North Carolina National Bank. NCNB changed their name to NationsBank in 1991 and then again to Bank of America… …   Wikipedia

  • Bank Of America — Logo de Bank of America Création 1929 : Bank of America 1874 : NationsBank Dates clés …   Wikipédia en Français

  • Bank of America — Not to be confused with First Bank of the United States, Second Bank of the United States, or Bank of United States. Bank of America Corporation Type Public Traded as …   Wikipedia

  • Bank of America — Logo de Bank of America Création 1929 : Bank of America 1874 : NationsBank Dates clés …   Wikipédia en Français

  • National Register of Historic Places listings in Jackson County, Missouri — Map of all coordinates from Google Map of all coordinates from Bing …   Wikipedia

  • Bank of America Home Loans — Type Subsidiary of Bank of America Founded 1969 (Countrywide), February 2009 (Bank of America Home Loans) Headquarters Calabasas, CA, USA (Countrywide Financial) Cha …   Wikipedia

Share the article and excerpts

Direct link
Do a right-click on the link above
and select “Copy Link”

We are using cookies for the best presentation of our site. Continuing to use this site, you agree with this.