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The collapse of a bank can have far-reaching consequences, not only for investors but also for the overall economy. Over the years, there have been some significant bank failures that have shaken the financial world. In this article, we will take a closer look at the four largest bank failures in history.

1. Lehman Brothers (2008)
The collapse of Lehman Brothers in 2008 is arguably the most iconic bank failure in recent memory. The investment bank’s bankruptcy sent shockwaves through the financial markets and marked the beginning of the global financial crisis. Lehman Brothers had assets worth over $600 billion at the time of its collapse, making it the largest bankruptcy in U.S. history. The failure of Lehman Brothers led to a domino effect, with other major financial institutions also facing severe financial difficulties.

2. Washington Mutual (2008)
Another casualty of the 2008 financial crisis was Washington Mutual, which was the largest savings and loan institution in the United States at the time of its collapse. Washington Mutual had over $300 billion in assets and was known for its aggressive lending practices, particularly in the subprime mortgage market. The bank’s failure was a result of mounting losses from its mortgage-related assets, ultimately leading to its seizure by the Federal Deposit Insurance Corporation (FDIC) in September 2008.

3. IndyMac Bank (2008)
IndyMac Bank was one of the largest mortgage lenders in the United States before it collapsed in 2008. The bank’s failure was a result of its heavy exposure to risky subprime mortgages, as well as a run on deposits by panicked customers. IndyMac had over $30 billion in assets at the time of its collapse, making it one of the largest bank failures in U.S. history. The FDIC took over the bank and eventually sold its assets to a group of investors.

4. Continental Illinois National Bank (1984)
The failure of Continental Illinois National Bank in 1984 was a significant event in the history of banking in the United States. At the time of its collapse, Continental Illinois was the seventh-largest bank in the country, with over $40 billion in assets. The bank’s failure was a result of its heavy exposure to loans in the energy sector, which suffered a sharp decline in the early 1980s. The FDIC orchestrated a rescue plan for Continental Illinois, injecting billions of dollars in capital to stabilize the bank and prevent a broader financial crisis.

These four bank failures serve as a stark reminder of the risks inherent in the financial system. They also highlight the importance of strong regulation and oversight to prevent such catastrophic events from happening again. Investors should always be aware of the potential risks associated with their investments and take steps to protect themselves in the event of a bank failure.