Too Big to Fail Began in 1984: The Continental Illinois Bank Run
The 1984 Continental Illinois bank run created “too big to fail.” Here’s how $10 billion in hot money fled in days, and why 2008 and SVB (2023) repeated the same playbook.In May 1984, Continental Illinois, then the 7th-largest bank in the United States, lost about $10 billion, roughly 30% of its funding, in a run carried out over wire networks, not bank lobbies. Regulators responded with a rescue that rewrote the rules: a 100% deposit guarantee, a Good Bank/Bad Bank split, and a $1 billion injection at the holding-company level. Congress gave the new policy a name: “too big to fail.”This…
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