The 7 Largest Bank Failures In US History | Bankrate (2024)

FAQs

The 7 Largest Bank Failures In US History | Bankrate? ›

Since the establishment of the Federal Deposit Insurance Corporation (FDIC) in 1934, there have been 3,516 bank failures in the United States. Washington Mutual's failure in 2008, during the financial crisis, is the largest in the country's history.

Since the establishment of the Federal Deposit Insurance Corporation (FDIC) in 1934, there have been 3,516 bank failures in the United States. Washington Mutual's failure in 2008, during the financial crisis, is the largest in the country's history.

Republic First Bank reported unrealized securities losses in excess of its equity as early as June 2022. State regulators closed Republic First Bank in April 2024, marking the first bank failure of the year.

The 10 largest banks in the U.S. are Chase, Bank of America, Wells Fargo, Citibank, U.S. Bank, PNC Bank, Goldman Sachs Bank, Truist Bank, Capital One and TD Bank.

The collapses of Silicon Valley Bank and Signature Bank in March 2023—then the second- and third-largest bank failures in U.S. history—took consumers by surprise. Subsequently, three more banks failed in 2023: First Republic Bank in May, Heartland Tri-State Bank in July and Citizens Bank of Sac City in November.

The Great Depression of 1929–39

Encyclopædia Britannica, Inc. This was the worst financial and economic disaster of the 20th century. Many believe that the Great Depression was triggered by the Wall Street crash of 1929 and later exacerbated by the poor policy decisions of the U.S. government.

Bankruptcies were becoming more common and confidence in financial institutions such as banks was being rapidly eroded. Some 650 banks failed in 1929; the number would rise to more than 1,300 the following year.

Consulting firm Klaros Group analyzed about 4,000 U.S. banks and found 282 banks face the dual threat of commercial real estate loans and potential losses tied to higher interest rates. The majority of those banks are smaller lenders with less than $10 billion in assets.

Is bank of America in financial trouble? ›

Bank of America's Financial Health

In recent years, Bank of America's financial performance has been relatively stable. In 2022, the bank reported a net income of $20.4 billion, a decrease from the previous year's $27.4 billion. However, its revenue increased from $91.2 billion in 2021 to $95.2 billion in 2022.

Economic Factors: Higher interest rates also often lead to slower economic growth, meaning people are spending less money. Inflation, recessions, and housing market crashes can all cause banks to shut down.

JPMorgan Chase, the financial institution that owns Chase Bank, topped our experts' list because it's designated as the world's most systemically important bank on the 2023 G-SIB list. This designation means it has the highest loss absorbency requirements of any bank, providing more protection against financial crisis.

Many smaller banks, such as this one in Haverhill, Iowa, lacked sufficient reserves to stay in business and became no more than convenient billboards. Many of the small banks had lent large portions of their assets for stock market speculation and were virtually put out of business overnight when the market crashed.

First, broad national forces—economic, financial, legisla- tive, and regulatory—established the preconditions for the increased number of bank failures. Second, a series of severe regional and sectoral recessions hit banks in a number of banking markets and led to a majority of the failures.

That meant depositors had a strong incentive to pull out their money at the first sign of trouble. The Depression ravaged the nation's banking industry. Between 1930 and 1933, more than 9,000 banks failed across the country, and this time many were large, urban, seemingly stable institutions.

The Bank of United States, founded by Joseph S. Marcus in 1913 at 77 Delancey Street in New York City, was a New York City bank that failed in 1931.