A short history of U.S. bank failures

Bank runs were a recurring feature of American finance in the nineteenth and early twentieth centuries. The worst came during the Great Depression. Waves of panic beginning in late 1930 led thousands of banks to suspend operations; roughly 9,000 banks failed or suspended between 1930 and 1933, and depositors lost billions of dollars. The crisis ended with a national bank holiday in March 1933.

Congress responded with the Banking Act of 1933, which created the Federal Deposit Insurance Corporation. Deposit insurance began on January 1, 1934, with an initial limit of $2,500. Bank failures fell sharply and remained rare for decades. The limit was raised several times over the following decades, to $100,000 in 1980 and to $250,000 in 2008, which Congress made permanent in 2010.

High and volatile interest rates in the late 1970s and early 1980s squeezed savings and loan associations, which held long-term fixed-rate mortgages funded by short-term deposits. Deregulation, rapid growth into riskier lending, regional real estate and energy busts, and in some cases fraud followed.

• More than 1,000 savings institutions failed between the mid-1980s and the mid-1990s. The Federal Savings and Loan Insurance Corporation (FSLIC), which insured thrifts, became insolvent and was abolished in 1989; the Resolution Trust Corporation was created to resolve failed thrifts.
• Commercial and savings banks insured by the FDIC also failed in large numbers — more than 1,600 closed or received assistance between 1980 and 1994, according to the FDIC's history of the period — concentrated in Texas, Oklahoma, New England and other regions hit by real estate and energy downturns.

The cost of resolving failed thrifts fell substantially on taxpayers. Reforms included stronger capital standards and "prompt corrective action" rules (1991) requiring regulators to intervene as capital falls. It was during this period that analysts developed the Texas ratio.

From the mid-1990s to the mid-2000s, failures were uncommon; in 2005 and 2006 no FDIC-insured bank failed. That changed with the housing and financial crisis.

Washington Mutual, closed in September 2008 with roughly $300 billion in assets, remains the largest bank failure in U.S. history by assets; its banking operations were sold to JPMorgan Chase. IndyMac failed earlier that year. Over the following years, losses on construction, commercial real estate and residential loans brought down hundreds of mostly small and mid-sized community banks, especially in Georgia, Florida, Illinois and California. According to the FDIC, about 465 insured banks failed from 2008 through 2012, and close to 500 when 2013 is included, with the peak in 2010.

In response, the deposit insurance limit was raised to $250,000, temporary guarantees were extended to some transaction accounts, and the Dodd-Frank Act (2010) introduced new capital, liquidity and resolution rules for large banks.

After several years with few or no failures, three large banks failed in spring 2023:

• Silicon Valley Bank (Santa Clara, California) closed on March 10, 2023, after large losses on securities and a rapid run by mostly uninsured depositors.
• Signature Bank (New York) closed on March 12, 2023.
• First Republic Bank (San Francisco) closed on May 1, 2023, and was sold to JPMorgan Chase.

Each had more than $100 billion in assets; together they were larger, in nominal terms, than all the banks that failed in 2008. Regulators invoked a systemic risk exception to protect all depositors at Silicon Valley Bank and Signature Bank, with the cost to the Deposit Insurance Fund recovered through a special assessment on larger banks. Reviews by the Federal Reserve and the FDIC pointed to concentrated, uninsured deposits, unmanaged interest-rate risk and supervisory shortcomings. A handful of small banks also failed in 2023 and in the years since; see all 2023 failures.

Credit unions have their own history of failures and liquidations, generally involving small institutions. During the 2008–2010 crisis, losses on mortgage-backed securities at several corporate credit unions (which provide services to other credit unions) led the NCUA to place the largest of them into conservatorship in 2009 and to create a stabilization program funded by assessments on the credit union system.

• Insured depositors have been protected throughout the FDIC era.
• Failure waves tend to follow credit booms, interest-rate shocks or regional downturns, and they cluster.
• The speed of runs has increased with online banking, which makes uninsured deposit concentration more important than before.

Browse every failure since 1934, with acquirers and estimated costs, in our failed bank list.