Business

Financial bumps and meltdowns in Canada and the U.S.

A summary of financial meltdowns in Canada and the U.S.

'The Bank Panic' of 1907

In October 1907, Wall Street braced for a financial meltdown, following a failed bid by the head of the Mercantile National Bank to corner the market in shares of United Copper Co. Nervous depositors withdrew millions from banks as shares of United Copper dropped sharply. Banker J.P. Morgan allayed the crisis when he organized a group of bankers who supported fledgling banks and purchased stocks. In 1908, the U.S. Congress created the National Monetary Commission to study banking reform, and in 1914, the Federal Reserve System was created.


Home Bank of Canada collapses in 1923

The Toronto-based Home Bank of Canada boasted 70 branches across Canada before collapsing in 1923, after making a series of loans to land speculators. After the collapse of the bank, the federal government created the Office of the Inspector General of Banks.


The Glass-Steagall Act, 1933

In October 1929, the U.S. stock market collapsed, spurring bank failures around the globe. In October 1933, U.S. President Franklin Delano Roosevelt put into law the Glass-Steagall Act. The act, which was intended to block the possibility of future market bubbles and panics, removed commercial banking involvement from securities operations.


First Pennsylvania, 1980

In 1980, First Pennsylvania Bank was propped up with $325 million in loans from the U.S. Federal Deposit Insurance Corporation along with $175 million from private banks.


Continental Illinois, 1984

Left insolvent owing to bad oil and gas exploration loans issued in the late 1970s and early 1980s, the Continental Illinois National Bank and Trust Co. received a $4.5 billion bailout from the U.S. Federal Deposit Insurance Corporation. The federal government also became the bank's prime shareholder until it was acquired by Bank of America in 1994.


Canadian Commercial Bank, Northland Bank, 1985

In 1985, two Alberta-based banks became the first two chartered banks to close in Canada since 1923. In 1986, the Estey Commission, which was given the task of investigating the fall of the two banks, said the faltering economy in Western Canada coupled with poor business practices led to the fall of the banks.


S&L crisis, 1980s-1990s

The U.S. government's Resolution Trust Corp. during the late 1980s and early 1990s closed 747 savings and loan institutions beset with financial troubles after issuing dicey real estate and commercial loans. The Federal Deposit Insurance Corporation estimated the crisis cost $153 billion US.


Bear Stearns, 2008

In March 2008, Wall Street investment bank Bear Stearns — struggling with the faltering the U.S. mortgage market — was sold to JPMorgan Chase for $236.2 million in a government-backed deal. The deal, which included federal guarantees, was completed swiftly in a bid to avert panic in the global markets.


Indymac, 2008

In July 2008, bank regulators seized California-based mortgage lender IndyMac Bancorp Inc. after nervous depositors began pulling out their money. Financial regulators seized IndyMac's assets, saying the institution might not be able to meet continued withdrawals by investors hit by the credit squeeze.


Fannie Mae, Freddie Mac, 2008

The Federal National Mortgage Association, nicknamed Fannie Mae, and the Federal Home Mortgage Corporation, nicknamed Freddie Mac, two U.S. mortgage companies and guarantors, were brought under federal control in September 2008. The U.S. Treasury plans to put fresh capital of as much as $100 billion into each institution to help ease mortgage rates and spur real estate demand.

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