At the time, it was the 33rd largest bank in the United States, and its federal seizure bailout was the second-largest on record.

[3] This loss is attributed to poor investments in the real estate market and was part of the larger savings and loan crisis engulfing the banking industry at the time.

[4] These investments were the result of CEO Walter Connolly's aggressive growth and acquisition strategies throughout the mid-1980s and in 1989 he was forced to resign by the board of directors and replaced by Lawrence Fish.

[5][6][7] At the same time as his resignation, the federal government issued a cease and desist order to the bank to restrain its lending practices, which were considered a risk to its solvency.

[8] Despite efforts to restore the company's financial health, such as selling the credit card unit to Citigroup and laying off 5,600 employees, the bank continued to experience large losses.

[16] The FDIC indicated that a panic at the Bank of New England would have created a systemic risk to the entire financial markets.

[26][27] However, as of 2009[update], creditors were still disputing the allocation of the final 101 million dollars that the bankruptcy trustee had to distribute.