The bank nearly collapsed under the weight of bad debt associated with oil industry financing associated with the energy price boom of the late 1970s.

Due diligence was not properly conducted by John Lytle, an executive in the Mid-Continent Division of oil lending, and other leading officers of the bank.

Lytle later pleaded guilty to a count of defrauding Continental of $2.25 million and receiving $585,000 in kickbacks for approving risky loan applications.

This meant Continental absorbed massive risks on behalf of FOC customers, in the period leading up to a major stock market crash.

[8] The FOC crisis, and the extent to which it may have jeopardized Continental Illinois; the banking system; and the financial markets as a whole, was the subject of a hearing by the Subcommittee on Oversight and Investigations of the House Committee on Energy and Commerce, headed by Rep. John Dingell (D., Mich.), in 1988.

Until the seizure of Washington Mutual in 2008, the bailout of Continental Illinois under Ronald Reagan was the largest bank failure in American history.

The term "too big to fail" was popularized by Congressman Stewart McKinney in a 1984 Congressional hearing, discussing the FDIC's intervention with Continental Illinois.

It continued to exist, with the federal government effectively owning 80% of the company's shares and having the right to obtain the remainder (ultimately exercised in 1989) if losses in the rescue exceeded certain thresholds.

Successor Bank of America has a retail branch and hundreds of back-office employees at Continental's former headquarters on South LaSalle Street in Chicago.