The FDIC had long known of its problems. The bank had first approached failure in July 1982, when the Penn Square Bank, which had partnered with Continental Illinois in a number of high-risk lending ventures, collapsed. However, federal regulators were reassured by Continental Illinois executives that steps were being taken to ensure the bank's financial security.
The FDIC had been aware of its difficulties. In July 1982, Penn Square Bank, which partnered with Continental Illinois on high-risk loans, faced failure. Nonetheless, federal regulators were reassured by Continental Illinois executives that actions were being taken to ensure the bank's financial safety.