Business - U.S. financial rescues, failures in last century

(Reuters) - The Federal Reserve and Treasury Department once again led marathon weekend talks in an effort to resolve a crisis at a major financial institution, this time Wall Street investment bank Lehman Brothers, crippled by toxic real estate assets and a collapsing share price.
The federal government has a long history of involvement with financial institution rescues. Following is a chronology of key events over the last century.

PANIC OF 1907

In October 1907, a run on the Knickerbocker Trust Co after it failed in its effort to corner the market in shares of United Copper Co caused a panic on Wall Street. Banks called loans and stock prices plummeted, threatening several major banks with failure. The calming influence came not from the Fed, which did not exist, but from banker John Pierpont Morgan, who organized a consortium of bankers to provide funds to prop up banks and buy up stocks. They were joined by Treasury Secretary George Cortelyou, who brought in $35 million in federal funds. The episode led to creation of the Federal Reserve System in 1914 to add stability to the banking system.

GREAT DEPRESSION, 1930s

Some 9,000 U.S. banks failed during the Great Depression after a stock market collapse triggered a severe restriction of credit, massive loan failures and "runs" by depositors to withdraw their funds. President Franklin Delano Roosevelt's first act after his 1933 inauguration was to declare a three-day bank holiday to cool things off. He later signed into law the Glass-Steagall Act, creating the Federal Deposit Insurance Corp, to restore depositors' confidence in banks. The act also separated the operations of commercial banks and investment banks to reduce chances for another stock market bubble. Roosevelt also created the Federal Housing Administration and Fannie Mae to stabilize the housing sector and provide liquidity to the mortgage market.

COMMONWEALTH BANK OF DETROIT, 1972

Commonwealth Bank of Detroit was the first bank with more than $1 billion in assets to be bailed out. The bank was considered essential to Detroit's inner city, so the Federal Deposit Insurance Corp provided $35.5 million in loans. It was never paid back.