TIMELINE: 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.

FIRST PENNSYLVANIA, 1980

Established in 1782 as one of the first U.S. private banks, First Penn was among many banks in the 1970s made insolvent by high deposit interest rates that outstripped earnings from lower-yielding assets. It was the first large-scale bailout by the FDIC, which provided a $325 million five-year subordinated note that allowed First Penn to sell off government securities and reduce its interest drain. The FDIC made its money back, without interest.

CONTINENTAL ILLINOIS, 1984

Once the seventh-largest U.S. bank, Chicago-based Continental Illinois National Bank and Trust Co. was deemed "too big to fail" and remains the largest commercial bank taken over by the Fed and FDIC. The $40 billion-asset bank became insolvent due largely to bad oil and gas exploration loans purchased from the failed Penn Square Bank of Oklahoma, some of which led to criminal fraud charges against lending officers.

The FDIC injected $4.5 billion to rescue the bank and buy bad loans. The federal government held an 80 percent stake in the bank until 1994, when it was sold to Bank of America.

SAVINGS AND LOAN CRISIS, 1980s-90s

From 1986 to 1989, the Federal Savings and Loan Insurance Corp closed or assisted 296 institutions hit by unsound real estate and commercial loans. More than 740 institutions were later closed or consolidated by the Resolution Trust Corp, a federal agency created to take over and liquidate their assets, often for pennies on the dollar.

The largest of these was the American Savings and Loan Association of Stockton, California, which had about $30 billion in assets and received a $250 million injection from the Federal Home Loan Bank Board in 1988.