Recently, the bank regulatory agencies have adopted capital forbearance programs to permit some troubled agriculture and energy banks to operate temporarily with capital levels below the regulatory minimum requirement. In a world with federal deposit insurance and a lender of last resort, bank...

At the time of the Continental Illinois National Bank insolvency, bank regulators considered some commercial banks "too large to fail" (TLTF) and were reluctant both to legally fail such banks and to impose pro rata losses on any of the uninsured creditors of these insolvent banks and their...