Part 3/16:
Penn Central's bankruptcy in 1970 is presented as a textbook example of how banks, rather than actual mismanagement by the railroad, orchestrated its downfall to maximize their own profits. Major banks, including Chase Manhattan, Morgan Guaranty, and others, held large stakes in Penn Central and had board members with insider knowledge. These banks provided loans for expansion and diversification that artificially inflated stock prices. As Griffin notes, congressional investigations later revealed that bank managers used these financial manipulations not to help the company but to dump worthless stock onto the unsuspecting public, reaping dividends, interest, and profits in the process.