The Panic of 1907 was a financial crisis that occurred in the United States, marked by a severe banking collapse. Triggered by a loss of confidence in the banking system, it led to bank runs, where many depositors withdrew their money simultaneously. The crisis was exacerbated by the failure of several major financial institutions, including the Knickerbocker Trust Company. In response to the panic, J.P. Morgan, a prominent banker, organized a rescue plan to stabilize the financial system. This event highlighted the need for banking reform, ultimately leading to the establishment of the Federal Reserve System in 1913 to prevent future financial crises.