It's the Second-Largest Bank Failure in US History

Regulators seize First Republic, sell most of it to JPMorgan Chase
By John Johnson,  Newser Staff
Posted May 1, 2023 6:08 AM CDT
It's the Second-Largest Bank Failure in US History
A pedestrian walks past a sign at a First Republic Bank location in San Francisco, Wednesday, April 26, 2023.   (AP Photo/Jeff Chiu)

Another midsize US bank has gone under, the third in two months. Regulators seized First Republic Bank on Monday and sold the bulk of it to the nation's largest bank, JPMorgan Chase, reports the BBC. The move, however, which was telegraphed over the weekend, is not being received as the start of a new phase of banking turmoil. As a sign of that, Dow futures were largely unchanged early Monday in the wake of the news, notes CNBC. Coverage:

  • No. 2: This is the second-biggest bank failure in US history, behind only the collapse of Washington Mutual in 2008, per the Wall Street Journal. The collapses of Silicon Valley Bank and Signature Bank in March are Nos. 3 and 4. First Republic had been teetering since the failure of the latter two banks.

  • Context: No other large or mid-size banks appeared to be in imminent danger of collapse, reports the New York Times. A takeaway line: "Many banking experts said First Republic’s travails were a delayed reaction to the turmoil in March rather than the opening of a new phase in the crisis."
  • Clientele: First Republic, based in San Francisco, had been the 14th largest US commercial bank at the end of last year, per the AP, with 84 offices in eight states. The bank catered to "rich coastal Americans, enticing them with low-rate mortgages in exchange for leaving cash at the bank," per CNBC. Rising interest rates had hit the bank hard.
  • Clients bailing: As with Silicon Valley Bank, First Republic had a relatively large amount of uninsured deposits and had been seen for months as the "weakest link" in the American banking system, per CNBC. Late last month, the bank revealed that customers had withdrawn more than $100 billion in deposits. The FDIC estimated that the development would cost its insurance fund $13 billion to cover First Republic's losses.
  • Even bigger: All First Republic banks will reopen Monday as JPMorgan banks, and customers will have access to all their deposits. “Our government invited us and others to step up, and we did,” said Jamie Dimon, JPMorgan’s chief executive. Because the move makes the nation's biggest bank even bigger, expect "political scrutiny from progressive Democrats in Washington," per the Times.
(More banking industry stories.)

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