As was previously reported, First Republic Bank has gone into receivership by the Federal Deposit Insurance Corporation (FDIC) – now representing the second-largest bank failure in history. JP Morgan Chase (NYSE:JPM) has stepped in to take over the bank as a bidding process took place over the weekend with JPM winning the process.
Representative Patrick McHenry, Chair of the House Financial Services Committee, issued a statement on the news:
“Americans should remain confident in the safety of their deposits at U.S. banks. The FDIC used its available tools to resolve First Republic Bank. I appreciate the quick work of regulators to facilitate a sale of the bank’s assets, while minimizing risk to taxpayers. The question remains, why didn’t the FDIC do the same thing in March when SVB was placed into receivership. It’s critical that the Biden Administration and its regulators not politicize these events. As Chairman of the House Financial Services Committee, I will ensure Members of Congress receive appropriate briefings and information from our federal banking regulators. The Committee will continue to use its authority to provide the transparency the American people deserve regarding recent bank failures.”
Reviews by federal agencies indicate the recent bank failures were driven by poor management who did not adjust to the rising rate environment. As public concern increased about the bank’s viability, a tech-enhanced run on the bank took place. At the same time, federal regulators failed in their responsibilities to act swiftly to compel banks to change course as the failures could have been avoided.