The FDIC faced backlash on Monday for authorizing a deal that effectively allowed JPMorgan Chase to purchase a major bank’s assets at a government-subsidized discount.Ĭritics said that regulators need to develop effective and fair guidelines to resolve bank failures, arguing that the FDIC wasn’t fully prepared for First Republic’s collapse. FDIC resolution sparks backlash JPMorgan Chase & Company Chairman and CEO Jamie Dimon testifies at a Senate Banking Committee annual Wall Street oversight hearing on Sept. banks,” House Financial Services Committee Chairman Patrick McHenry (R-N.C.) said in a statement. “Americans should remain confident in the safety of their deposits at U.S. Reduced access to credit will slow the growth of new businesses and hurt employers’ ability to invest in their company and hire more workers, experts said. The forecast is even gloomier now that big banks are pulling back on lending to reduce risk on their balance sheets. Consumer spending is falling after years of sky-high inflation and interest rate hikes aimed at slowing demand for goods and services. falling into a recession in 2023 before several major banks collapsed this year. One of the original big box retailers, the company filed for bankruptcy protection on April 23 following years of dismal sales and losses. Another threat to a slowing economy Bed Bath & Beyond shopping carts are left in a corral in Flowood, Miss., on April 24.
Rebeca Romero Rainey, CEO of the Independent Community Bankers of America, urged policymakers on Monday to differentiate regional banks from smaller community banks, which don’t rely on uninsured deposits. The bank faced hefty unrealized losses on long-term Treasury bonds, which saw their value plummet after the Federal Reserve hiked interest rates, hurting its ability to raise cash to cover deposit outflows. While that was a lower ratio than at SVB, it was higher than other regional banks, prompting depositors to pull their money over fears of losing it. (Photo by Justin Sullivan/Getty Images)įirst Republic relied heavily on wealthy clients, with more than two-thirds of its deposits surpassing the FDIC’s $250,000 insurance limit. Will more banks go under? A person walks by the First Republic Bank headquarters on March 13 in San Francisco, Calif. “This part of the crisis is over,” JPMorgan Chase CEO Jamie Dimon said Monday, adding that he believes the financial system is strong but it’s possible a smaller bank could fail. That could hinge on whether depositors will pull their money from other institutions. It’s unclear whether First Republic Bank is the final domino to fall in the recent banking crisis. Its stock plummeted 75 percent last week. First Republic’s fate was set when the bank revealed that it lost $100 billion in deposits after SVB’s collapse led to panic among wealthy clients.
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