San Francisco-based First Republic Bank became the third regional bank to fail since March. It is the second-largest bank failure in U.S. history, second only to Washington Mutual, which collapsed in
Happy Monday, Daily Money readers!
This is Swapna Venugopal Ramaswamy bringing you the top headlines.
The day starts with the not-so great news of another bank collapse.
San Francisco-based First Republic Bank became the third regional bank to fail since March. It is the second-largest bank failure in U.S. history, second only to Washington Mutual, which collapsed in 2008 amid the financial crisis.
Early Monday morning, federal regulators seized First Republic and entered a purchase agreement to sell the bulk of its operations to JP Morgan Chase in a move to protect its depositors and stave off another banking crisis.
The Federal Deposit Insurance Corporation will continue to insure the bank’s deposits and customers do not need to change their banking relationship to retain their deposit insurance coverage up to applicable limits, the regulators said in a release.
JPMorgan, the biggest bank in the U.S., has also entered into a loss-share agreement with the FDIC on single family, residential and commercial loans it bought.
As in the case of Silicon Valley Bank and Signature Bank failure in March, the toppling of the First Republic Bank is being blamed, in part, on the Federal Reserve’s aggressive interest rate hikes to tamp down inflation, which eroded the value of bank assets such as government bonds and mortgage-backed securities.
First Republic Bank, which has approximately $229.1 billion in total assets, also was one of the banks which was no longer subject to stringent oversight as a result of a Trump-era law which raised the asset threshold for enhanced regulatory standards from $50 billion to $250 billion.
The new law meant 25 of the 38 largest banks in the United States were no longer subject to stronger capital and liquidity rules, enhanced risk management standards, living-will requirements, and some stress testing requirements, according to the Center for American Progress, a public policy research and advocacy organization.
📰 More stories you shouldn’t miss 📰
Investors sue Adidas over partnership with Ye, say company aware of rapper’s behavior
Rising home prices, elevated mortgage rates: Why the spring housing market hasn’t bloomed
Financial aid for college may soon be harder for some to get with simplified FAFSA form
With the phase out of gas-powered cars, do California communities need new gas stations?
About The Daily Money
Each weekday, The Daily Money delivers the best consumer news from USA TODAY. We break down financial news and provide the TLDR version: how decisions by the Federal Reserve, government and companies impact you.
