When Silicon Valley Bank collapsed in March, it was the second biggest bank failure in American history. But now, just two months later, it’s only the third biggest.
Um… congratulations?
San Francisco’s troubled First Republic Bank is no longer. “The substantial majority” of its $229 billion in assets and deposits were seized Monday morning by federal regulators and quickly sold to financial giant JPMorgan Chase, according to Reuters. JPMorgan Chase chairman and CEO Jamie Dimon said in a statement that the “government invited us and others to step up, and we did.”
JPMorgan Chase has over $3.7 trillion in assets, so taking on a comparatively tiny bank caused barely a ripple in their morning coffee.
Apropos of nothing, it just popped into my brain to ask someone who understands these things better than I do when “too big to fail” becomes “too big to bail out.”
We’ll save the sleep-sucking worries for another day, however, because customers will find their existing First Republic branches open today. The FDIC also assured depositors that “deposits will continue to be insured by the FDIC, and customers do not need to change their banking relationship in order to retain their deposit insurance coverage.”
First Republic had been hit by a massive wave of withdrawals following the twin collapses of New York City’s Signature Bank and the Bay Area’s Silicon Valley Bank in March.
If it seems like I was just telling you about First Republic, it’s because I was. Last week I reported on San Francisco’s troubled Financial District real estate market — formerly some of the most valuable office space in the world,
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First Republic announced last week that they were laying off a quarter of their workforce and pulling way back on how much Financial District office space they leased. Now that the bank is no longer, it’s unclear how much of First Republic’s workforce or downtown offices will survive. Even before this morning’s collapse and seizure, First Republic’s “right sizing” efforts were set to leave the lovely One Front Street skyscraper (I used to work there, way back when) looking like a 38-story ghost town.
So, in addition to another massive bank failure, today’s news is potentially another body blow to a city already struggling for breath.
Even when adjusted for the discomforts of today’s inflation, three of America’s five largest bank failures have occurred on President Joe Biden’s watch.
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