First Republic Bank Is Seized and Sold to JPMorgan in Second-Largest U.S. Bank Failure

First Republic Bank Is Seized & Sold to JPMorgan in Second-Largest U.S. Bank Failure

The FDIC avoided another banking crisis by seizing First Republic and selling it to JP Morgan, including all $103.9 billion in deposits and $229.1 billion in assets.

First Republic represents the second largest bank failure in the US, loosing $100 billion in deposits 2 months ago after the fall of Silicon Valley Bank

3 of the 4 largest-ever bank failures have now taken place in the past 8 weeks: First Republic, Silicon Valley Bank and Signature Bank. 

We also saw the spectacular fall of Credit Suisse in March, bailed out by the Swiss National Bank and acquired by UBS.

Most analysts don’t expect First Republic to cause a domino effect like we saw in 2008. I don’t understand how they can come to such a conclusion when we know banking is a confidence fame.

Remember, in the US we have a factional reserve system, meaning banks only need to hold 10% of the funds customers deposit. So a relatively small panic can cause a bank run. FDIC insurance can only do so much to restore confidence in such an environment, especially in today’s world where information and fear spreads faster than ever before.

As the Fed continues to fight inflation by raising interest rates, we are seeing more and more cracks in the system. Are you worried of more banks failing? Could we see a similar economic collapse as 2008?