How to shore up America’s banks after First Republic’s demise
One route to a safer system is consolidation; another is taxpayer stakes in the sector
WHEN A deeply insolvent bank fails and its depositors are made whole somebody has to bear the losses. In the case of First Republic Bank, the bulk of which was taken over by JPMorgan Chase on May 1st, the Federal Deposit Insurance Corporation (FDIC) carried the can. It expects to lose about $13bn as a result of what is the second-biggest retail-bank failure in America’s history. Yet customers with bank balances above the notional deposit-insurance limit of $250,000 have escaped unharmed, just as they did after the failure of Silicon Valley Bank (SVB) kicked off America’s banking crisis in March.
This article appeared in the Leaders section of the print edition under the headline “Rebuilding the buffers”
From the May 6th 2023 edition
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