Treasury Department Reassures Markets and Public After Second-Largest Bank Failure in American History

The Treasury Department has sought to reassure the markets and the public after First Republic Bank, with $229.1 billion in total assets at the time of closure, became the second-largest bank failure in American history. On Monday morning, the Federal Deposit Insurance Corporation (FDIC) seized the bank and accepted a bid from banking giant JPMorgan Chase to acquire almost all of its assets.

The California Department of Financial Protection and Innovation took over First Republic early Monday due to the regulator’s determination that the bank was conducting its business in an “unsound manner.” The FDIC was then appointed as the receiver for the bank, making it the third major bank to go under in less than two months.

Jill Schlesinger, a financial expert and commentator, discussed the fate of First Republic Bank and the lessons from Silicon Valley Bank, which had $209 billion in total assets at the time of closure. Schlesinger said that the banking system remains sound and resilient, and Americans should feel confident in the safety of their deposits and the ability of the banking system to fulfill its essential function.

Schlesinger also noted that the failure of First Republic Bank and Silicon Valley Bank should serve as a reminder that banks are not immune to the economic downturn caused by the pandemic. She suggested that consumers should take the time to review their bank accounts and make sure they are properly insured.

The Treasury Department’s reassurances come as the banking industry continues to grapple with the economic fallout from the pandemic. The failure of First Republic Bank and Silicon Valley Bank has highlighted the importance of financial stability and the need for consumers to be aware of the risks associated with banking.