JPMorgan buys First Republic after FDIC seizure

The Federal Deposit Insurance Corporation took control of First Republic Bank Monday morning and then auctioned its assets to JPMorgan Chase that same day. On Monday, depositors could access their funds during business hours at any of First Republic’s 84 branches now under JPMorgan’s banner. First Republic is the third midsize U.S. bank to fail in two months. 

What led to the collapse? First Republic depositors had started pulling money out after Silicon Valley Bank collapsed separately in March, according to the bank’s quarterly results. A group of large banks gave First Republic a $30 billion bailout in March. First Republic had become a “zombie” bank—alive but unable to make money, financial analyst David Bahnsen told WORLD. First Republic held hundreds of billions in loans made at low rates and couldn’t survive the current higher-interest environment, Bahnsen said. JPMorgan is now taking over any losses from those loans not covered by government insurance. 

Dig deeper: Listen to Nick Eicher’s conversation with David Bahnsen on The World and Everything in It podcast about the Fed’s policies and economic growth.