• First Republic Bank collapses, causing concern for the United States banking system
• US President Joe Biden reassured the public that the system is "safe and sound"
• The collapse makes three of the four largest bank failures in the history of the US to have happened in the last two months

First Republic Bank's collapse and subsequent seizure by JPMorgan has caused concern for the United States banking system, but President Joe Biden reassured the public that it is "safe and sound."

The shutdown of the bank on Monday marked the second-largest bank failure in the country, as First Republic Bank had nearly $230 billion in assets last month. This value far surpasses the collapse of the Silicon Valley Bank. The latest development also makes three of the four largest bank failures in the history of the US happening in the last two months.

First Republic Bank Collapses

On Monday, the Federal Deposit Insurance Corporation (FDIC) took control of First Republic Bank, a regional bank based in San Francisco. The FDIC brokered the sale of the bank to JPMorgan Chase to protect its deposits. However, it is expected to wipe out shareholders and make the largest bank in the country even bigger, as per The Hill.

The fate of the regional bank was set in stone after it revealed that it lost $100 billion in deposits following Silicon Valley Bank's collapse, causing panic among wealthy clients. First Republic Bank's stock plummeted by 75% last week.

It remains unclear whether First Republic Bank is the final nail in the coffin of banks collapsing in the recent banking crisis. The answer to that question is tied to whether or not depositors will be able to pull their money from other institutions.

In a statement on Monday, JPMorgan Chase CEO Jamie Dimon said that this part of the crisis is over. He added that he continues to be optimistic that the financial system is strong but argued that there was the possibility that a smaller bank could fail.

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JPMorgan Chase Takes Control of Bank

First Republic Bank was founded in 1985 and is considered the 14th-largest bank in the United States this year. According to the New York Times, the rapid rise in interest rates battered its assets, and it struggled to keep afloat, especially after two other lenders collapsed last month.

Investors immediately welcomed JPMorgan Chase's seizure of First Republic Bank, causing its stock to rise 3.5% on Monday. On the other hand, PNC Financial Services and Citizens Financial Group's stocks traded for more than 5% lower each.

President Biden also welcomed the seizure, saying that the developments will ensure that the country's banking system stabilizes and moves to protect small businesses across the nation. During a press conference, the Democrat added that the move would protect all depositors and keep taxpayers off the hook.

JPMorgan Chase's seizure of First Republic Bank will have the former shell out a payment of $10.6 billion to the FDIC. On the other hand, the regulator said that it would cost its Deposit Insurance Fund (DIF) roughly $13 billion, said Aljazeera.

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