Senator Elizabeth Warren blasted federal regulators for their handling of the recent demise of First Republic Bank, including the decision to sell the failed lender to JPMorgan Chase & Co.
(Bloomberg) — Senator Elizabeth Warren blasted federal regulators for their handling of the recent demise of First Republic Bank, including the decision to sell the failed lender to JPMorgan Chase & Co.
The Massachusetts Democrat is demanding more details on bids the government received for First Republic after it was seized, regulators’ rationale for choosing JPMorgan, and the impact of the deal on the government’s bedrock deposit insurance fund. Warren demanded answers by the end of the month in a letter to Federal Deposit Insurance Corp. Chairman Martin Gruenberg and Acting Comptroller of the Currency Michael Hsu.
“Without a complete regulatory review, and at a cost of $13 billion to the Federal Deposit Insurance Fund, the nation’s biggest bank – already too big to fail – got a bargain deal on a failing bank that made it even bigger,” she wrote. “This is a troubling outcome.”
First Republic’s collapse was the second-biggest bank failure in US history. As part of its deal to buy the lender, JPMorgan agreed to share both the losses and the potential recoveries on loans with the FDIC.
In her letter, Warren questioned why regulators didn’t pick a smaller bank to sell to, given JPMorgan is already the country’s largest. She also demanded information on what strictures will be put in place to ensure the deal doesn’t increase risks to the financial system or reduce competition.
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