First Republic's failure shows we are fighting an unwinnable war

5.2.23 - First Republic's failure shows we are fighting an unwinnable war

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First Republic's failure shows we are fighting an unwinnable war - Yahoo! Finance

When Silicon Valley Bank was busy imploding earlier this year, and depositors were pulling their money out of shaky lenders to put it in safer-looking banks, the joke was that everyone was going to end up banking with JP Morgan. Now that the US uber-lender has agreed to acquire most of First Republic, another stricken bank, the gag is even less funny.

Make no mistake, this is yet another bailout. First Republic - like SVB and Signature Bank before it - was seized by the Federal Deposit Insurance Corporation (FDIC) before the sale was hastily arranged. The regulator has agreed to share the burden of any losses, which are expected to cost the FDIC something in the order of $13bn.

Jamie Dimon, JP Morgan's chief executive, wanted to make it crystal clear whose idea this all was: "Our government invited us and others to step up, and we did." The bank's finance chief double underlined the point on a call after the acquisition was announced: "We did not seek out this deal."

How did it come to this? Just under two months ago we passed the 15-year anniversary of the investment bank Bear Stearns being rescued from collapse by JP Morgan amid the global financial crisis. One of the key lessons then was that many banks had become "too big to fail".