First Republic Bank collapse spurs fears for banking system, broader economy
By Karl Evers-Hillstrom
The demise of First Republic Bank raises questions about the strength of the U.S. banking system and the broader economy that relies on it. Monday’s shutdown marks the nation’s second-largest bank failure — First Republic Bank had nearly $230 billion in assets last month — eclipsing the Silicon Valley Bank collapse. Three of the four largest bank failures in U.S. history have taken place over the last two months…Karen Petrou, managing partner at policy research firm Federal Financial Analytics, wrote in a memo that the FDIC is encouraging “moral hazard that enables self-interested management, hands-off boards, insufficient supervision, and systemic risk.” To protect First Republic depositors, the FDIC is using an estimated $13 billion from its deposit insurance fund, which is paid for by fees on banks.