Biden: Taxpayers not on the hook for First Republic failure

President Biden stressed that taxpayers are not on the hook for the failure of First Republic Bank, which was seized by regulators and sold to JPMorgan Chase early on Monday morning.

“Let me be very clear, all depositors are being protected, shareholders are losing their investments, and critically, taxpayers are not the ones who are on the hook,” Biden said during a small business event at the White House on Monday.

The FDIC brokered the deal for Chase to take over First Republic, which includes all of its deposits and assets. All 84 branches of First Republic Bank will reopen as branches of JPMorgan Chase during Monday business hours, the FDIC said, and JPMorgan Chase and the FDIC together will cover the costs of losses on residential and commercial loans First Republic issued.

“These actions are going to make sure that the banking system is safe and sound, and that includes protecting small businesses across the country who need to make payroll for workers and their small businesses,” Biden said.

First Republic is the third major bank to fail since March, struggling in the wake of the abrupt collapses of Silicon Valley Bank and Signature Bank, which were both taken over by the FDIC. As of April 13, First Republic Bank had about $229.1 billion in assets and $103.9 billion in deposits. 

In his remarks, the president called for stronger regulations and supervision to avoid more bank failures in the future.

“Going forward, I’ve called on Congress to give regulators the tools to hold bank executives accountable, and I’ve called on regulators to strengthen regulations and supervision of large and regional banks,” he said. “And, folks, we have to make sure that we’re not back in this position again, and I think we’re well on the way to be able to make that assurance.”