Treasury Secretary Janet Yellen and other US officials were in touch with regulators all week as First Republic neared collapse, a source familiar with the matter told CNN.
Given the stakes in the banking crisis casting a shadow over the US economy, it stands to reason that Yellen and other Biden officials were involved in the First Republic situation.
The source familiar with the matter argued to CNN that First Republic is an “outlier” in the regional bank sector, adding that first-quarter results show midsize and regional banks are “well-capitalized” and deposit flows have “stabilized.”
Still, the First Republic collapse shows the banking turmoil is not over. First Republic marks the third bank failure in the past seven weeks, following a period where no banks collapsed in either 2021 or 2022.
The JPMorgan deal to buy First Republic risks “creating political blow back” for the Biden administration by allowing America’s biggest bank to expand its size, according to Jaret Seiberg, analyst at TD Cowen Washington Research Group.
“This is an extraordinary series of events,” Seiberg wrote in a note to clients on Monday, pointing out that top regulators have permitted “the country’s biggest bank to get even bigger.”
Seiberg said this will likely be a “Democratic focus for months.”