Biden vows taxpayers not on the hook when bolstering banking system
Ryan King
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President Joe Biden assured the public that the banking system will be “safe and sound” without burdening taxpayers following the JPMorgan Chase takeover of First Republic Bank.
“These actions are going to make sure that the banking system is safe and sound,” Biden declared at the top of his remarks at a Rose Garden event to usher in National Small Business Week. “Let me be very clear: All depositors are being protected. Shareholders are losing their investments. And critically, taxpayers are not the ones that are on the hook.”
JPMorgan’s takeover of the faltering bank was announced Monday morning by the California Department of Financial Protection and Innovation. Regulators in California took control of First Republic Bank and appointed the Federal Deposit Insurance Corporation to oversee the bank during the transition process.
Its failure is estimated to cost the Federal Deposit Insurance Corporation $13 billion from funds that come from other banks. First Republic Bank was one of several weakened financial institutions that caused panic among regulators and consumers in March, though it remained open at the time.
Markets had been rattled after prolonged high interest rates seemingly caused a series of banks to shed value. Since then, the Federal Reserve has taken actions to shore up liquidity. The company was the 14th-largest bank in the country and the second-largest to falter since the Great Recession of 2008.
“Going forward, I’ve called on Congress to give regulators the tools to hold bank executives accountable. And I called on regulators to strengthen regulations and supervision of large and regional banks. Folks, we have to make sure that we’re not back in this position again,” Biden added.
Already some Democrats have re-upped calls for stronger financial regulations, including Senate Banking Chairman Sherrod Brown (D-OH).
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Biden also used his remarks to criticize House Speaker Kevin McCarthy (R-CA) over their debt ceiling battle, warning that the standoff could imperil the financial system.
“We’ve got a lot to do. And the most immediate thing we can do is ensure the continued reliance of our economy and the financial system. [The] most important thing we have to do in that regard is to make sure the threat by the Speaker of the House of default on the national debt is off the table,” Biden said. “America is not a deadbeat nation.”