STORY: BIDEN: "These actions are going to make sure that the banking system is safe and sound."
President Joe Biden hailed actions taken by regulators over the weekend to facilitate the sale of First Republic Bank to JPMorgan Chase, resolving the second-largest bank failure in U.S. history.
BIDEN: "... all depositors are protected and the taxpayers are not on the hook."
JPMorgan, which will pay $10.6 billion to the FDIC for First Republic's assets and wealthy client base, emerged as the winner of an auction for the mid-sized bank -- the third major bank failure in two months, after Silicon Valley Bank and Signature Bank both collapsed in March.
While the deal was expected to calm markets, some analysts and industry executives said it would come at a cost to the long-term health of the U.S. economy.
Patricia McCoy is a professor at Boston College School of Law.
MCCOY: "The U.S. has backed itself into a corner where the way that we protect uninsured depositors when a bank fails is to have a larger bank gobble it up. That then makes the larger bank more likely to be too big to fail. And each time this happens, the problem is compounded. And so we don't have any easy solutions in our system. I think we're going to continue to see this trend where the largest banks get larger."
White House spokesperson Karine Jean-Pierre said the actions taken by regulators would hold First Republic accountable.
KELLEHER: "What we really need is banking regulators to do their job."
Dennis Kelleher, president and CEO of Wall Street reform group Better Markets, said more actions were needed.
KELLEHER: "So, for example, if your bank fails, you should be recalled. The regulators should be required to claw back the executive compensation for the last three, four or five years. Similarly, if your bank fails, you should be barred from ever being an officer or director at a bank in the future. I mean, there are certain penalties that should be available to the regulators that are not available now."
Shares of JPMorgan and some of the other big U.S. banks rose on Monday, while those of mid-tier banks fell.
JPMorgan already holds more than 10% of the nation’s total bank deposits. A Wells Fargo analyst said in a research note that JPMorgan's net deposits would increase by 3% as a result of the deal to buy First Republic.