Banking Crisis 2023

The Federal Reserve Board governor also called for the Fed to commission an independent investigation into the failure of Silicon Valley Bank.

Speaking before the International Swaps and Derivatives Association's annual meeting, Treasury Undersecretary for Domestic Finance Nellie Liang said liquidity and interest rate risk in the banking sector is being managed, but said fears of risk mounting in the nonbank sector are a source of concern.

The president of the Federal Reserve Bank of New York said the performance of office loans is a top supervisory issue, but not an immediate threat to financial stability.

The Federal Reserve chair said he holds himself accountable for ensuring proper regulatory and supervisory changes are enacted in response to recent bank failures.

Loss sharing protects against some risks, leaving the acquirer with what could be a valuable asset so long as it can maintain adequate capital and service levels.

The faltering bank's sale could work to quell any lingering unrest among depositors at other banks, according to analysts. "No one likes to see a bank fail, but it's good to have really the last remaining source of uncertainty resolved," said Citigroup CEO Jane Fraser.

Because the bank occupied a niche in serving ultra high-end consumers, experts question whether its receivership will make other depositories more reluctant to offer jumbo loans.

First Republic Bank was shuttered by regulators early Monday, and all its deposits and most of its assets were acquired by JPMorgan. San Francisco-based First Republic was undone by low-rate mortgages it made to its wealthy customers as well as by the fallout from last month's banking crisis.

About $2.9 billion of the deposits the company obtained from the failed Signature Bank had fled as of last week, and executives are forecasting that number to double. However, they say they're "cautiously optimistic" they can lure some deposits back.

The Federal Deposit Insurance Corp. said in a report released Friday that Signature's rapid, unrestrained growth and inadequate risk management practices outpaced supervisors' ratings and responses, even though the issues were known to the agency.