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Sen. Warren seeks details on 'troubling' sale of First Republic to JPMorgan

Published 05/18/2023, 03:38 PM
Updated 05/19/2023, 10:50 AM
© Reuters. FILE PHOTO: A person walks past a First Republic Bank branch in San Francisco, California, U.S. April 28, 2023. REUTERS/Loren Elliott
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By Pete Schroeder

WASHINGTON (Reuters) - U.S. Senator Elizabeth Warren is questioning federal bank regulators on their decision to sell First Republic Bank (OTC:FRCB) to the nation's largest bank, JP Morgan Chase (NYSE:JPM).

In a letter sent to the Office of the Comptroller of the Currency and Federal Deposit Insurance Corporation Wednesday, Warren said the deal was "deeply troubling," and sought details on how the agencies decided to arrange that particular sale, allowing JPM to grow even larger.

"The net result of these machinations is that...the nation’s biggest bank – already too big to fail – got a bargain deal on a failing bank that made it even bigger. This is a troubling outcome, leaving me with numerous questions," she wrote.

The FDIC announced this month it had seized First Republic and sold it to JPM in a deal that it estimated would cost its deposit insurance fund $13 billion. Spokespeople for the OCC and FDIC declined to comment. A JPM spokesperson did not respond to a request for comment.

Among other items, she asked regulators to provide details on how they analyzed bidders for the failed bank and what additional restrictions JPM should face as a result of its larger size.

© Reuters. FILE PHOTO: A person walks past a First Republic Bank branch in San Francisco, California, U.S. April 28, 2023. REUTERS/Loren Elliott

Warren also pressed the matter with Michael Hsu, the acting Comptroller of the Currency, at a hearing Thursday. She noted that the FDIC is bound by law to sell a bank to a bidder at the least cost to its deposit insurance fund, but the OCC should consider other factors, like financial stability, before signing off on such a merger.

Hsu said the OCC has to consider a range of factors in assessing a merger with a failed bank, with a focus on maintaining stability and "coordinated and timely" government action.

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