Congress reacts to bank failure
WASHINGTON — Lawmakers who sit atop key banking committees praised the federal takeover of First Republic Bank on Monday, and held up the sale of its assets to JP Morgan as a successful public-private collaboration to protect the U.S. financial system.
"This prompt and cost-effective sale of the bank protects depositors, limits contagion, and ensures that no cost is borne to our nation's taxpayers," said Rep. Maxine Waters of California, the top Democrat on the House Financial Services Committee.
The Republican chairman of the committee, Rep. Patrick McHenry, N.C. said, "I appreciate the quick work of regulators to facilitate a sale of the bank's assets, while minimizing risk to taxpayers."
The collapse of the institution, which followed the failures of Silicon Valley Bank and Signature Bank in March, sparked a fresh debate on Capitol Hill about how best to address threats to the financial system.
GOP lawmakers have repeatedly cautioned against passing new legislation in response to the banks' failure, and they declined to push for stricter regulation again on Monday.
Democrats, meanwhile, have focused on a 2017 bank deregulation bill that passed with bipartisan support at the time, making it unlikely that a repeal effort would succeed today.
More broadly, with control of the House and Senate split and negotiations over the debt ceiling poised to dominate the next several months, there is little hope in Washington that any serious banking reforms will come out of Congress this year.
Even so, an appetite for banking reform exists outside of Congress.
The Federal Deposit Insurance Corporation, which has backstopped tens of billions of dollars worth of uninsured deposits at the failed banks, released a new report Monday outlining various options for deposit insurance reform. The report concluded that Congress should allow higher limits or unlimited insurance for business accounts.
Republicans have so far indicated that they strongly prefer private sector solutions over broadening government backstops.
On Senate side, the ranking member of the chamber's Banking Committee, Sen. Tim Scott, R-S.C., said he was "glad" the FDIC had "secured a private market solution for First Republic. I look forward to learning more about the bid process and bringing transparency to the American people."
His statement contrasted from the reaction of the Senate Banking Committee's chairman, Democratic Sen. Sherrod Brown of Ohio. He did not directly respond to the federal intervention, choosing instead to direct his ire at the failed bank.
"First Republic Bank's risky behavior, unique business model, and management failures led to significant problems, and it's clear we need stronger guardrails in place," Brown said in a statement. "We must make large banks more resilient against failure so that we protect financial stability and ensure competition in the long run."
Source: CNBC
