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May 1, 2023

Time-Pressured, Panicky-Looking Seizure and Sale of First Republic Bank Again Highlights Fundamental Legal and Regulatory Failures

WASHINGTON, D.C.— Dennis M. Kelleher, Co-founder, President, and CEO, issued the following statement in connection with the FDIC’s seizure and sale of most of First Republic Bank to JPMorgan Chase:

“While the regulators appear to have followed the law in seizing First Republic Bank by selling most of it to JPMorgan Chase, this process nonetheless again highlights fundamental failures in our banking, legal, and regulatory systems.  The current ad hoc, over-the-weekend, time-pressured, panicky-looking, and biased auction process damages public confidence and is a disservice to the country.  Applying these banking band aids in the middle of a panic guarantees such lurching from crisis to crisis will continue and get even worse. That must change.

“First, while required by law, the ‘least cost option’ is too narrowly focused on dollars and cents and not broadly on the health and stability of the banking system and economy.  The current process is biased because it favors the biggest, most sophisticated banks, which results in unhealthy consolidation, unfair competition, a dangerous increase in too-big-to-fail banks, all while harming community banks, small business lending, and economic growth.  Of the approximately 5,800 banks in the US, only 35 have more than $100 billion in assets and pose such threats.  Regulators need broader authority, better tools, and, most importantly, a workable action plan for resolving those few dangerous banks when they get into trouble.

“Second, penalties for reckless and irresponsible bank executives are clearly inadequate to deter such conduct and prevent such failures in the first place.  Numerous measures much be taken, but first and foremost must be the requirement that all executive compensation for not less than the prior five years be clawed back and executives should be barred from the financial industry for life.  That has to be the baseline penalty when a bank fails under such circumstances.

“Third, this bankruptcy again starkly illustrates the total failure of the resolution process required by the 2010 Dodd-Frank law.  Known as living wills, it is years past time that regulators force banks to have resolution plans that will actually work when a bank fails.  After the collapses of Silicon Valley Bank and Signature Bank, this latest bank seizure and sale makes clear that regulators have utterly failed to implement the Dodd-Frank law as written, designed, and intended.  That must change and change fast, or the current egregiously flawed process for resolving banks will continue, which will continue consolidation in the banking industry, make the too-big-to-fail problem much worse, and reduce lending to communities and small businesses.”


Better Markets is a non-profit, non-partisan, and independent organization founded in the wake of the 2008 financial crisis to promote the public interest in the financial markets, support the financial reform of Wall Street and make our financial system work for all Americans again. Better Markets works with allies—including many in finance—to promote pro-market, pro-business and pro-growth policies that help build a stronger, safer financial system that protects and promotes Americans’ jobs, savings, retirements and more. To learn more, visit

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