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Biden promises banking system 'safe and sound' after First Republic collapse

Biden reassured depositors and made a pitch for stiffer oversight as First Republic becomes the third major bank to collapse in under two months.

WASHINGTON — President Joe Biden said depositors of a bank seized by federal regulators Monday would be protected and promised continued actions to keep the banking system “safe and sound.”

First Republic Bank became the third major bank to collapse in under two months when overnight it was taken over by the Federal Deposit Insurance Corp. and sold to JPMorgan Chase.

“Let me be very clear: All depositors are being protected,” Biden said in remarks from the Rose Garden. “Shareholders are losing their investments. And critically, taxpayers are not the ones that are on the hook.”

The president said the move would also protect small businesses, including depositors at San Francisco-based First Republic, now the second-largest bank failure in American history and the largest since the 2008 crisis. 

“These actions are going to make sure that the banking system is safe and sound, and that includes protecting small businesses across the country who need to make payroll for workers,” the president added, speaking at an event for National Small Business Week.

First Republic was initially rescued by rival banks in the aftermath of Silicon Valley Bank’s dramatic failure in March. But depositors began moving their money from First Republic after the crisis and as rising interest rates offered depositors better returns elsewhere.

Biden made a pitch for stiffer oversight of large and regional banks, calling on Congress to empower bank regulators.

“Folks, we have to make sure that we’re not back in this position again,” the president said before voicing confidence about the road ahead. 

“I think we’re well on our way to be able to make that assurance,” he added.