Second Biggest Bank Failure in History; JPMorgan Chase Takes Over

  • It’s the 3rd bank fail since March — Silicon Valley Bank ($209 billion) and Signature Bank ($118 billion) are number 3 and 4 on the list.
  • The largest bank failure in US history is Washington Mutual which failed in 2008 with $307 billion in assets at the time.

After regulators took possession of First Republic last Monday, JPMorgan Chase, already the largest US bank by several measures, emerged as winner of the weekend auction.

  • The acquisition has raised concerns regarding anti-monopoly regulation and whether JPMorgan technically should be allowed to consume it.
  • Others have expressed questions about what happens when on of the “too big to fail” banks turns into a “too big to bail-out” bank.

Read the full article here.

Getting deeper: One of the themes I’ll be developing in the coming months is that the “rules of the game” always change in a crisis.

It pays to understand the rules because in non-crisis times, they largely apply and tell you where the opportunities are.

But in times of crisis, all bets are off if you’re clinging to those rules.

For example, apparently there’s a rule where no single bank can hold more than 10% of nationwide deposits.

JP Morgan was already at that limit.

Yet, with today’s takeover of First Republic, they’re going to break that rule and get even bigger.