Congress Asks Americans to Remain Confident in Banking Sector

Following the recent spate of issues involving the global banking sector, the United States Federal Deposit Insurance Corporation (FDIC) announced that it is placing yet another regional bank under receivership.

FDIC officials formally seized the First Republic Bank on Monday, May 1st, subsequently selling its assets to banking giant JPMorgan & Chase Inc. First Republic was one of several regional lenders in the US that were hit hard by the way depositors lost confidence in the banking sector earlier this year.

Back in March, spurred by the collapse of smaller banking firms, depositors across the country pulled their deposits out en masse to establish accounts with major banking companies like JPMorgan and others. 

While the First Republic initially weathered the onslaught of issues, depositors fled last week following the bank’s announcement that it experienced over $100 billion in outflows as of the end of Q1-2023. As a result, regulators in California seized the First Republic on May 1st, putting the bank into FDIC receivership pending the sale of its assets.

“Do Not be Alarmed”

In response to this issue, North Carolina congressman Patrick McHenry released a statement following the FDIC’s placement of First Republic under receivership in order to calm public sentiment and restore confidence in the American banking sector.

In his capacity as chair of the House Financial Services Committee, McHenry stated that Americans needed to stay confident in the safety of their deposits in domestic banks. He lauded how the FDIC used the tools at its disposal to resolve the issue involving the First Republic at little risk to taxpayers.

However, McHenry also called out the FDIC for not using the same solutions back in March when another regional firm, California’s Silicon Valley Bank (SVB) collapsed and was placed under receivership.

McHenry closed his statement by saying that it is vital that the government and its regulatory bodies should not politicize recent adverse events in the banking sector.

 He went on to say that he and his committee will ensure that relevant lawmakers are briefed properly by banking regulators and that transparency regarding issues involving the financial sector will be provided for the information of the public.