Over the weekend, federal regulators were racing to find a buyer for First Republic before the markets opened on Monday. JPMorgan, PNC Financial Services and Bank of America were all at some point in talks with the F.D.I.C. about a potential deal.
“The F.D.I.C. wants banks to take over other banks,” Ms. Heitz said.
One way it incentivizes buyers is by sharing in any potential losses that a buyer might take, in what’s called a shared-loss agreement. JPMorgan said the F.D.I.C. would provide loss share agreements in the First Republic deal including for some home mortgages and business loans.
Does this mean deposits are safe?
Yes. The F.D.I.C.’s rules guarantee that deposits up to $250,000 will be covered, per depositor, per bank. The insurance coverage categories include checking and savings accounts and certificates of deposit. People who have a joint account with someone else, like a spouse, each get $250,000 in coverage, for a potential total of $500,000 in a single joint account.
People with different types of holdings can add them up. If the total does not exceed $250,000, multiple holdings — say a $50,000 savings account and a $20,000 certificate of deposit — will be covered. And the insurance is automatic.
Customers of Silicon Valley Bank and Signature Bank did not lose any of their deposits. Regulators opted to pay all depositors back in full after invoking the “systemic risk exception,” which is intended to protect against systemwide destabilization.