![] A view of the exterior of the JP Morgan Chase & Co. corporate headquarters in New York City May 20, 2015. REUTERS/Mike Segar/File Photo](https://www.biznob.com/wp-content/uploads/2023/04/JP_800x500.jpeg)
JPMorgan Chase & Co.’s (JPM.N) acquisition of First Republic Bank forced the Biden administration to reconcile its anti-merger position with enabling the largest U.S. bank to grow.
President Joe Biden praised the sale of the ailing San Francisco lender at a White House event on small business on Monday, saying it will safeguard depositors and avoid a government bailout. However, he stressed stricter financial restrictions without mentioning JPMorgan.
Senator Elizabeth Warren, a Democrat and member of the Senate Banking Committee pushing for tighter banking regulations, blasted the decision. This theme could haunt Biden, who announced his bid for another term in the White House last week and has low approval ratings.
“A poorly supervised bank was snapped up by an even bigger bank—ultimately taxpayers will be on the hook,” Warren tweeted.
White House press secretary Karine Jean-Pierre said JPMorgan’s acquisition of First Republic’s assets was vital to maintain banking system resilience and cost taxpayers nothing.
“No recent administration has done more to promote competition, address (the) concentration process across industries,” she told a White House briefing.
Jean-Pierre noted that Biden administration officials liked that community banks serve individuals without financial access.
U.S. authorities are discussing strengthening bank merger restrictions amid concerns that consolidation might erode financial stability and leave communities without services.
According to people familiar with the process, administration officials encouraged smaller institutions to submit bids and tried to find an alternative solution, but JPMorgan’s large offer won.
Aaron Klein, a former Treasury official, and Senate aide who helped draft the Dodd-Frank reform bill after the global financial crisis, said the Federal Deposit Insurance Corp was legally compelled to accept the lowest bid.
Former officials said preventing the banking sector contagion outweighed concerns about JPMorgan’s growing dominance.
“Too big to fail is obviously a worry, but right now you’ve got to put out the hottest fire first,” said Ben Harris, who left his post as Treasury assistant secretary for economic policy at the end of March and was Biden’s chief economist when he was Obama’s vice president.
Comment Template