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Congressional Democrats usually critical of massive banks are begrudgingly backing the nation’s biggest bank growing even larger in the wake of yet another financial institution failing.
The government over the weekend brokered JPMorgan’s purchase of First Republic Bank as it teetered on the brink of collapse. It comes on the heels of the failures of the Silicon Valley Bank and Signature Bank earlier this spring.
The acquisition likely saved further economic hardship. But it tested Democrats’ stomach for consolidation amid their long-standing warnings against making too many banks “too big to fail.”
“The broader question about how many big banks there are and consolidation there is a fair question,” said Sen. Chris Van Hollen (Md.), a Democrat on the Banking Committee. “But I think given the emergency they were facing, this was the best of the bad solutions.”
First Republic is the second-largest bank to fail since the 2008 financial crash. Absent federal interference, lawmakers have worried such collapses could set off domino effects throughout the financial sector.
“If the alternative was a bank failure, this is a better option,” said Sen. Mark Warner (Va.), a senior Democrat on the Banking Committee.
The FDIC in announcing the sale it brokered said its funds would bear a $13 billion hit after “highly competitive bidding” over First Republic’s remains. The Federal Deposit Insurance Act requires those regulators to seek the lowest cost in such transactions.
House Progressive Caucus Chair Pramila Jayapal (D-Wash.) said the sale of First Republic was a Faustian bargain. While she said the FDIC ultimately did the right thing by protecting investor and taxpayers, First Republic should have never been so close to failing in the first place. Zach C. Cohen has more perspectives from lawmakers.
Eyes On Banks
Regulators should consider taking apart risky banks that submit unreliable resolution plans, Consumer Financial Protection Bureau Director Rohit Chopra said.
Sens. Richard Blumenthal (D-Conn.) and Ron Johnson (R-Wis.) are looking into KPMG’s relationship with three recently failed banks, asking the firm for a wide range of documents for their initial inquiry.
The Senate Committee on Banking, Housing and Urban Affairs will conduct hearing to examine “cannabis banking challenges” of small businesses and workers on May 11.
- President Joe Biden and Vice President Kamala Harris meet with the White House’s Investing in America Cabinet at 11:45 a.m.
- The Senate at 9:30 a.m. holds a pro forma session with no business expected. The House returns next week.
More From Congress
Sen. Dianne Feinstein (D-Calif.) says there has been no slowdown in confirmation of judicial nominees despite her absence and says remaining nominees will clear the Judiciary Committee quickly when she returns.
More than 250 business leaders are urging the Senate to confirm Julie Su as Labor Secretary, CNBC reports, citing a letter addressed to Senate Majority Leader Chuck Schumer (D-N.Y.) and Minority Leader Mitch McConnell (R-Ky.).
A bipartisan group of senators introduced legislation that would allow Biden to sign a tax agreement with Taiwan, addressing an issue that businesses on both sides have pointed to as a barrier for further investment.
US spy agencies don’t have enough information to assess Russia’s claim that Ukraine was behind a drone attack it said was aimed at President Vladimir Putin’s residence in the Kremlin, Director of National Intelligence Avril Haines told the Senate Armed Services Committee on Thursday.
Politics, Probes and 2024
The Supreme Court sought a fresh round of briefs in a major election-law case being pressed by Republicans, hinting at the possibility the justices might scrap the case.
An opening on Pennsylvania’s Supreme Court is forcing Republican primary voters to decide whether to back a judge who briefly stalled Pennsylvania’s certification of Biden’s narrow victory in the 2020 presidential election.
Sen. Elizabeth Warren (D-Mass.) won’t be required to immediately retract, apologize for, or remove a letter from her website requesting that Amazon not direct consumers to an anti-vaccine book by Robert F. Kennedy Jr. because Kennedy’s underlying suit isn’t likely to succeed on the merits, a federal appeals court said Thursday.
A judge gave Donald Trump until Sunday at 5 p.m. to change his mind about not testifying in the trial of a civil lawsuit alleging he sexually assaulted New York author E. Jean Carroll in the 1990s.
What Else We’re Reading
The Department of Homeland Security is overhauling its intelligence unit and boosting oversight after a series of high-profile blunders and questions about political influence.
The US has concluded its evacuation of American citizens and others from Sudan, helping more than 2,000 people — including at least 1,300 American citizens — leave the country since fighting started April 15, the State Department said Thursday.
A legislative proposal to boost a little-known office tasked with managing space traffic is gaining steam in Congress and the private sector.
The Pentagon is seeking a meeting between Defense Secretary Lloyd Austin and his Chinese counterpart in Singapore next month, according to people familiar with the matter, as the Biden administration tries again to restart military contacts despite China’s earlier refusal.
Philippines President Ferdinand Marcos Jr. said the US can’t use military bases in his country for “offensive action” against China in the event of a future war over Taiwan, as the Southeast Asian nation continues to balance strengthening American defense ties with increasing pressure from Beijing.
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