And then people are looking around to see who else is vulnerable. And so you are much more likely to look around and feel a little nervous if your bank is doing anything funny and feel like you need to run for the exits and make sure that money is safe.Īnd so that’s very much what we saw with these two banks. But if you’re above $250,000, the federal government doesn’t insure that. If you have deposit under $250,000 at a bank, you don’t really care if the bank fails because the federal government is going to ensure that.

And just to remind people why that $250,000 number matters, that’s the point at which if you fear your bank might fail, you’re very worried about that money, you should pull it out is the thinking, which actually becomes a self-reinforcing cycle that leads to a run on a bank. Signature Bank, another bank in that sort of midsized region, which also had, similar to Silicon Valley Bank, some exposures to interest rates and a lot of customers over the $250,000 Federal Deposit Insurance limit, also collapsed a few days later. So the customers pulled out their money in droves. It had to sell a bunch of investments that had lost value as interest rates rose. So Silicon Valley, as you’ll remember, had planned pretty poorly for rising interest rates. I think that what happened at First Republic was sort of a slow-motion reaction to what happened at Silicon Valley Bank, that first bank that failed. So tell us about why first Republic Bank ultimately went under. And it was even bigger as a bank than the previous two that failed. In fact, a third bank, First Republic Bank, collapsed. And after these two banks had failed, Silicon Valley Bank, then a couple of days later Signature Bank, the hope, and I’d say the expectation, was that this crisis might be over. So, Jeanna, another day, another bank failure. Today, I speak with my colleague, Jeanna Smialek, about whether we’re at the end of this banking crisis or the start of a new phase of financial pain. On Monday morning, the federal government took over a third failing bank, this time, First Republic.

michael barbaroįrom “The New York Times,” I’m Michael Barbaro. Please review the episode audio before quoting from this transcript and email with any questions. While it has been reviewed by human transcribers, it may contain errors. This transcript was created using speech recognition software. Now What? The seizing of First Republic by regulators could signal the end of the banking crisis.

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