When alarm bells went off in response to the bank run at Silicon Valley Bank in mid-March, many feared it would lead to a domino effect of regional bank failures. Yet on the heels of JPMorgan Chase’s takeover of troubled lender First Republic on Monday morning, Jamie Dimon has declared that this phase of the banking crisis is behind us. “I think the banking system is very stable,” he told investors and analysts on a Monday morning call. “This part of the crisis is over," he added.
Since March, SVB, Signature, and First Republic have all failed, following huge losses incurred by exposure to interest rate risk, which in turn caused a run on deposits. While these financial institutions had similar profiles that made them vulnerable, Dimon no longer sees the liquidity issues hitting other regional banks. He told reporters Monday morning that the extent to which First Republic relied on uninsured deposits was unique among regional banks and—similar to SVB—it was vulnerable to rising interest rates because of its loan portfolio. Dimon added on the investor call that he has seen reports that many regional banks have been faring well despite the turmoil. Some regional banks have “actually had good results, very modest outflow, and the deposit outflows were because of quantitative tightening, not because these people are having runs,” he said.
