Employees stand outside of the shuttered Silicon Valley Bank (SVB) headquarters on March 10, 2023 in Santa Clara, California.
Justin Sullivan/Getty Images
Wall Street titans are expected to pay a multi-billion dollar price for the spring’s banking chaos.
JPMorgan, BofA, and Wells Fargo are among those refilling the FDIC’s deposit insurance fund.
The FDIC’s fund recently took a $13 billion hit following the failure of First Republic Bank.
Wall Street’s largest lenders are set to pay nearly $8.9 billion to refill the Federal Deposit Insurance Corporation (FDIC) coffers after this spring’s banking fiasco.
JPMorgan tops the list as the biggest contributor, expected to pay $3 billion towards the US government’s deposit insurance fund, according to Bloomberg.
Bank of America and Wells Fargo will pay nearly $2 billion, while Citi Group, Goldman Sachs and Morgan Stanley will hand out $1.5 billion, 400 million, and 270 million, respectively.
The FDIC typically insures bank deposits of up to $250,000 in the event of a bank collapse.
The fund has dealt with a massive blow this year after a string of bank failures. In March, the FDIC promised to cover depositors at Silicon Valley Bank and Signature Bank following their demise. What followed was a $15.8 billion hole in the FDIC’s deposit insurance fund.
Then in May, after the failure of First Republic Bank, the FDIC estimated another $13 billion hit to the insurance fund.
Turmoil in the banking sector largely came as a result of the Federal Reserve’s aggressive interest-rate hiking cycle over the past year in a bid to cool inflation. The Fed has lifted benchmark borrowing costs by 500 basis points since early-2022.
The rate hikes were bad news for small and mid-sized US lenders given they triggered steep losses on their bond portfolios.
The fallout from banking sector chaos has dragged on for months. JPMorgan CEO Jamie Dimon warned of more banking turmoil if the Fed continues to hike interest rates. “If rates go up from here, and they might, it could rear its ugly head again,” he said in a recent interview with The Economist.