Report: JPMorgan Faces $3 Billion Debt to US Government Following Banking Crisis Impact on Emergency Fund
Major US Banks Ready to Contribute Billions to Federal Deposit Insurance Corporation for System Support
JPMorgan, Wells Fargo, Bank of America, Goldman Sachs, Morgan Stanley, PNC Financial Services Group, and Citigroup Collaboratively Allocate $8.2 Billion for Emergency Fund Replenishment, as Per Reuters Report
Out of these banks, JPMorgan takes the lead, committing a substantial sum of $3 billion.
These contributions are part of the Federal Deposit Insurance Corporation's (FDIC) "special assessment" approach, introduced in May. This strategy aims to establish a novel framework where prominent financial institutions shoulder the expenses of safeguarding depositors.
According to the revised system, financial entities with assets exceeding $50 billion will contribute 95% of the special assessment, while those with assets below $5 billion will be exempt from this assessment. Presently, the FDIC identifies 113 firms subject to these updated regulations.
As stated by the FDIC,
"This proposition targets the types of banking organizations that have gained the most from the protection extended to uninsured depositors. Primarily, substantial banks with considerable uninsured deposits have reaped significant benefits from the systemic risk evaluation."
The FDIC's initiative coincides with major US financial establishments fortifying their influence within the American banking sector, as numerous smaller competitors shutter their operations. The most recent instance transpired on July 28th when Heartland Tri-State Bank of Elkhart, Kansas, ceased operations, transferring its assets to Dream First Bank, National Association (N.A.), also based in Kansas.
JPMorgan, holding the position of the largest US bank, achieved notable Q2 results. The bank reported an impressive 67% surge in quarterly profits, amounting to $14.47 billion for the quarter concluded on June 30th, even in the face of a significant deposit decline.
Aug 11, 2023