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Has JPMorgan Chase grown too large? A former White House economic adviser weighs in

A Chase Bank location in Warrington, Pa. Regulators seized First Republic Bank and sold all of its deposits and most of its assets to JPMorgan Chase Bank.
Matt Rourke
A Chase Bank location in Warrington, Pa. Regulators seized First Republic Bank and sold all of its deposits and most of its assets to JPMorgan Chase Bank.

Updated May 2, 2023 at 10:12 AM ET

The Federal Deposit Insurance Corp. (FDIC) says the government might want to reconsider the size of the bank accounts it insures. Accounts are currently insured up to $250,000.

The FDIC suggests a larger limit for certain business accounts might have advantages. The recommendation comes after First Republic Bank collapsed this weekend. The bank had a large share of uninsured deposits, which can worsen bank runs. All the bank's deposits, and most of its assets, were sold to JPMorgan Chase. This transaction required a regulatory waiver as JPMorgan Chase already controls more than 10% of all U.S. insured deposits, a limit set by law for any bank merger.

NPR's Leila Fadel talks to Tomas Philipson, former acting chairman of the White House Council of Economic Advisers, about the risks of JPMorgan Chase becoming even bigger after it took over First Republic Bank.

The interview has been condensed and edited for clarity and length.

Interview highlights

On the regulations to stop big banks from growing too big

I think the problem is that we are getting these too big to fail policies are essentially increasing concentration in the banking sector. And that's what people worry about, because that ultimately leads to lower deposit rates and higher interest rates on loans, etc.

I think FDIC, when they get into a situation when they're bailing out a bank like First Republic, they're looking at their costs a century in the future and they try to minimize those. So, it's an additional bias that they have for big players. JPMorgan is by far the largest bank in the country. It's 2.4 trillion in deposits and this is just a 3% add to their deposits of taking on First Republic.

On what it means for consumers when a bank gets this large

In any industry, when you have a lot of concentration, you have less price competition. Less price competition in the banking sector means lower deposit rates for deposits you make to them and higher rates on the interest rates that they lend out at.

On how to stop banks from failing

You can't have a fail-free banking system that's not good for competition. So I think, you know, the poor people in, you know, in the economy are protected by the FDIC. If you have less than a quarter million in deposits or cash at a bank with which, you know, covers a large share of the population, you are protected by your deposits being insured by the Federal Deposit Insurance Corporation. So the question is, are you going to have a system where the rich people are also covered by regulation.

Jan Johnson contributed editing. contributed to this story

Copyright 2023 NPR. To see more, visit https://www.npr.org.

Destinee Adams
Destinee Adams (she/her) is a temporary news assistant for Morning Edition and Up First. In May 2022, a month before joining Morning Edition, she earned a bachelor's degree in Multimedia Journalism at Oklahoma State University. During her undergraduate career, she interned at the Stillwater News Press (Okla.) and participated in NPR's Next Generation Radio. In 2020, she wrote about George Floyd's impact on Black Americans, and in the following years she covered transgender identity and unpopular Black history in the South. Adams was born and raised in Oklahoma City, Oklahoma.
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