NEW YORK (Reuters) – Federal Reserve Chair Jerome Powell said it was probably good policy that the largest banks are not doing big acquisitions, but said that JPMorgan Chase & Co’s acquisition of First Republic Bank was an exception.
Regulators have to follow the law of going with the least-cost bid, Powell said.
Regulators seized First Republic and sold its assets to JPMorgan on Monday, in a deal to resolve the largest U.S. bank failure since the 2008 financial crisis and draw a line under a lingering banking turmoil.
The Federal Reserve on Wednesday raised interest rates by a quarter of a percentage point and signaled it may pause further increases.
Powell said that the resolution of First Republic was “an important step to drawing a line” under a period of severe stress in the banking system.
He added that he was very focused on what happens with credit availability and would broadly monitor what is going on in the banking sector.
Powell added that the speed of the run on SVB needed to be reflected in supervision and regulation.
Startup-focused lender SVB Financial Group, which did business as Silicon Valley Bank was closed by regulators on March 10 in a sudden collapse.
(Reporting by Megan Davies; Editing by Andrea Ricci)