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JPMorgan’s Jamie Dimon plays a key role in the bank bailout in the 2008 Echo

NEW YORK — Consulted by policymakers and able to nudge his peers into action, JPMorgan Chase CEO Jamie Dimon played a key role in a bank bailout this week — a situation reminiscent of 2008.

After the rapid collapse of Silicon Valley Bank and Signature Bank, there were fears that regional lender First Republic Bank could be the next domino to fall — despite efforts by authorities like the Treasury Department and the Federal Reserve to attract SVB and Signature depositors assure.

While First Republic isn’t out of the woods yet, it received a lifeline on Thursday when 11 major U.S. banks pledged to deposit $30 billion with the lender.

And Dimon, 67, played a key role in the plan.

He spoke with Treasury Secretary Janet Yellen and Fed Chair Jerome Powell this week as leaders tried to find a way to boost confidence in the financial system, according to three sources close to the discussions.

– “Adored” by peers –

As the crisis unraveled last Friday, with the SVB shut down by the agency and threatening contagion, Dimon also met with Deputy Treasury Secretary Wally Adeyemo at his office, according to the New York Times.

On Sunday, authorities unveiled plans to ensure SVB customers can access their deposits, while the Fed rolled out a new lending tool for banks to prevent a repeat of SVB’s rapid decline.

President Joe Biden tried the next day to reassure Americans that the banking system was safe, but the situation remained fragile.

Yellen has raised the idea of ​​big banks stepping in together, a source familiar with the matter said.

But it took Dimon and Yellen’s efforts Tuesday through Thursday to persuade CEOs to come on board and deposit billions of dollars into First Republic to prop up the bank.

Bank of America, Citigroup and Wells Fargo came on board first, followed by the others.

White House Chief of Staff Jeff Zients and National Economic Council Director Lael Brainard were kept in the loop during the trial, the source said.

Dimon is “revered by his peers,” said Yale School of Management professor Jeffrey Sonnenfeld.

“He speaks with expertise, authority and rare clarity,” Sonnenfeld said, adding that Dimon has been in the industry for a long time.

Dimon, who has headed JPMorgan since 2005, is the last remaining major bank chief to remain in post after the 2008 financial crisis.

“Nobody else has that authority, that credibility,” he said. “Everyone takes Jamie Dimon’s calls, especially in the financial world.”

– Echoes of 2008 –

Dimon, who runs the largest US bank by assets, also came to the rescue during the 2008 financial crisis by buying Bear Stearns and some assets of Washington Mutual.

Under his leadership, JPMorgan Chase weathered the crisis better than many.

While the acquisitions helped JPMorgan grow, they also brought a spate of complaints from regulators and shareholders over toxic financial products being recovered in the process, as well as billions in legal costs.

Dimon himself has come to regret the deal with Bear Stearns.

While the takeover of a troubled bank was out of the question this time, Dimon met with Yellen Thursday afternoon after her appearance at a Senate hearing.

The aim was to discuss the final details of a plan that would eventually see 11 major banks depositing $30 billion into First Republic.

Despite the latest lifeline, First Republic shares remained down around 33 percent as of 1930 GMT, signaling ongoing concerns for the financial sector.

Source: Crypto News Deutsch

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