When does a banking wobble become a crisis?

Can a banking crisis really be going this well? After a week of panic withdrawals and a crashing share price, the First Republic Bank in the US will be taken over nearly in its entirety by J P Morgan Chase, in a shotgun marriage facilitated by the Federal Deposit Insurance Corporation (FDIC). No depositors will lose money, and most of the bank’s functions will continue uninterrupted – just as they did in the case of HSBC’s takeover of the UK arm of Silicon Valley Bank last month.    

We have now had four major banking collapses in the space of six weeks, with remarkably little spillover into the economy at large and the misery mostly limited to shareholders in the banks concerned. Otherwise, stock markets have largely escaped collateral damage. This takeover doesn’t come cost-free – the FDIC’s Deposit Insurance Fund will shell out £13 billion, paid for by all banks and, by implication, depositors.