The Federal Deposit Insurance Corporation is set to seize control of First Republic Bank, according to multiple reports.
"Receivership is basically the FDIC coming in and handling all the affairs of a failed bank. It's selling the assets of the bank to then meet the obligations of the bank, such as for example, the people who have $250,000 or less deposited," said Dr. Julian Vogel, an assistant professor of finance at San Jose State University.
"When more people withdraw their money, that's when the bank is more likely to go under," he said."However, these banks that are affected also had an issue with their management – they didn't diversify enough, they invested an unproportionately large amount of their assets in risk-free treasury securities, and that is never ideal. Being overexposed to any specific type of security or asset is never ideal.
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