In the closing of First Republic Bank by the Federal Deposit Insurance Corporation and its sale to JPMorgan Chase, there was mention of a loss-share transaction for loans.
Both the FDIC and JPMorgan Chase will share costs and potential recoveries from single family, residential, and commercial loans that the bank bought from First Republic. According to the FDIC, the Shared Loss Agreement (SLA) along with the Purchase and Assumption agreement (P&A) are part of the resolution transaction for a failing bank.
When a bank fails, it means significant problems in how the institution had been run and with its current financial state. Every sale of a failed bank is something unto itself, with negotiations responsible to see what assets and deposits will transfer to the buyers.
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