LOS ANGELES -- President Biden says the American banking system remains safe following the collapse of two U.S. banks, but the failures have nonetheless created concern among customers who hold their money in other similarly-sized banks.
At First Republic Bank in Studio City, Los Angeles Monday morning, there was a steady stream of customers to take their money out and move it to bigger banks. This came amid worries about what may be next to topple following the second- and third-largest bank failures in U.S. history.
U.S. regulators closed the Silicon Valley Bank on Friday after it experienced a traditional bank run, where depositors rushed to withdraw their funds all at once. It is the second largest bank failure in U.S. history, behind only the 2008 failure of Washington Mutual.
In a sign of how fast the financial bleeding was occurring, regulators announced that New York-based Signature Bank had also failed.
Silicon Valley Bank had more than $200 billion in assets and catered to tech start-ups, venture capital firms and well-paid technology workers. Officials assured all of the bank's customers that they would be able to access their money on Monday.
President Biden on Monday said he'd seek to hold those responsible and pressed for better oversight and regulation of larger banks. And he promised no losses would be borne by taxpayers.
"Americans can have confidence that the banking system is safe," the president said. "Your deposits will be there when you need them. Small businesses across the country... can breathe easier knowing that they'll be able to pay their workers and pay their bills.
The most pressure is on the regional banks a couple steps below in size of the massive, "too-big-to-fail" banks that helped take down the economy in 2007 and 2008. Shares of First Republic plunged 62.6%, even after the bank said Sunday it had strengthened its finances with cash from the Federal Reserve and JPMorgan Chase.
Amid the turmoil, First Republic in a response to Eyewitness News, tried to reassure its nervous customers.
"We're continuing to fully serve the needs of our clients by opening accounts, making loans, executing transactions and delivering exceptional service at our offices and online," First Republic said in a statement.
But for the people showing up at First Republic's branches today to withdraw their money, the bank cannot be trusted.
"I still don't trust that," said Patti, a long-time First Republic bank customer in Studio City. "I'm sorry I have to say that. You understand, my feelings towards this. It's not easy to go through these things and lose the money you worked for so many years for."
Other customers said they were withdrawing funds to prevent being last in line in case there was a run on First Republic Bank, causing a similar shutdown to what happened Silicon Valley Bank last week.
Huge banks, which have been repeatedly stress-tested by regulators following the 2008 financial crisis, weren't down as much. JPMorgan Chase fell 1.2%, and Bank of America dropped 3.9%.
First Republic Bank is small compared to the nation's largest banks.
Still, one financial expert told Eyewitness News this problem could be isolated and won't spread to bigger banks.
"The broader market is rallying today, and why I think that this isn't necessarily turning into more of a systematic failure across all of equities and all of stocks," said Sahak Manuelian, managing director at Wedbush Securities.
Treasury Secretary Janet Yellen has asserted that actions by regulators after the bank failures do not amount to a bailout. She has also disputed comparisons to the 2008 financial crisis.
With the turmoil in the U.S. banking system, Brian Gilder, a Los Angeles-based certified financial planner, says worried customers should spread their savings across several banking accounts.
"Don't panic and understand what's FDIC insured and what's not FDIC insured," said Gilder. "Let's say for example you have $350,000 dollars at Bank A. I would have $250,000 at bank A and then I would look at possibly going to bank B and putting $100,000 there, so you can sleep at night knowing that everything you have is FDIC."
The Associated Press contributed to this report.