Former First Republic Bank CEO James Herbert has blamed the bank’s collapse on “contagion” from the global financial crisis. In an interview with The Wall Street Journal, Herbert said the bank was hit hard by the crisis and its collapse was due to the “contagion” of the crisis, which caused customers to pull their deposits and invest elsewhere.
He also said that the bank’s business model, which relied heavily on short-term financing, was not sustainable in the long-term. He added that the bank’s liquidity crisis was worsened by the Federal Reserve’s decision to raise interest rates. The bank eventually filed for bankruptcy in 2013, after being unable to secure enough capital to stay afloat.