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| Group of Banks Rescues First Republic Bank with $30 Billion Deposit |
First Republic Bank has been saved from collapsing after a group of 11 banks deposited $30 billion worth of capital into the bank. This deposit is significantly more than the previous negotiations, which involved JPMorgan, Citigroup, Bank of America, and Wells Fargo, who were considering depositing $5 billion each into First Republic Bank. The rescue package was put together by the Treasury, Federal Reserve, Federal Deposit Insurance Corp., and the Office of the Comptroller of the Currency.
The contributing banks include Bank of America, Wells Fargo, Citigroup, JPMorgan Chase, Goldman Sachs, Morgan Stanley, Truist, PNC, U.S. Bancorp, State Street, and Bank of New York Mellon. The banks will deposit varying amounts, with the first four depositing about $5 billion each, Goldman Sachs and Morgan Stanley depositing about $2.5 billion, and the rest depositing about $1 billion each. The banks’ press release stated that the massive deposits will remain in First Republic for at least 120 days.
First Republic Bank’s stock price had suffered a decline in recent days, which was further fueled by the collapse of Silicon Valley Bank and Signature Bank over the weekend. The collapse of Silicon Valley Bank was triggered by the FED’s interest rate hikes due to President Joe Biden’s soaring inflation, causing borrowing money to become more expensive for businesses. This caused business depositors to access their savings at the institution, contributing to the bank’s decline. The rescue package from the group of banks is expected to prevent First Republic Bank from collapsing and help it regain stability.
The joint effort of the Treasury, Federal Reserve, Federal Deposit Insurance Corp., and the Office of the Comptroller of the Currency, along with the 11 contributing banks, has saved First Republic Bank from collapsing. The massive $30 billion deposit will remain in the bank for at least 120 days and is expected to help the bank regain its stability. This incident highlights the importance of the banking system's stability and the role of government and banks in maintaining it.
