NATIONAL NEWS

Big banks create $30B rescue package for First Republic

Mar 16, 2023, 5:30 PM

Eleven of the biggest U.S. banks Thursday announced a $30 billion rescue package for First Republic...

A television screen displaying financial news is seen inside one of First Republic Bank's branches in the Financial District of Manhattan, Thursday, March 16, 2023. The S&P 500 was 0.8% higher in midday trading after erasing an earlier loss of nearly that much following reports that First Republic Bank could receive financial assistance or sell itself to another bank. (AP Photo /Mary Altaffer)

(AP Photo /Mary Altaffer)

NEW YORK (AP) — Eleven of the biggest U.S. banks Thursday announced a $30 billion rescue package for First Republic Bank in an effort to prevent it from becoming the third to fail in less than a week and head off a broader banking crisis.

San Francisco-based First Republic serves a similar clientele as Silicon Valley Bank, which failed last week after depositors withdrew about $40 billion in a matter of hours. New York’s Signature Bank was shuttered on Sunday. It appears that First Republic, which had deposits totaling $176.4 billion as of Dec. 31, was facing similar issues.

The group of banks behind the rescue package confirmed that other unnamed banks had seen large withdrawals of uninsured deposits. The Federal Deposit Insurance Corporation insures deposits up $250,000 for individual accounts.

Republic’s shares dropped more than 60% Monday, even after the bank said it had secured additional funding from JPMorgan and the Federal Reserve.

The rescue package brought back memories of the 2008 financial crisis, when banks collectively came to the aid of weaker banks in the early days of the crisis. Banks then bought each other in hurried deals in order to keep the crisis from spreading further.

The $30 billion in uninsured deposits is seen as a vote of confidence in First Republic, whose banking franchise before the past week was often the envy of the industry. The bank catered to wealthy clients, many of them billionaires, and offered them generous financial terms. The Wall Street Journal reported that Facebook founder Mark Zuckerberg got a mortgage through First Republic.

First Republic shares had been down as much 36% earlier Thursday, but rallied after reports the rescue package was in the works. The stock closed up 10%.

As part of the aid package, JPMorgan Chase, Bank of America, Citigroup and Wells Fargo have agreed to each put $5 billion in uninsured deposits into First Republic. Morgan Stanley and Goldman Sachs will deposit $2.5 billion each into the bank. The remaining $5 billion would consist of $1 billion contributions from BNY Mellon, State Street, PNC Bank, Truist and US Bank.

“The actions of America’s largest banks reflect their confidence in the country’s banking system,” the banks said in a statement.

Notably the banks came to the rescue of one of their competitors, while Silicon Valley Bank failed because its closest and most loyal customers — venture capitalists and start ups — fled the bank at the first sign of trouble.

“We are deploying our financial strength and liquidity into the larger system, where it is needed the most,” the banks said.

The nation’s banking regulators also issued a statement praising the rescue package.

“This show of support by a group of large banks is most welcome, and demonstrates the resilience of the banking system,” Treasury Secretary Janet Yellen, Acting Comptroller of the Currency

Michael Hsu, Federal Reserve Chair Jerome Powell and FDIC Chairman Martin Gruenberg said in a joint statement.

The $30 billion bet on First Republic is seen as a bulwark against future bank runs. The shares of many midsized banks were hit hard this week as investors feared depositors would withdraw their cash and run to the nation’s biggest banks.

Over the weekend the federal government, determined to restore public confidence in the banking system, moved to protect all the banks’ deposits, even those that exceeded the FDIC’s $250,000 limit per individual account. While the banking crisis started with Silicon Valley Bank, regulators told reporters earlier this week that it became necessary for the government to backstop the banking system because it appeared more runs were possible.

We want to hear from you.

Have a story idea or tip? Send it to the KSL NewsRadio team here.

National News

Estee Lauder products on display...

ANNE D'INNOCENZIO AP Retail Writer

Estee Lauder to cut up to 7,000 jobs as sales slide

Estee Lauder said it's expanding its restructuring plan to include from 5,800 to 7,000 job cuts by 2026.

2 days ago

dc plane crash recovery...

Associated Press

Remains of all 67 victims of plane/chopper collision near DC are recovered

The news came Tuesday as crews worked to try to recover the cockpit and other parts of the jetliner from the Potomac River.

3 days ago

A figure skater with the Cottonwood Heights Figure Skating Club held a rose during a memorial vigil...

Shara Park

Cottonwood Heights Figure Skating Club holds memorial vigil for Flight 5432

As crews pull the remaining wreckage from Flight 5432, figure skating clubs from around the country held vigils to honor those killed.

3 days ago

The lobby of the U.S. Agency for International Development (USAID) headquarters is seen on February...

ELLEN KNICKMEYER and MEG KINNARD Associated Press

What is USAID? Explaining the US foreign aid agency, why Trump/Musk want to end it

Former President John F. Kennedy established USAID during the Cold War. In the decades since, Republicans and Democrats have fought over the agency and its funding,

4 days ago

Grammy...

MARIA SHERMAN AP Music Writer

Jimmy Carter wins posthumous Grammy for narrating an audiobook of his Sunday school lessons

Former President Jimmy Carter posthumously won a Grammy on Sunday for narrating an audiobook of Sunday school lessons.

4 days ago

parent tackles gunman at texas school band competition...

Mariah Maynes

Parent tackles gunman who injured 1 at Texas school band competition, officials say

A parent tackled a gunman who opened fire at a Texas school band competition. One person was injured.

4 days ago

Sponsored Articles

Full speed through the snow. A man on skis is pulled by his through the snow at full gallop Skijori...

Bear Lake Convention and Visitors Bureau

Get ready for an unforgettable skijoring adventure in Bear Lake!

“Skijoring the Bear” takes place this year on February 21-22 in Garden City, Utah.

the bedroom in a geodesic dome shows the night sky...

Clear Sky Resorts Bryce Canyon

Your front row to an extraordinary cosmos show

As America's first glass dome stargazing resort, Clear Sky Resorts Bryce Canyon is one of the world’s most unique and spectacular places to stay.

2 people huddled up in a blanket and warm clothes sipping hot chocolate...

Bear Lake Convention & Visitors Bureau

The best ways to spend your Christmas vacation in Bear Lake

If you're dreaming of a white Christmas this year, Bear Lake should definitely be on your radar. Read this guide for more!

big crowd of people under holiday lights in an outdoor market...

Western Nut

Our favorite family Christmas activities in Utah

We gathered up a list of our favorite activities, movies, and treats to try this holiday season that the whole family can enjoy.

an IT tech looks at a laptop in front of a server network...

Comcast Business

Tips to protect yourself from phishing attacks

Check out this resource from Comcast Business to learn more about phishing attacks and how to protect yourself from becoming a victim of one.

A surprise gift, wrapped and ready to bring holiday cheer! Whether for Christmas, a birthday, or an...

Western Nut

10 Holiday Gift Ideas to cover everyone on your list

This guide is for you if you need holiday gift ideas that will make a lasting impression. 

Big banks create $30B rescue package for First Republic