![]() 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. The $30 billion bet on First Republic is seen as a bulwark against future bank runs. “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 remaining $5 billion would consist of $1 billion contributions from BNY Mellon, State Street, PNC Bank, Truist and US Bank. Morgan Stanley and Goldman Sachs will deposit $2.5 billion each into the bank. The stock closed up 10%.Īs 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. The Wall Street Journal reported that Facebook founder Mark Zuckerberg got a mortgage through First Republic.įirst Republic shares had been down as much 36% earlier Thursday, but rallied after reports the rescue package was in the works. The bank catered to wealthy clients, many of them billionaires, and offered them generous financial terms. 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. Banks then bought each other in hurried deals in order to keep the crisis from spreading further. 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.
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