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U.S. Government Mulls Private Effort to Rescue First Republic Bank

U.S. Government Mulls Private Effort to Rescue First Republic Bank

Recent reports suggest that U.S. officials are leading urgent discussions to save First Republic Bank, which is struggling to secure a finalized deal through private-sector efforts.

Three anonymous sources familiar with the matter have stated that the Federal Deposit Insurance Corporation (FDIC), the Treasury Department, and the Federal Reserve have been holding meetings with financial companies to put together a lifeline for the troubled lender.

Efforts to save First Republic Bank in the US

It remains uncertain if the United States government will partake in a private effort to rescue First Republic Bank. Nevertheless, an insider has stated that the government’s involvement has empowered the bank’s leaders. They are now diligently working to devise a plan to prevent U.S. regulatory authorities from taking over the bank.

As previously reported, First Republic Bank was expected to be seized by the U.S. government. According to Fox News’ Charles Gasparino, bankers working with the bank have said they expect the government to take over the ailing institution once private sector solutions have been exhausted.

These solutions include selling assets and finding a buyer, both of which have proved difficult. Gasparino also claimed that officials at large banks believed the Fed was “poised” to take over First Republic Bank last week.

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Despite this, two sources told Reuters that U.S. officials consider a private-sector solution “preferable” to the bank falling into FDIC receivership. A range of options has been put forth, including selling assets and creating a “bad bank.” However, according to the sources, none of these options have resulted in a deal as yet. At this point, no decision has been made, and the outcome is uncertain.

First Republic Bank’s stocks crash

The market response to these developments has been mixed. On Thursday, FRC’s share price rose by 8.79%, but this was not enough to offset the decline in value since November 2022.

The bank’s shares have suffered a 98.3% decline in value since its $222 ATH. The regional banking crisis additionally furthered this drop in March following the failure of Silicon Valley Bank and Signature Bank.

Wall Street banks have been attempting to discover a resolution for First Republic since March 16, when 11 of the largest U.S. lenders deposited $30bn at the bank to alleviate the banking crisis in the region.

Alexander Stefanov

Reporter at CoinsPress

Alex is an experienced finance journalist and a cryptocurrency and blockchain enthusiast. With over five years of experience covering the industry, he deeply understands the complex and constantly evolving world of digital assets. His insightful and thought-provoking articles provide readers with a clear picture of the latest developments and trends in the market. His passionate approach allows him to break down complex ideas into accessible and insightful content. Follow up on his content to be up to date with the most important trends and topics - stay ahead of the curve with CoinsPress.

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