the staff of the Ridgewood blog
Ridgewood NJ, shares of First Republic dropped sharply Friday as hopes dimmed for a rescue deal that could keep the bank afloat. First Republic Bank shares fell a whopping 43% in regular trading. Then, as a news report foretold a potential future in receivership for the ailing California lender, its shares collapsed again. US officials have been coordinating talks to rescue First Republic, with the Federal Deposit Insurance Corp., the Treasury Department and Federal Reserve said to be orchestrating meetings about throwing it a lifeline. But some of the biggest US banks, which have already contributed $30 billion in deposits to prop up First Republic, have balked at the prospect of throwing good money after bad.
First Republic Bank has also been exploring divesting $50 billion to $100 billion of assets in an attempt to save itself after the collapse of Silicon Valley Bank and two other regional lenders. Its customer deposits plunged 41% in the first quarter, and the lender said it intends to terminate 25% of its employees. Then late on Friday, the situation worsened significantly.
The beleaguered bank is now facing buyout bids after the FDIC sought to arrange suitors . JPMorgan, PNC Financial, Citizens among bidders for First Republic Bank.
Regulators took possession of First Republic on Monday, resulting in the third failure of an American bank since March, after a last-ditch effort to persuade rival lenders to keep the ailing bank afloat failed.
JPMorgan Chase already the largest U.S. bank by several measures, has acquired all of First Republic’s deposits and a “substantial majority of assets,” according to a release.
Over at Charles Schwab, better known as a stock brokerage, its foray into banking has gotten caught up in the broader drama. Bank deposits at Schwab fell by $41 billion, to $325.7 billion, in the first three months of 2023—an 11% decline. Over the past year, deposits are down 30%. The company is shoring itself up by borrowing money at higher interest rates, becoming the largest borrower from the Federal Home Loan Bank of Dallas. It had borrowed a total of $45.6 billion from the FHLB by the end of March, up from $12.4 billion at year end. Schwab had borrowed nothing from the FHLB system at the end of 2021. Wall Street worries this can’t be sustainable. Executives at Schwab say such borrowing is temporary.
Meanwhile the sudden collapse of Silicon Valley Bank last month was due to a combination of extremely poor bank management, weakened regulations and lax government supervision, according to a highly anticipated autopsy of the bank’s failure from the Federal Reserve released Friday.
“Meanwhile the sudden collapse of Silicon Valley Bank last month was due to a combination of extremely poor bank management, weakened regulations and lax government supervision, according to a highly anticipated autopsy of the bank’s failure from the Federal Reserve released Friday.”
Oh, so *not* because it’s “woke”? I’m shocked.