Fed, FDIC and Treasury discussing rescue options for First Republic with banks, private equity: report

The Federal Deposit Insurance Corporation (FDIC), the Treasury Department and the Federal Reserve are overseeing discussions with banks and private equity to organize a rescue for troubled First Republic Bank.

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That’s according to a report by Reuters on Friday that cited sources, one of whom said that private equity groups have also been involved in those meetings to try to keep First Republic afloat as its shares have tumbled anew this week.


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The bank’s executives have been encouraged by the involvement of U.S. agencies, though it’s uncertain that the U.S. government itself will be involved in a private-led bailout, the sources said.

First Republic revealed earlier this week that customers withdrew billions of dollars in the first quarter, piling pressure on the stock, which has slumped 56% this week, bringing its year-to-date losses to 94%, according to FactSet Research.

Read: First Republic stock slides further on questions about its future

The Wall Street Journal reported earlier this week that First Republic had offered to sell its loans or securities at prices above market rates to 11 banks as part of a fresh survival plan. And Bloomberg reported that the bank is currently considering the sale of $50 billion to $100 billion of long-dated mortgages and securities as part of a rescue plan,

The Federal Reserve and JPMorgan Chase & Co JPM stepped in during last month’s banking crisis to backstop a run on deposits at the lender, with 11 of the biggest banks in the U.S. also stepping up with a $30 billion deposit.

Two sources cited by Reuters said that U.S. officials want to keep the bank out of FDIC receivership, and would prefer a deal led by the private sector. However, they also said that asset sales or the suggestion to create a “bad bank” had yet to produce a deal.

Separately, White House spokeswoman Karine Jean-Pierre said late Thursday that the administration of President Joe Biden continues to monitor First Republic Bank, saying that it will take action if necessary, according to Reuters.

“We have used important tools to quickly stabilize the banking system. We could use those tools again, if needed. Certainly we are monitoring this situation,” she told reporters when asked about the troubled lender.

MarketWatch has reached out to First Republic, the FDIC, the Treasury, the Federal Reserve and The White House for comment.

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