The $30 billion bet on First Republic — to prevent it from becoming the third bank to fail in less than a week — was pitched as a bulwark against future bank...
NEW YORK — When 11 of the biggest U.S. banks announced their $30 billion rescue package for First Republic Bank this week, those banks, notably, were coming to the rescue of one of their competitors. When Silicon Valley Bank failed, it was because its closest and most loyal customers, venture capitalists and startups, 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. Context: From SVB’s sudden collapse to Credit Suisse’s fallout: 8 charts show turbulence in financial marketsAnd: California House Democrats demand investigation into Goldman Sachs’ relationship with Silicon Valley Bank
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 others in hurried deals in order to keep the crisis from spreading.The $30 billion in uninsured deposits is seen as a vote of confidence in First Republic, whose banking franchise before the past week was the envy of much of the industry.
“The actions of America’s largest banks reflect their confidence in the country’s banking system,” the banks said in a statement.
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