Eleven of the nation’s biggest banks rescued regional lender First Republic Bank with a $30 billion bailout after questions about the San Francisco-based bank caused its stock price to tumble this week. CBS News congressional correspondent Scott MacFarlane reports.
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LEARN MORE ABOUT: Bank Failures
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First Republic Bank was in dire straits in the early months of 2020, and it seemed that the bank was headed towards bankruptcy. The bank, which had been struggling with debts and mounting losses, was on the verge of collapse, with its customers fearing that they would lose their savings and investments.
However, the big banks came to the rescue of First Republic Bank when they put together a massive $30 billion bailout package. The package was aimed at helping the bank work through its financial problems and return to profitability in the future.
The package was made up of loans, guarantees, and other forms of financial support, and was provided by eleven of the largest banks in the United States. The banks involved were Bank of America, Wells Fargo, JPMorgan Chase, Citigroup, Goldman Sachs, Morgan Stanley, Barclays, Credit Suisse, Deutsche Bank, UBS, and HSBC.
The bailout was a clear indication of the financial industry’s willingness to support its own, and the banks’ decision to throw their weight behind First Republic Bank was seen as a significant vote of confidence in the bank and its future prospects.
It is worth noting that First Republic Bank is not the first bank to receive such support. In the aftermath of the 2008 financial crisis, numerous banks received bailout packages from the government in order to avoid a complete collapse of the financial system.
Although the $30 billion bailout package provided to First Republic Bank was not provided by the government, it was nonetheless a clear indication of the banking industry’s continued commitment to mutual support and assistance, particularly in times of financial distress.
Critics of such bailouts argue that they create a moral hazard, essentially incentivizing banks to take on excessive risk knowing that they will be bailed out if things go wrong. However, supporters of bailouts argue that they are necessary to prevent the collapse of the financial system and the enormous economic fallout that would result.
In the case of First Republic Bank, it remains to be seen whether the bailout will ultimately prove successful. However, the fact that the bank has received such a significant show of support from its peers bodes well for its future prospects, and provides hope that it will be able to weather the storm and emerge stronger in the longer term.
It was my understanding in a capitalist society that the businesses that couldn't make it failed and disappeared and knew stronger companies moved in to take their place. The problem is you guys keep saving failed businesses and they just continue to fail something wrong with this equation.
Luckily I put my money at a credit union. They're not perfect but less riskier than banks and they don't just take my money and make a gamble without my permission.
If a corporation becomes too big to fail, then laws need to be put into place to prevent a corporation from becoming too big to fail and to maintain accountability.
It's not a bailout. It's kiting checks. With our checkbooks …and for only 120 days.
They know the dominoes are falling their direction and it's a CYA firewall.
Thank God they're gonna save One Republic!
That's a million-dollar question in this financial crisis – who is next??
How is the 'Bank run' going in US, especially FRB? Are there still people in front of FRB branch? I think that's where we should begin to study before putting money in it.
Something is fishy here….I wonder who money they are protecting bc it’s certainly not yours!
Digital currencies need no banking.
https://www.youtube.com/watch?v=0I-mLRU3Ra8
It's obviously a bailout, no matter how they are spinning it, it's irrecponsible to lie to public . Tax payers are paying again to bailout irresponsible and incompetent banks' management, they must go to jail. Inside trading is illegal but regulators are turning their heads as they did during 2008. How is this different than communism? unless we make the responsible accountable, we'll never resolve this problem. The $25 BILLION taxpayer money's not sufficient to bail out one more regional bank. The total unrealiized losses are ~$600 BILLION (given past experience it should be multiples of that). Let's not forget that the largest banks have multiples more of these toxic assets.
Ohio Distraction, carry on.
Biden: Bank runs are transitory.
Considering what happened with SVB and other banks it appears improbable that the market will register substantial gains in the immediate future. Therefore, it is advisable to temper one's expectations and acknowledge the potential length of the market's recovery period. It is my professional opinion that it would be prudent to defer any significant investment decisions until the economic environment stabilizes in areas of concern. Until then, exercising caution and refraining from engaging with the current turbulence would be the most judicious course of action.
How do you fight a proxy war and bailout banks at the same time. This corrupt government is awesome in it’s incompetence.
Pull all your money out before they steal it all
Good start with laughing
And still failing!!!
Omg
Gerard Cassidy said four days ago this may be a good time to buy First Republic huh!!
I'll look they are pretending they're not using tax dollars but they are do you really think a bank is going to loan their competition money if you did you should check your water and see if they've been putting stupid in it everybody was complaining they were going to loan the bank's money and they said they were going to now they came up with this lie because people were getting upset all governments lie trying to prevent panic
Perfect time to buy FRC while it’s low, they can’t let it fail!
We urge people to Wake up and switch to prepaid cards like Green Dot or NetSpend Prepaid visa cards top rated.
Diamond sports must Put Bally regional sports networks for sale to different ownerships. Hey this will help Sinclair broadcast group to pay former tribune ownership
SVB executives sold all their stock options before they went bankrupt. They also pushed woke DEI policies rather than focus on profits. Crooks.
Right wing lying garbage not taking responsibility for their repealing all the regulations that prevented this from 2008. Typical conservative trash.
Ahhh yes the absolute worst word in 2022 and 2023 "SYSTEMIC" What a joke LMAO IDIOTS!!!!
Wow wow god Femily Democratic okay Family business ok thanks good Family Bank yes Democratic Families yes Happens Democracy Family U.S. yes Democracy okay Happy TNX GOOD
Who knew a society based on greed would have issues, shocking. And for all the "smart" guys who are going to smugly tell me why "greed is good" I'll point you to 6000 years of moral teachings about greed and power. But I'm sure you're super smart.
That’s why regulation and oversight is needed
Cant repair many years of fraudulent activity in days. Alittle too late
Our nation's idiots can't comprehend why we have regulations.
First Republic Bank – CA based like SVB.
This is a bank problem associated with HQ in DEM state.
The rich are getting richer.
Biden continues to fail his country, he's too busy giving Ukraine our money and assets.
Explain "systemic risk".
Here we go.
Biden is the cause for the Big bank failures not Trump
This is very serious. What bank is next? We don't believe you Ms. Yellen, you need more people
It’s not enough, look at the gold market.