JPMorgan Chase, Wells Fargo and more give $30B lifeline to First Republic

The exterior of a First Republic Bank building is pictured Thursday in San Francisco. (Justin Sullivan/Getty Images)

First Republic Bank, facing a crisis of confidence from investors and customers, is set to receive a $30 billion lifeline from a group of 11 large banks.

The major banks include JPMorgan Chase, Bank of America, Wells Fargo, Citigroup and Truist.

The infusion will give the struggling San Francisco lender much-needed cash to meet customer withdrawals and buttress confidence in the US banking system during a tumultuous moment for lenders.

First Republic's stock, which was halted several times for volatility on Thursday, ended the session up 10%.

A First Republic Bank branch is pictured in Manhattan on Monday. (Mike Segar/Reuters/FILE)

First Republic Bank, facing a crisis of confidence from investors and customers, is actively discussing options for a lifeline, people familiar with the matter said.

Some of America's largest banks are in talks to inject billions of dollars into the struggling San Francisco lender, giving it additional financial firepower to meet customer withdrawals and boost confidence.

The consortium of big banks involved in providing the lifeline includes JPMorgan Chase, Bank of America, Wells Fargo, Citigroup and Truist, the people told CNN.

The lifeline is expected to total roughly $30 billion, one of the people said.

A First Republic spokesman declined to comment. 

US officials appear to be pleased with the prospect of an industry-led rescue of First Republic. The fact that America's largest banks are discussing a lifeline for the San Francisco-based lender is a welcome sign of confidence in the strength of the banking system, a US official told CNN.

The official said such a rescue would complement actions that regulators have taken in recent days to safeguard deposits across the country.

The exterior of a First Republic Bank branch is seen on Broadway on the Upper West Side in New York City, on March 13. (Tal Yellin/CNN)

First Republic Bank, facing a crisis of confidence from investors and customers, is actively discussing options for a lifeline, a person familiar with the matter told CNN.

Participating in the discussions Thursday are massive Wall Street banks, including JPMorgan Chase, Bank of America, Wells Fargo and Citigroup, the source said. A deal to prop up First Republic with much-needed access to cash could be announced as soon as Thursday.

A First Republic spokesman declined to comment to CNN. The talks were first reported by the Wall Street Journal.

First Republic’s shares were halted several times for volatility Thursday. The stock was last up 22% after plunging more than 30% earlier in the day.

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The German share price index DAX graph is pictured at the stock exchange in Frankfurt, Germany, on March 16. (Staff/Reuters)

European stocks rebounded strongly Thursday afternoon, after falling back earlier in the day following an announcement by Europe’s central bank that it would hike its main interest rate by half a percentage point.

Europe’s benchmark Stoxx Europe 600 Banks index, which tracks 42 big EU and UK banks, closed 1.2% up, while London’s bank-heavy FTSE 100 index finished the day 0.9% higher.

Both indexes had fallen back almost 1% and 0.16% respectively following the European Central Bank’s decision to press ahead with rate hikes to help bring down inflation.

Germany’s DAX also closed up 1.6%, and France’s CAC 40 finished 2% higher.

The increases tracked a similar rebound across the pond. The S&P 500 bounced 1.7% by early afternoon ET following reports that ailing regional bank First Republic is considering a takeover by larger lenders.

 Customers line up at Silicon Valley Bank headquarters in Santa Clara, California, on March 13. (Dai Sugano/MediaNews Group/The Mercury News/Getty Images)

US tech investor Bradley Tusk told CNN that financial regulators are unprepared for bank runs in the age of social media.

Tusk, who was an early investor in Uber and Coinbase, says social media companies should work with regulators if they see sudden surges in online posts and mentions of banks. He told Julia Chatterley that this was a “no brainer."

"Perhaps by finding out a little sooner, they can act faster, and that may help save a bank run," he said.

Speaking more broadly about the impact of SVB’s collapse, Tusk said his venture capital business had its money stored at SVB, but insisted it was crucial to save the tech focused bank for wider economic reasons.

“If the Fed had let Silicon Valley Bank go down, half the start-ups in this country might have gone out of business," he said. "Talk about a hit to the innovation economy.”

He added that his firm “had not written a check to a start-up since all of this happened” because they were dealing with the SVB crisis.

Sen. James Lankford, R-Okla., speaks with Treasury Secretary Janet Yellen during her testimony about the Biden Administration's 2024 federal budget proposal before the Senate Finance Committee on Capitol Hill today. (From US Senate Committee on Finance)

Republican Senator James Lankford grilled Treasury Secretary Janet Yellen Thursday on how the US government's intervention in Silicon Valley Bank's and Signature Bank's collapses could encourage depositors to move their funds into large banks.

"What is your plan to keep large depositors from moving their funds out of community banks into the big banks? We have seen the mergers of banks over the past decade. I'm concerned you're about to accelerate that," the senator from Oklahoma said.

"That's certainly not something that we're encouraging," Yellen responded.

Lankford also said smaller, community banks likely won't receive the same help as SVB. The US government moved to insure deposits at SVB after the bank fell, sparking backlash from those who saw that intervention as a bailout.

"Will the deposits in every community bank in Oklahoma, regardless of their size, be fully insured now?" Lankford said. "Will they get the same treatment that SVB just got, or Signature Bank just got?"

"The bank only gets that treatment if a majority of the FDIC board, a super majority of the Fed board and I in consultation with the president determine that the failure to protect uninsured depositors would create systemic risk and significant economic and financial consequences," Yellen responded.

Single family homes are seen in a residential neighborhood in Miramar, Florida, on October 27, 2022. (Joe Raedle/Getty Images/FILE)

The current turmoil in the financial market means it could get tougher to purchase a home, particularly if government regulators like the Federal Reserve crack down on banks in the wake of SVB’s collapse. The Fed has also been on a historic rate-hiking regime to keep inflation in check, and most economists expect that to continue.

"If banks are under stress, they might be reluctant to lend," Treasury Secretary Janet Yellen said Thursday in testimony to the Senate Finance Committee. "We could see credit become more expensive and less available.”

“That could turn this into a source of significant downside economic risk," she added.

The banking meltdown over the past week leaves more questions than answers. The stunning collapse of two American banks and the loss of investor confidence in Credit Suisse led to wild market swings and put Wall Street on edge.

During CNN’s primetime special, “Bank Bust: Inside the Collapse of SVB,” experts weighed in on how to best understand what’s happening in a rapidly developing and confusing environment for financial institutions.

“On top of that, I think a lot of folks are feeling very concerned about, ‘Hey, if I’m saving up for a down payment, is a bank a safe place to put that money?’”

The 30-year fixed-rate mortgage averaged 6.73% in the week ending March 9. A year ago, it was 3.85%.

Freddie Mac is set to release its average weekly mortgage rates at 12 p.m. ET on Thursday.

Senator Sherrod Brown speaks to members of the media before a Senate Finance Committee hearing in Washington, DC, on March 16. (Al Drago/Bloomberg/Getty Images)

Senate Banking Chairman Sherrod Brown praised the administration’s actions after Silicon Valley Bank collapsed, and insisted that their assistance was not a bailout.

“I think the Secretary of the Treasury and the Federal Reserve have generally done this well,” he said. “A bailout says taxpayers paid, no taxpayer — this is the banks. This is the assessment of the banks of paying up for more Federal Deposit Insurance Corp, right?”

“Taxpayers are not on the hook, period,” he said. “There would be no support for this if this were a taxpayer funded kind of thing.”

He added that his committee plans to hold oversight hearings as soon as next month. 

“We're going to bring in the regulators, we are going to try to get the executives — and I'm sure they're loading up with legal console to protect themselves, I don't know if we'll get them in or not, but we're going to try,” said Brown. “We want the dust to settle a little from what happened and the fears to die down, as they mostly are.”

He added that they plan to focus on “not just what happened, but what the Federal Reserve is going to do, what Michael Barr is going to do, what the FDIC is going to do, what OCC and the other regulators are going to do at Treasury.”

The Blockchain Association, a nonprofit crypto advocacy group, said it is investigating firms' allegations that they are being unfairly shut out from the mainstream banking system.

The allegations include instances of accounts being closed and banks refusing to open new accounts.

In a statement, BA said it is looking into alleged "actions by regulators that may have improperly contributed to the failures of Signature, Silicon Valley Bank, and Silvergate."

Although crypto aspires to bring about a world without centralized banking authorities, the nascent industry still relies heavily on traditional lenders to bridge the gap between crypto platforms and fiat currency. Two of the three US banks that collapsed last week, Silvergate and Signature, catered heavily to crypto firms, leaving digital asset companies with far fewer friendly banks to turn to.

“These are lawful businesses in the United States and should be treated like any other law-abiding business," said Blockchain Association CEO Kristin Smith.

The group said it has submitted requests to the Federal Deposit Insurance Corporation, the Board of Governors of the Federal Reserve System, and the Office of the Comptroller of the Currency, requesting documents and communications under the Freedom of Information Act.