Morning Consult Finance: 11 U.S. Banks Team Up in $30 Billion Rescue Package for First Republic Bank


Essential financial news & intel to start your day.
March 17, 2023
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Today’s Top News

  • The nation’s largest banks will inject $30 billion in deposits into First Republic Bank in a move to stabilize the institution and shore up faltering confidence in the banking industry more broadly, a move that came together after discussions between bank executives, Washington regulators and Treasury Secretary Janet Yellen, according to people familiar with the matter. JPMorgan Chase & Co., Citigroup Inc., Bank of America Corp. and Wells Fargo & Co. will each contribute a $5 billion uninsured deposit, while Morgan Stanley and Goldman Sachs Group Inc. will each contribute $2.5 billion, and five other banks will contribute $1 billion each. (The Wall Street Journal)
  • Yellen told Senate lawmakers that there is no guarantee that all future uninsured bank deposits will be made whole by the U.S. government. As lawmakers pressed Yellen on whether the recent measures by the Biden administration to cover all uninsured deposits at the failed Silicon Valley Bank and Signature Bank could become a new norm, Yellen established that only uninsured deposits at banks that pose systemic risk to the financial system would be covered in the future. (CNBC)
  • In the past week, banks have borrowed $164.8 billion from Federal Reserve funds, including a record $152.85 billion from the discount window and $11.9 billion from the Fed’s Bank Term Funding Program, which was created earlier in the week to provide additional liquidity in the wake of failures of SVB and Signature Bank late last week. The previous record of $111 billion in discount window borrowing was reached during the 2008 financial crisis. (Bloomberg)
  • As Biden administration officials put together a bank depositor bailout late on Sunday, they wanted to include language that placed blame for the recent banking collapses on shortcomings in banking regulations, according to several people involved in or close to the discussions, but Federal Reserve Chair Jerome Powell pushed to have the language removed. In the joint statement released Sunday by the Fed, the Treasury Department and the Federal Deposit Insurance Corporation, Powell wanted instead to focus on the actions designed to strengthen the financial system, such as guaranteeing SVB customers’ deposits, according to a person familiar with that matter. (The New York Times)

Chart Review


What Else You Need to Know


Yellen jousts with Senate tax writers over OECD, IRS, TCJA

Brian Faler, Politico Pro

Republicans aired a long list of grievances with the Treasury secretary.


Student loan servicers must return illegally collected debt, CFPB says

Ronda Lee, Yahoo Finance

The nation’s most powerful financial watchdog agency directed student loan servicers that unlawfully collected debt discharged in bankruptcy to return those funds to affected borrowers.


Audit identifies ‘ineffective’ active directory security controls at FDIC

John Hewitt Jones, FedScoop

In a report published on Thursday commissioned by the FDIC’s inspector general, examiners set out seven separate weaknesses found during a probe of the department’s systems. According to the investigation, multiple privileged system users reused their passwords and shared passwords across multiple accounts. Other privileged users at the agency violated security protocols by failing to change passwords for over a year, auditors found.


US CFTC to give pass over certain swap reporting failures tied to SVB, Signature Bank contracts


The U.S. Commodity Futures Trading Commission on Wednesday said it would give a pass to firms that cannot meet certain swap reporting requirements following the recent failures of Silicon Valley Bank and Signature Bank.

Economic and Fiscal Policy

China would be among first paid under GOP debt limit plan, Treasury Secretary Yellen says

Chelsea Cox, CNBC

Treasury Secretary Janet Yellen said Thursday that China would be among the first in line to get paid under a Republican proposal to prioritize some U.S. debt obligations over others, calling it a “dangerous idea” that would technically cause the U.S. to default on its bonds.


Better-Funded IRS Should Increase Audits of the Top 1%, Democrats Say

Laura Davison, Bloomberg

The Internal Revenue Service should focus new audits solely on large corporations and households earning more than $400,000 annually, Senator Elizabeth Warren and 24 other Democrats told the agency.


Jobless Claims Fell Last Week, Showing Still Strong Labor Market

Bryan Mena, The Wall Street Journal

New applications for unemployment benefits declined by 20,000, mostly reversing prior week’s jump


Top House Republican Urges Congress to Avoid Debt-Limit Drama, SVB Blame Game

Laura Davison, Bloomberg

A top House Republican wants Congress to lower the political temperature in Washington by cooperating on investigating the collapse of Silicon Valley Bank and avoiding “drama” on increasing the debt ceiling.


Crypto Twitter Thinks the Fed’s $297B Balance Sheet Expansion Is ‘QE’, But It’s Not

Omkar Godbole, CoinDesk

According to some observers, the latest expansion in the Fed’s balance sheet is not outrightly stimulative like the one seen following the coronavirus-induced crash of 2020.


Low Rates Were Meant to Last. Without Them, Finance Is In for a Rough Ride.

Jeanna Smialek, The New York Times

If a number defined the 2010s, it was 2 percent. Inflation, annual economic growth, and interest rates at their highest all hovered around that level — so persistently that economists, the Federal Reserve and Wall Street began to bet that the era of low-everything would last.


Taxpayer advocate urges Congress to reconsider $80 billion IRS funding boost

Tobias Burns, The Hill

“The IRA allocated the funds in a manner that does not address the needs of U.S. taxpayers, including individuals, families, and businesses,” advocate Erin Collins wrote in a blog post on Thursday.


Unlike last year, this tax season has been going smoothly

Jeanne Sahadi, CNN

The past two tax-filing seasons were fraught with aggravations, delays, last-minute changes and huge backlogs at the IRS. But by comparison, this year’s tax-filing season has been going relatively smoothly, tax preparers say.


First Republic Bank Executives Sold $12 Million in Stock in Months Before Crash
Ben Foldy and Tom McGinty, The Wall Street Journal

Insider sales at the bank are exempt from normal disclosure rules.


Silicon Valley Bank’s Distress Wasn’t Reflected in Credit Ratings

Matt Grossman and Eric Wallerstein, The Wall Street Journal

Ratings firms gave high marks to regional banks shortly before failures.


SVB Hunts for a Buyer After Tense, Dragged-Out FDIC Sale Failed
Saleha Mohsin et al., Bloomberg

The effort to wind down Silicon Valley Bank was marred by an unmotivated seller, infighting between regulators and, ultimately, a failed auction.


Credit Suisse sued by U.S. shareholders over finances, controls


U.S. shareholders of Credit Suisse Group AG sued the Swiss bank on Thursday, claiming that the bank defrauded them by concealing problems with its finances.


UBS, Credit Suisse Oppose Idea of Forced Tie-Up
Dinesh Nair et al., Bloomberg

UBS Group AG and Credit Suisse Group AG are opposed to a forced combination, even as scenario planning for a government-orchestrated tie-up continues, according to people with knowledge of the matter.


‘An untenable equity story’: what’s next for Credit Suisse?

Owen Walker, Financial Times

The bank’s liquidity is not its fundamental problem, rather its business model is unprofitable


Credit Suisse Got Its Lifeline. Now It Must Win Back Clients

Marion Halftermeyer et al., Bloomberg

The $54 billion lifeline won by Credit Suisse Group AG on Thursday gives it a fighting chance to rebuild its business. Some clients aren’t waiting around to find out how that goes.


Peter Thiel is swearing he kept $50 million of his personal fortune at SVB while his Founders Fund bailed on the bank

Tristan Bove, Fortune

Peter Thiel’s Founders Fund was one of the first venture capital firms to take action and urge clients to quickly withdraw funds from Silicon Valley Bank last week. The firm had reportedly removed all of its own holdings in SVB by Thursday morning, just as panic over the bank’s solvency began to set in on social media, from which it devolved into a historic $42 billion bank run on Friday that collapsed SVB.


What’s wrong with the banks

The Economist

Only ten days ago you might have thought that the banks had been fixed after the nightmare of the financial crisis in 2007-09. Now it is clear that they still have the power to cause a heart-stopping scare.


Former JPMorgan Executive Staley to Face Deposition on Epstein

Ava Benny-Morrison, Bloomberg

Former JPMorgan Chase & Co. executive Jes Staley faces a two-day deposition about his relationship with Jeffrey Epstein and what he knew about the late financier’s prolific sex-trafficking operation.

Financial Products and Investments

Schwab Clients Shift From Prime Funds to Government Portfolios

Silla Brush, Bloomberg

Charles Schwab Corp. saw $8.8 billion in net outflows from its prime money market funds this week as investors rattled by turmoil at US banks plowed even more money into the brokerage’s other portfolios that favor assets with government backing.


Cash pours into US money market funds as investors flee bank turmoil

Harriet Clarfelt et al., Financial Times

Net inflows of $120bn for the week are highest since 2020 amid ‘of a lot of angst’


Crypto Firms Move Cash to Asset Managers Including Fidelity as Banking Crisis Deepens

Muyao Shen and Yueqi Yang, Bloomberg

A rising number of companies in the digital-asset sector are reaching out to asset managers such as Fidelity Investments to invest their cash in products like Treasuries in the aftermath of the recent collapse of several crypto friendly US banks.


Ohio teachers retirement fund takes massive hit in Silicon Valley Bank collapse

Lauren Sforza, The Hill

Retirement funds for public workers in Ohio lost millions after the Silicon Valley Bank collapsed last week, sending the tech and bank industries into a spiral. The Columbus Dispatch reported that Ohio’s State Teachers Retirement System took the hardest hit amid the banking crisis.

Housing and GSEs

CFPB launches inquiry into data brokerage business practices

Chris Clow Housing Wire

The Consumer Financial Protection Bureau (CFPB) announced this week that it is launching an inquiry into the business practices of data brokerage firms to learn whether their impact on consumers can inform planned rulemaking under the Fair Credit Reporting Act (FCRA).

Crypto and Financial Technology

FDIC Denies Report Signature Bank Purchaser Must Divest Crypto

Nikhilesh De, CoinDesk

The Federal Deposit Insurance Corporation denied it would require any purchaser of Signature Bank to divest its crypto activities.


Voyager-Binance.US Pause Denied by Bankruptcy Judge

Jack Schickler, CoinDesk

A New York court denied the government’s request to halt the $1 billion deal, saying delay would harm customers.


Bitcoin Fund Seeks $100 Million to Capitalize on Market Mayhem

Hannah Miller, Bloomberg

A group of investors has set out to raise $100 million for a Bitcoin-focused fund even as implosions and scandals rock the crypto world.

Morning Consult