Wall Street’s largest banks have moved to prop up the ailing San Francisco-based First Republic Bank after the sudden collapse of regional banks Signature and SVB last week sparked fears of a financial meltdown. Bank of America, Citigroup, JPMorgan Chase and Wells Fargo will each make $5 billion in uninsured deposits into First Republic, while seven other Wall Street firms will deposit a further $10 billion. The Federal Reserve reports Wall Street firms have received about $300 billion in emergency lending over the past week — roughly half what the Fed loaned banks during the 2008 financial crisis. On Capitol Hill, Treasury Secretary Janet Yellen sought to reassure the Senate Finance Committee over the stability of U.S. financial markets.
Treasury Secretary Janet Yellen: “I can reassure the members of the committee that our banking system is sound and that Americans can feel confident that their deposits will be there when they need them.”
Yellen defended the Biden administration’s decision to allow all depositors at SVB and Signature to recover their assets after the banks collapsed, using money from the Federal Deposit Insurance Corporation. That’s despite the fact that over 93% of assets at SVB and Signature were not insured by the FDIC. Under questioning from senators, Yellen admitted that smaller banks that fail might not get the same treatment.