America

To avoid contagion, Wall Street banks come to the aid of the First Republic

To avoid contagion, Wall Street banks come to the aid of the First Republic

First modification:

In the United States, 11 banks have agreed to inject 30,000 million dollars in deposits to the First Republic bank, in a financial rescue that would save it from bankruptcy, after a resounding fall in the stock market.

The 11 largest banks in the United States decided to deposit 30,000 million dollars to the First Republic regional bank to try to save it and avoid the collateral effects that this may have on the US financial system.

Bank of America, Citigroup, JP Morgan Chase and Wells Fargo will deposit $5 billion each. Goldman Sachs and Morgan Stanley will deposit $2.5 billion and the remaining $5 billion will come from five other banks.

The lenders said in a statement that “regional, medium and small banks are critical to the health and functioning of our financial system.”

“Our banking system remains solid”

This decision comes after S&P and Fitch Rating lowered First Republic Bank’s credit rating despite the fact that the bank, also from California, claims to have enough funds to respond to the massive withdrawal of money by depositors.

Analysts say that it is not so much about the size of the bank but about the people who have their money there and the risk that the bankruptcy of a medium-sized bank will have consequences for the national and international financial system.

In this regard, Janet Yellen, Secretary of the United States Treasury, said that the risk of contagion and the debacle of Silicon Valley Bank was accelerated by panic in the networks. “I can assure the members of this committee that our banking system remains strong and Americans can trust that their deposits will be there when they need them,” she said.

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