The scene was reminiscent of the last financial crisis, nearly 15 years ago: Faced with a blossoming emergency in the banking sector, worried regulators and policymakers in Washington turned to Wall Street for help.
The anxiety this week centered on First Republic Bank in San Francisco, which was once the envy of the banking sector, with its wealthy and well-traveled clientele. Now the bank was reeling after some of those customers withdrew billions of dollars.
As early as Tuesday, it became clear to policymakers that First Republic needed to be rescued or it could fail, two people briefed on the matter told The Associated Press, speaking anonymously because they were not authorized to discuss details.
The result was a swift agreement among the nation’s leading banks to lay aside competitive instincts to come to First Republic’s aid. With Washington greasing the wheels, a coalition of lenders put $30 billion in uninsured deposits into the California-based bank as a show of support.
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The money gives First Republic a lifeline while it reportedly seeks a buyer. Regulators hope it also bolsters confidence in the health of the broader banking system.
The recent turmoil in the banking industry isn’t on par with the crisis that sparked the Great Recession from 2007 to 2009. But after Silicon Valley Bank and Signature Bank failed and were seized by the federal government, the industry’s overseers worried about more dominoes falling.