The Federal Reserve has released its findings on the supervision of Silicon Valley Bank (SVB), whose failure is still having an effect on the US financial system. In particular, First Republic Bank, which is similar to SVB, is struggling for survival due to solvency and liquidity problems. The bank has acknowledged that it has latent losses in its portfolio of mortgages granted at very low interest rates and has experienced a flight of customer deposits. JP Morgan and others have injected $30 billion in deposits, but the bank has had to resort to funding from the Federal Reserve.
The bank has faced difficulties in selling its mortgage portfolio and has acknowledged that it has held discussions with various parties about strategic options, but many of the proposed options have so far not come to fruition. The article mentions that US authorities are coordinating talks for a private rescue of First Republic, with the Federal Deposit Insurance Corporation, the Treasury Department, and the Federal Reserve involved. However, some of the largest US banks, which have already contributed $30 billion in deposits to prop up First Republic, have been reluctant to become more involved in the operation.
First Republic’s plunge followed the publication of a news report revealing that US authorities are coordinating talks for a private rescue of the bank. News is expected before the stock market opens on Monday, and the article mentions that, depending on the type of deal, existing shareholders could lose all their money.
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