Feds may throw struggling First Republic Bank a lifeline by expanding emergency lending program

Federal banking regulators are reportedly weighing a possible extension of an emergency loan program that would allow banks to access more money to meet their liquidity needs, which could give First Republic Bank more money as it struggles to regain stability. Can give time

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The Federal Reserve’s emergency lending program, known as the Bank Term Funding Program (BTFP), was designed to provide banks with liquidity and greater access to safe depositors’ funds following the failure of Silicon Valley Bank and Signature Bank earlier this March. was created for. BTFP provides loans for one year to eligible financial institutions.

According to a Bloomberg report, officials are considering expanding the program to help troubled First Republic Bank, which has already received $70 billion in liquidity, including $30 billion in deposits from the country’s 11 largest banks. Dollars and loans from the federal government. Credit facility of reserve.

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First Republic gets $30 billion in relief from biggest US banks

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While any increase in funding or potential changes to the BTFP will apply to all banks, officials may try to adapt any changes to help First Republic Bank improve its financial position.

The bank in early March saw its share price slide between $115 and $120 per share to a low of $12.36 per share as of Friday’s close in at least a decade. First Republic also received a downgrade of its credit rating cut to junk status earlier this month by S&P Global Ratings and Fitch Ratings.

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Expanding the Fed’s emergency lending program may require officials to allocate more money to it. The BTFP was initially backstopped to $25 billion in funding from the Treasury Department’s Exchange Stabilization Fund.

As of last week, the program had loaned nearly $53.7 billion to banks – a dramatic increase of $11.9 billion in loans from the day it opened on March 12 to March 16.

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Regional and medium-sized banks have struggled for stability following the collapse of Silicon Valley Bank and Signature Bank, which were particularly vulnerable to bank runs that led to their failure due to their unusually high levels of unsecured deposits. Be the cause of

More than 93% of Silicon Valley Bank’s deposits were uninsured while more than 89% of Signature Bank’s deposits were uninsured. His downfall led federal financial regulators to grant a systemic risk exception that allowed the Federal Deposit Insurance Corporation (FDIC) to backstop all but two banks’ deposits, including those above the standard $250,000 insurance limit.

Fox Business’ Edward Lawrence and Reuters contributed to this report.