- US Weighs Expanding Fed’s Emergency Liquidity Program To Stabilize First Republic, Other Regional Banks
by Tyler Durden, https://www.zerohedge.com/
One day after a lengthy meeting on the growing bank crisis by the Financial Stability Oversight Council (chaired by Janet Yellen who five years ago vowed there would be “no financial crises in her lifetime“) on the last day of a week which started with the collapse of Credit Suisse and culminated with US regional banks nursing historic losses amid speculation that First Republic Bank could keel over any moment and drag down countless other names with it, even though the FSOC assured Americans that “while some institutions have come under stress, the U.S. banking system remains sound and resilient”, Bloomberg reports that in their attempt to rescue the most trouble of regionals, authorities are considering expanding the recently introduced emergency lending facility for banks – the BTFP – in order to give First Republic Bank more time to shore up its balance sheet.
Or they may not: after all this has been a crisis has been marked by at times puzzling second-guessing, miscommunication and lack of conviction on the part of regulators, whose actions not only precipitated the contagion from the collapse of Silicon Valley Bank when they blocked potential buyers from acquiring the bank and avoiding a complete wipeout of shareholders, but where Janet Yellen has actively sought to destabilize the regional banks by explicitly refuting what Fed chair Powell was stating, the most vivid example being last Wednesday’s market crunch when stocks stabilized after the dovish FOMC only to puke after Yellen inexplicably said that US regulators were not even contemplating uniform deposit insurance.
And sure enough, the BBG report adds that “officials have yet to decide on what support they could provide First Republic, if any, and an expansion of the Federal Reserve’s offering is one of several options being weighed at this early stage.” Meanwhile, regulators continue to grapple with two other failed lenders — Silicon Valley Bank and Signature Bank — that require more immediate attention… attention they wouldn’t need if regulators had intervened more competently in the beginning and not waited until almost a trillion in deposits had been pulled from small banks as confidence cratered.