The US government’s prejudice is clear. FRC First Republic Bank (FRC) has been hit hard with a 90% drop in its share price, with its charts looking worse than ever. Despite this, there have been attempts to revive the bank and the injection of $40bn in deposits by JP Morgan, Goldman Sachs, and other major banks last week. Unfortunately, this week it became clear this wouldn’t be enough, and there is ongoing discussion about how to save FRC. A buyout by a bigger bank and raising fresh capital are still possibilities, and the bank continues to operate in its weakened state.
Contrast this with Signature Bank (SBNY) which was shut down without hesitation despite its share price the day before closing at a respectable $70. Despite claims by the director of the bank that withdrawals were still manageable, the bank was shut down due to its pro-crypto stance. No attempts were made to revive SBNY, no chance was given to improve its liquidity or raise external capital. It was just shut down overnight.
It is evident that the US government’s bias is shown in the way different banks are treated. While FRC is being given a chance to improve its situation, SBNY was not given the opportunity. This unfairness raises questions about how the government approaches the banking sector, and it should be addressed.