Banks Join Forces to Stabilize U.S. Banking System

The nation’s largest banks are taking action to stabilize the U.S. banking system as a whole, by joining forces to funnel $30 billion worth of deposits into First Republic Bank (NYSE: FRC).[0] Bank of America (BAC), Citigroup (C), JPMorgan Chase (JPM), Wells Fargo (WFC), Goldman Sachs (GS), Morgan Stanley (MS), Bank of New York Mellon, PNC Bank, State Street, Truist, and U.S. Bank have each contributed $5 billion, $2.5 billion, or $1 billion, respectively, to the uninsured deposit.[1]

This news follows a tumultuous week for First Republic’s stock, which was down 15% during after-hours trading and 33% on Friday, to about $23 a share.[2] This is compared to the stock’s price of $110 a share a week ago.[3] The KBW Bank Index dropped by 5% and other regional bank stocks declined as well.[3] Analysts believe that the depositor-driven panic could slow the economy later this year, resulting in the index losing 28% of its value since early last week.[3]

The joint effort by the banks is an attempt to restore confidence in the U.S. banking system and small- and medium-sized banks.[4] The banks released a joint statement saying, “The actions of America’s largest banks reflect their confidence in the country’s banking system. Together, we are deploying our financial strength and liquidity into the larger system, where it is needed the most. Smaller- and medium-sized banks support their local customers and businesses, create millions of jobs and help uplift communities. America’s larger banks stand united with all banks to support our economy and all of those around us.”[5]

However, some analysts have expressed concern about the risk of contagion spreading to the larger banks, with Bill Ackman of Pershing Square Capital Management saying, “The result is that FRB default risk is now being spread to our largest banks. Spreading the risk of financial contagion to achieve a false sense of confidence in FRB is bad policy.”[6] He also noted that the large banks would never have made such a low return investment in deposits unless they were pressured to do so.[7]

Other banks, such as Credit Suisse (CS), have also been affected by the turmoil. Credit Suisse’s U.S.

0. “Here's why the banking crisis is over, says top long-term sector analyst” Yahoo News, 17 Mar. 2023,

1. “How First Republic rescue, Silicon Valley Bank could cost Main Street America” Fox Business, 17 Mar. 2023,

2. “Wall Street rides to the rescue as 11 banks pledge First Republic $30 billion in deposits” CNBC, 16 Mar. 2023,

3. “First Republic sees ‘gob-smacking' deposit outflows; shares plummet after rescue package” Crain's New York Business, 17 Mar. 2023,

4. “Major banks pledge $30 billion rescue for First Republic” The Week, 17 Mar. 2023,

5. “First Republic Gets $30 Billion Lifeline from JPMorgan, Citi, Bank of America, Wells Fargo” Investopedia, 16 Mar. 2023,

6. “Ackman says plan to deposit $30B into First Republic is bad policy” Business Insider, 17 Mar. 2023,

7. “Moody's downgrades First Republic Bank to B2 from Baa1” ForexLive, 18 Mar. 2023,

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