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Document Type

Case Study

Case Series

Ad hoc Emergency Liquidity Programs

Abstract

First Republic Bank, a California-based institution with $212.6 billion in assets, lost $25 billion in deposits on Friday, March 10, 2023, following the closing of Silicon Valley Bank that morning. On Sunday, March 12, First Republic announced that it had access to $70 billion in unused liquidity owing to its borrowing capacity at the Federal Reserve, the Federal Home Loan Bank System, and JPMorgan Chase (JPMC). But First Republic’s depositors withdrew a further $40 billion of deposits on Monday, March 13. First Republic’s borrowings from the Federal Reserve rose as high as $109 billion between Friday, March 10, and Wednesday, March 15. On Thursday, March 16, a consortium of 11 large US banks provided emergency liquidity assistance of $30 billion in uninsured deposits to First Republic, for a period of 120 days at market rates, to ensure liquidity for the bank’s customers and to give the bank time to formulate a longer-term solution. US Treasury Secretary Janet Yellen and JPMC CEO Jamie Dimon led the efforts to reach out to the leaders of large institutions and secure the funds required. The direct result of the deposit was to offset other outflows and reduce the bank’s borrowings at the Fed. The bank stabilized for five weeks, but withdrawals picked up again after the bank announced its first-quarter financial details on April 24. On May 1, 2023, the California Department of Financial Protection and Innovation seized First Republic and appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. JPMC immediately assumed all of First Republic’s deposits and, according to a press release, “substantially all assets.” JPMC settled its own $5 billion of deposits when it acquired First Republic and repaid the remaining $25 billion of deposits to the bank consortium, including accrued interest, on May 9, 2023. The failure of First Republic cost the FDIC an estimated $15.6 billion.

Date Revised

2025-04-15

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