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

Kevin OLeary gives his take on the future of regional banks amid bailouts

Shark Tank star and OLeary Ventures chairman Kevin OLeary gives the financial outlook, assesses the risk of more bank collapses on Maria Bartiromos Wall Street.

Federal banking regulators are reportedly weighing a potential expansion of an emergency lending program that would allow banks to access more funding to meet their liquidity needs which could buy struggling First Republic Bank more time to regain stability.

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

According to a report by Bloomberg, authorities are mulling an expansion of the program to help beleaguered First Republic Bank, which has already received a liquidity infusion of $70 billion, including $30 billion in deposits from 11 of the nation’s largest banks plus loans from the Federal Reserve's lending facilities.

FIRST REPUBLIC GETS $30 BILLION RESCUE FROM BIGGEST US BANKS

Authorities are reportedly considering an expansion of the Fed's emergency lending program for banks as a way to help institutions like First Republic Bank. (Photo by Smith Collection/Gado/Getty Images / Getty Images)

Although any increase in funding or potential changes to the BTFP would apply to all banks, authorities could try to tailor any changes to help First Republic Bank improve its financial position.

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

FIRST REPUBLIC BANK REPORTEDLY EXPLORING POTENTIAL SALE AFTER CREDIT DOWNGRADE

First Republic Bank has received over $70 billion in funding to boost its liquidity, including $30 billion in deposits from 11 of the largest U.S. banks. (Photo by Justin Sullivan/Getty Images / Getty Images)

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

As of last week, the program had lent out about $53.7 billion to banks – a dramatic increase over the $11.9 billion loaned out from the day it opened, March 12th, through March 16th.

GET FOX BUSINESS ON THE GO BY CLICKING HERE

Ticker	Security	Last	Change	Change %
FRC	NO DATA AVAILABLE	-	-	-

Regional and mid-size banks have struggled for stability following the collapse of Silicon Valley Bank and Signature Bank, which were particularly vulnerable to the bank runs that brought about their failure due to their unusually high levels of uninsured deposits.

Over 93% of Silicon Valley Bank’s deposits were uninsured while over 89% of Signature Bank’s deposits were uninsured. Their collapse caused federal financial regulators to grant a systemic risk exception that allowed the Federal Deposit Insurance Corporation (FDIC) to backstop all the two banks’ deposits, including those above the standard $250,000 insurance threshold.

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