US considering expanding emergency lending facility for First Republic Bank

According to people with knowledge of the situation, the US government is considering expanding an emergency lending facility for banks in a way that would give First Republic Bank more time to shore up its balance sheet.

Officials have yet to decide what support they could provide the First Republic, if any, and an expansion of the Federal ReserveFederal Reserve's offering is one of several options being weighed at this early stage. Two other failed lenders – Silicon Valley Bank and Signature Bank – need immediate attention, according to regulators.

The people said that they did not want to be named discussing confidential talks, because watchdogs see First Republic as stable enough to operate without immediate intervention.

First Republic's stock plunged more than 90% this month due to concerns that the San Francisco-based lender could fall victim to the forces that caused a trio of US banks to collapse. First Republic has remained open and independent, despite the fact that banks fell when rapid customer withdrawals forced them to lock in losses on depreciated assets.

The US officials have been keeping close to the firm's health and progress, aiming to stay vigilant in case the situation unexpectedly changes.

The people said that they concluded that the bank's deposits are stabilizing and that they aren't susceptible to the kind of sudden, severe run that caused regulators to seize Silicon Valley Bank within a few days.

The people said First Republic has cash to meet client needs while it explores solutions, despite the fact that it has structural problems with its balance sheet. That includes $30 billion deposited by the nation's largest banks this month.

Representatives for the Fed, FDIC and First Republic didn't want to make a statement. The Treasury Department hasn't responded immediately.

Authorities have weighed a potential adjustment to the Federal ReserveFederal Reserve's emergency lending program announced on March 13 as one of the options authorities have weighed in the past, according to people with knowledge of the deliberations.

Any expansion of the Fed's liquidity offerings would apply to all eligible users, keeping in line with banking law that says remedies must be broad based rather than aimed at helping a particular bank. The People said that the change could be made in a way to ensure that First Republic benefits.

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