STORY: Less than a week after large U.S. banks pumped $30 billion in deposits into the mid-size U.S. lender, investors dumped First Republic on Monday on worries that infusion of capital would not be enough. Ratings agency S&P Global also downgraded it deeper into junk status on Sunday, citing liquidity risks.
U.S. regulators have enacted emergency measures to backstop depositors of failed of troubled banks, but
President Joe Biden last week said that shareholders and bondholders would not be compensated. “They knowingly took a risk and when the risk didn’t pay off, investors lose their money," said Biden. "That’s how capitalism works."