Regulators Reportedly to Take Control of First Republic

First Republic Bank, the large regional bank known for its customer service and high net worth clientele, is reportedly set to be taken over by federal regulators and brought into receivership in the near future. The rumored move comes after over $100 billion in deposits have flowed out of the bank, spurred by depositors unsure about the bank’s stability.

First Republic has faced similar issues as the recently collapsed Silicon Valley Bank, whose unrealized losses on long-term bond holdings combined with deposit outflows led to its collapse. First Republic’s financial instability has led to the collapse of its stock price, which has fallen in three months from $141.01 to $3.51 at Friday’s close. In the case of First Republic’s failure, shareholders would be the last to receive any proceeds from sold assets.

Both JP Morgan Chase and PNC Bank are reportedly interested in buying First Republic. Both banks were part of an earlier consortium of large banks who deposited $30 billion to try to shore up the bank’s finances. 

 

House Passes Debt Ceiling Bill

The House passed the Republican debt ceiling package Wednesday on a near party line vote, with four GOP defections and all Democrats voting against. The bill would raise the debt ceiling by $1.5 billion while reducing discretionary spending by 9%.

President Biden and Senate Democrats have said the bill is dead on arrival. House Speaker Kevin McCarthy hopes the bill will bring Biden and Senate leadership to start negotiations. Biden ally Sen. Chris Coons (D-DE) has called Republican attempts to use the debt ceiling limit to force spending cuts as ‘hostage negotiations’ and has called for such discussions to be part of regular appropriations talks. 

 

Biden Announces Reelection Campaign

President Joe Biden’s campaign released an announcement video this past week that formally announced his reelection bid in 2024, a move widely expected. Biden enters the race the overwhelming favorite to win the Democratic nomination, with his two announced opponents, self-help author Marianne Williamson and environmental and anti-vaccine activist Robert F. Kennedy, Jr. polling in the high single digits to low double digits. 

The Republican field, while becoming more crowded, remains  overshadowed by former President Donald Trump’s campaign, and to a lesser extent, the unannounced campaign of Florida Governor Ron DeSantis. Trump has retained a strong consistent lead over DeSantis throughout the past few months, experiencing a bump following his indictment by Manhattan District Attorney Alvin Bragg for business falsification charges related to the 2016 hush money payment to pornographic actress Stephanie Clifford (aka Stormy Daniels). DeSantis has a consistent second-place lead, and the only other candidate, unannounced or otherwise, consistently polling in double digits.

Other Republican candidates include former South Carolina Governor and UN Ambassador Nikki Haley, who is running a campaign appealing to her gender and traditional Republican politics, former Arkansas Governor Asa Hutchinson, who has criticized Trump’s influence over the GOP, former California gubernatorial candidate and radio host Larry Elder, and technology entrepreneur and political activist Vivek Ramaswamy. South Carolina Senator Tim Scott has formed an exploratory committee and is expected to announce a run in the near future.

 

Bank Failures Send Fear Throughout Economy

The failures of three notable banks linked to the tech and cryptocurrency industries have sparked concerns about the stability of regional banks in the US, some of which may face similar issues to the three.

Silicon Valley Bank (SVB), Signature Bank, and Silvergate Bank all failed during March, with SVB, long considered the main banking partner for Silicon Valley tech firms, becoming the second largest American bank to fail, after Washington Mutual in 2008.

In the case of SVB, the failure was largely the cause of a decline in the value of their bond holdings because of rising interest rates. SVB had bought long-term treasury bonds to increase the rate of return back when interest rates were low. As the Federal Reserve raised interest rates to fight inflation, the value of SVB’s bond holdings decreased (price moves inversely to yield), leading to large unrealized losses for the bank. As depositors withdrew their cash to cover expenses, SVB was forced to sell their bond holdings at the reduced prices, leading to insufficient capitalization for the bank, which ultimately led to regulators seizing SVB.

 

Former President Donald Trump Indicted by Manhattan Grand Jury

Former US President Donald Trump was indicted by a Manhattan grand jury Thursday. Trump is the first president, former or current, to be indicted on a felony charge.

The indictment stems from an October 2016 payment from Michael Cohen, Trump’s then personal lawyer, to pornographic actress Stephanie Clifford, better known by her stage name Stormy Daniels, to cover up a 2006 affair between her and Trump. Cohen, who was reimbursed by Trump for the payment, was later convicted for violating campaign finance law for making the payment without it being disclosed as a campaign expenditure. The conviction was part of a larger criminal investigation in which Cohen pleaded guilty to multiple charges of fraud and tax evasion related to his businesses.

The indictment comes amid other probes into Trump’s conduct during his presidency and his post-presidency. He is under investigation by state authorities in Georgia over his alleged attempts to improperly influence election officials in the 2020 election. He also is facing a federal investigation into his handling of classified documents after he left the presidency as well as potential obstruction. Attorney General Merrick Garland appointed special counsel Jack Smith to investigate in the federal case.

Trump is expected to surrender to police on Tuesday next week, where he will be fingerprinted and have his mugshot taken.

One of Trump’s lawyers, Joe Tacopina, is making television appearances defending his client from the alleged charges, also saying that Trump will not take a plea deal in the case.

Republicans have vocally criticized the indictment, accusing Manhattan District Attorney Alvin Bragg (D) of political animus. Some congressional Republicans have said they will call on Bragg to testify before Congress regarding the prosecution. Bragg has denied any political motivation for the prosecution. 

Bragg himself is a controversial figure. Elected in 2021, Bragg ran on a progressive platform, promising a less punitive approach to criminal justice focused on rehabilitation rather than punishment. Critics argue his policies are in part responsible for an increase in crime in New York City.