Major Banks Invest $30 Billion to Show Confidence in Banking System Following Collapse of Silicon Valley Bank and Signature Bank

In a joint statement released Thursday, large banks including Bank of America, Citigroup, Goldman Sachs, JPMorgan Chase, and Wells Fargo announced that they will be sending a combined $30 billion to shore up First Republic Bank, a regional bank in California. The move follows the sudden collapse of Silicon Valley Bank and Signature Bank, both of which were taken over and shut down within days of each other.

Treasury Secretary Janet Yellen testified before the Senate Finance Committee on Thursday, assuring Americans that the banking system is stable and that the decision to backstop all deposits at the two lenders that failed over the past week was an exception to the norm. She clarified that authorities invoked the “systemic risk exception” to backstop all funds, including those that exceeded the Federal Deposit Insurance Corporation’s standard $250,000 limit.

The banks said in their statement that their cash infusion shows “confidence in First Republic and in banks of all sizes.” Bank of America, Citigroup, JPMorgan Chase and Wells Fargo said they plan to contribute $5 billion each, while Goldman Sachs and Morgan Stanley will each chip in $2.5 billion.

The influx of new depositors to large banks following the collapse of Silicon Valley Bank and Signature Bank is a sign of confidence in the banking system. Yellen said that the decision to backstop all deposits at the two lenders that failed was an exception to the norm, but that Americans should remain confident in the stability of the banking system. The banks’ joint statement further reinforces this sentiment, and the cash infusion of $30 billion is a sign of their commitment to the stability of the banking system.