Massachusetts regulators have opened an investigation into the stock sales made by First Republic Bank’s insiders prior to its failure earlier this month (March 30th). The bank, which has experienced a sharp decline in the value of its shares and a rapid bank run, is the hardest-hit regional bank among the 3 that ended up in Federal Deposit Insurance Corporation's liquidation.

The Massachusetts Secretary of the Commonwealth has issued a subpoena in light of the sale of $4.5 million worth of shares by the bank's founder and executive chairman James Herbert since January. This is the second such investigation launched this month after regulators took a look into Silicon Valley Bank.

The events of the past few weeks have culminated into a banking crisis, with the first being the liquidation of Silvergate—a key crypto-friendly bank—and the subsequent decision by the FDIC to take over Silicon Valley Bank on March 10th. Only a few days later, Signature bank met a similar fate to the other two.

As federal authorities stepped in to stabilize the banking sector, funds were borrowed in larger amounts than at any other point since the 2008 crisis. However, analysts have opined that there is no real banking crisis in progress, or that it is already over. This is contrary to what President Biden said this week—that the situation isn't yet resolved.

Additionally, the crisis has led to some disconcerting revelations--banks sitting on trillions of dollars of unrealized losses due to the FED’s rate hikes, which could quickly result in a bank run if the economic situation worsens. Ultimately, the ongoing events have put the banking sector under intense scrutiny.



Other News from Today