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First Republic rescue may be facilitated by U.S. backing

Sources familiar with the rescue negotiations say the government could be involved in the lifting of assets from First Republic that have eroded the bank’s balance sheet. The government could be able to help First Republic recover assets that have been lost. Investors have expressed interest in helping but the firm’s unrealized loss has been a sticking point. The people stated that other ideas include offering liability protection, making capital rules more flexible or easing ownership stake limits. These are just some of the options being considered. People said that there are still many issues to resolve and an agreement is not guaranteed. It is unclear how the government will provide financial support. A spokesperson for the White House referred questions to banking regulators. Representatives from the Federal Reserve, Treasury Department, and First Republic declined comment. The Federal Deposit Insurance Corp. did not respond to inquiries. First Republic, a San Francisco-based bank known for serving wealthy tech executives, lost more than 80% this year due to customers pulling their money. This pressured the bank to sell assets that had fallen in value amid rising interest rates. The company and its advisers, including JPMorgan Chase, attempted to save the bank by depositing $30 million last week. This gave them more time to work out a solution. She stated that the government is “resolutely committed” in mitigating financial-stability risk where necessary. “The public should have faith in our banking system.” With the assistance of Gillian Tan, Christopher Condon and Katanga Johnson.