Biden's Treasury Secretary Janet Yellen issued a joint statement Thursday along with the heads of the Federal Reserve and the Federal Deposit Insurance Corporation, announcing that 11 big banks would deposit roughly $30 billion into First Republic Bank to stabilize its balance sheet after its stock cratered last week.
While this bailout — blessed by the Biden administration — is intended to bolster depositors' confidence, a new report has revealed that First Republic's own executives have not done much in recent weeks to inspire diffidence.
The Wall Street Journal reported that top executives of the San Francisco-based bank dumped millions of dollars of company stock ahead of its crash last week.
It is presently unclear if First Republic executives did so suspecting possible trouble on the horizon. Nevertheless, they sold off and donated a bulk of stock when share prices were over $100.
This week, First Republic stock price dropped as low as $19.80 amid two credit downgrades. It took the Treasury's and Fed's joint statement to boost the price to $34.35 by market close.
James Herbert II, the bank's executive chairman who contributed thousands to former Rep. Liz Cheney (R-Wyo.) in 2022, reportedly has sold $4.5 million worth of shares since early January. In one instance, he sold 15,000 shares (when priced at $123.51) in late February, according to FDIC filings.
The Journal noted that in two of Herbert's recent stock dumps, he sold off 7% and 5% of his holdings at the time, respectively.
Robert Thornton, First Republic's president of private wealth management, sold 73% of his outstanding shares valued at $3.5 million on Jan. 18 — his first trade in roughly two years.
The bank's chief executive officer, Michael Roffler, sold approximately $1 million worth in January after having previously dumped $1.3 million worth in November 2022.
David Lichtman, the bank's chief credit officer, has sold off $2.5 million worth already in 2023, including a sale on March 6, just days before Silicon Valley Bank began teetering.
The New York Post noted that filings show Lichtman and his wife also sold $2.5 million in shares last year.
"In all, insiders have sold $11.8 million worth of stock so far this year at prices averaging just below $130 a share," said the report. "The bank’s chief credit officer, its president of private wealth management and chief executive together sold $7 million worth of stock."
According to the Journal, the executives' trades went largely under the radar, largely because they didn't have to report their insider sales to the Securities and Exchange Commission. First Republic is reportedly the only company listed on the S&P 500 not to do so.
The executives' sales were reportedly not executed under 10b5-1 plans, meaning they may be open to accusations of insider trading.
Secretary of the Treasury Janet Yellen, Federal Reserve Board Chair Jerome Powell, FDIC Chairman Martin Gruenberg, and acting Comptroller of the Currency Michael J. Hsu said in their statement that First Republic's bailout "demonstrates the resilience of the banking system."
In a corresponding statement, various banks involved in the bailout — including Bank of America, Citigroup, JPMorgan Chase, Wells Fargo, Goldman Sachs, and Morgan Stanley — said the action "reflects their confidence in the country’s banking system and helps ensure First Republic has the liquidity to continue serving its customers."
Like Blaze News? Bypass the censors, sign up for our newsletters, and get stories like this direct to your inbox. Sign up here!