FRC rescue | Time to read and learn

Bankers’ pitch to save First Republic: Help us now, or pay more later when it fails

 Lazard and JPMorgan Chase were hired last month to advise First Republic, according to media reports.

The key advantage of the advisors’ plan, they say, is that it allows First Republic to offload some, but not all of its underwater bonds. In a government receivership, the whole portfolio must get marked down at once, resulting in what Morgan Stanley analysts estimated to be a $27 billion hit.

One complication, however, is that the advisors are relying on the U.S. government to summon bank CEOs together to explore possible solutions.

There have been false starts already: One top four U.S. bank said that the government told it to be ready to act on the First Republic situation this past weekend, but nothing happened.