Multiple lawmakers sold their shares in First Republic Bank in the weeks before the firm collapsed and was sold to JPMorgan Chase by financial regulators.
First Republic Bank imploded on Monday, weeks after Silicon Valley Bank and Signature Bank similarly collapsed, as account holders with balances above the Federal Deposit Insurance Corporation threshold rushed to withdraw their funds. Periodic transaction disclosure forms reveal that multiple lawmakers jettisoned their shares in First Republic Bank or acquired shares in JPMorgan Chase over the past two months, a phenomenon which follows accusations that some lawmakers routinely buy stocks at opportune times and cut losses by selling shares.
The lawmakers who sold shares of First Republic Bank indeed avoided heavy losses: the firm’s stock fell from $121.54 at the beginning of the year to $3.51 at the time of the collapse.
Rep. Lois Frankel (D-FL) sold between $1,001 and $15,000 in First Republic Bank shares on March 16 and bought between $1,001 and $15,000 in JPMorgan Chase shares on March 22. Rep. Ro Khanna (D-CA) purchased between $1,001 and $15,000 shares of First Republic Bank shares on March 9 but likewise sold the same indeterminate amount of the assets on March 15, as well as purchased between $1,001 and $15,000 in JPMorgan Chase stock on both March 3 and March 14. His disclosure form said the shares belonged to his wife and dependent child.
Rep. John Curtis (R-UT) meanwhile sold between $1,000 and $15,000 in First Republic Bank shares on March 16, and the wife of Rep. Earl Blumenauer (D-OR) sold between $1,001 and $15,000 in First Republic Bank stock on March 20. Rep. Dan Goldman (D-NY) also sold between $1,001 and $15,000 in First Republic Bank shares on March 15.
Rep. Nicole Malliotakis (R-NY) previously bought between $1,001 and $15,000 of stock in New York Community Bancorp, the company which would acquire Signature Bank, on March 17.
The trades amid the possible financial crisis marked one of several instances in which lawmakers were criticized for improperly leveraging their insider knowledge of the financial markets. Democrats and Republicans, including conservative Rep. Matt Gaetz (R-FL) and leftist Rep. Alexandria Ocasio-Cortez (D-NY), proposed a bill on Tuesday that would prohibit fellow lawmakers, their spouses, and their dependents from buying or selling individual stocks, the latest of multiple prior legislative proposals to address the controversy.
“The fact that members of the Progressive Caucus, the Freedom Caucus, and the Bipartisan Problem Solvers Caucus, reflecting the entirety of the political spectrum, can find common ground on key issues like this should send a powerful message to America,” Rep. Brian Fitzpatrick (R-PA), another sponsor of the bill, said in a statement. “We must move forward on issues that unite us, including our firm belief that trust in government must be restored, and that members of Congress, including their dependents, must be prohibited from trading in stocks while they are serving in Congress and have access to sensitive, inside information.”
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The failure of the three medium-sized banks could threaten the economy and induce a contraction. Officials at the Federal Reserve concluded that the volatility in the financial system warrants a recession forecast for the end of the year, followed by a predicted recovery over the course of the subsequent two years.