Regional banks find themselves under scrutiny as the shadow of another bank failure looms large. A congressional member’s sale of stock in the collapsing bank before its downfall may exacerbate concerns surrounding the topic of trading by Congress members.
What Happened: One of the largest banks in the United States is acquiring the majority of assets and assuming certain liabilities of First Republic Bank FRC, a regional bank taken over by the FDIC.
JPMorgan Chase JPM has won the bid to acquire the assets of First Republic, beating out several other bank companies that made bids.
In the announcement Monday, First Republic branches located in eight states will reopen as a unit of JPMorgan Chase and become units of the large bank going forward.
With assets of $229.1 billion as of April 13, the collapse of First Republic marks the second-largest bank failure in U.S. history and one of several large bank failures in 2023.
In a filing on April 28, which was shared by Congresstrading on Twitter Monday, it was revealed that U.S. Representative Lois Frankel (D-FL) sold shares of First Republic prior to its collapse and takeover.
Frankel, who has served in the House of Representatives since 2013, sold $1,000 to $15,000 of First Republic stock on March 16.
Shares of First Republic traded between $19.80 and $40 on March 16 before closing at $34.27. The shares fell sharply after hours on March 16, the same day Frankel sold the shares. The drop came after the company announced it was suspending its dividend, and was receiving $30 billion in uninsured deposits from several large banks.
On March 17, the day after Frankel’s sale, First Republic shares opened at $27.74 and traded between $22.30 and $30.01 before closing at $23.03.
Shares of First Republic opened for trading on March 1 at $122.01 and last traded over $100 on March 9 before declining throughout the month amid volatility in the banking sector.
U.S. Rep John Curtis (R-UT) also reported selling $1,000 to $15,000 in shares of First Republic on March 16, which Benzinga previously shared.
Why It’s Important: While Frankel likely saw a loss on the original investment in First Republic shares, the sale on March 16 may have limited the downside for the member of Congress. Shares of First Republic are down over 90% year-to-date.
First Republic shares traded at $2.29 Monday morning, and shareholders will now likely be left with nothing after the FDIC takeover and subsequent acquisition.
While First Republic shares are down since Frankel sold, another stock she owns is trading up Monday.
Along with the sale of First Republic, Frankel reported the purchase of JPMorgan stock on March 22. The trade, valued at $1,000 to $15,000, was disclosed on April 28, as shared by Quiver Quant.
Shares of JPMorgan traded between $127.08 and $130.66 on March 22, the day of Frankel’s purchase. With shares of JPMorgan up 3% to $142.37 on Monday, the trade is currently profitable for the Congress member.
Members of Congress are currently able to buy and sell stocks as long as they disclose the transactions in the allotted time. Several members of Congress have reported selling bank stocks during the beginning of the bank crisis and before several major failures happened, which may raise questions from the public.
There have been increased calls to ban members of Congress and their spouses from buying and selling stocks and options while in office, but no bills have passed.
Earlier this year, Sen. Josh Hawley (R-MO) introduced the PELOSI Act, taking a dig at one of the most high-profile members of Congress. Officially named the Preventing Elected Leaders From Owning Securities And Investment Act, the bill would ban the trading of stocks and options by Congress members and return profits to American taxpayers in the case of any violations.