What Happened To Signature Bank? The Latest Bank Failure Marks Third Largest In History

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Signature Bank, a New York-based regional bank that has become a leading provider of cryptocurrency lending, suddenly shut down on Sunday, marking the third-largest bank failure in U.S. history, just two days after the nation’s second-largest, Silicon Valley Bank stock had rocked the market, reviving fears of “challenging and turbulent” economic times.

Important facts

State regulators in New York shut down Signature Bank — a 23-year-old regional bank that had previously focused on digital assets by becoming one of the few banks to accept crypto deposits — after regulators warned that the stability of the financial system could be at risk if this were the case Bank remained open.

The New York Treasury Department said Sunday it had taken possession of the bank, which had more than $110 billion in assets and more than $88 billion in deposits at the end of last year.

Signature Bank became the third regional bank to collapse in a matter of weeks, following the spectacular collapse of California-based crypto-friendly banks Silvergate Bank and Silicon Valley Bank, whose collapse worried investors ahead of widespread financial vulnerabilities.

Signature had announced fresh financial data on Thursday, saying it had limited crypto deposit balances to increase its diversification, telling investors, “We want to make it clear once again that Signature Bank is a well-diversified, full-service commercial bank with more is more than two decades of solid performance in the service of the middle class.”

The bank previously announced in December that it would reduce its crypto-related deposits by $8 billion to $10 billion.

On Friday, however, customers quickly withdrew their deposits, the New York Times reported after shares fell nearly 25% to $70 on the bank’s worst day on Wall Street and after being briefly halted on Friday morning over fears of volatility.

Fearing that Signature would suffer the same fate as SVB just days earlier, customers shifted their deposits to larger banks including JPMorgan Chase and Citigroup, opposite former Rep. Barney Frank (D-Mass.), who sat on Signature’s board CNBC.

Ilya Volkov, CEO of fintech platform YouHodler, said he doesn’t think the bank’s collapse will have any long-term impact on the crypto industry, arguing that crypto giants Bitcoin and Ethereum have already rallied since the banking collapse, which he said referred to as a “sign of increased confidence in independent decentralized assets.”

Volkov believes the biggest implications of Signature’s failure will most likely be increased scrutiny of banking regulations, how banks strategically plan risk management, and how they partner with crypto companies, saying it’s “not clear which new financial institutions will partner with these crypto companies.” Followed by Silvergate, SVB and now Signature.”

Crucial quote

“I think all markets are going to have a volatile period in the near term,” Volkov said when asked about the strength of European and US stock markets after the SVB collapse, adding, “Although Silicon Valley Bank is a regional bank is, the news shows a lack of confidence in the banking sector” that could have a “domino effect on another US regional bank.” Volkov noted that fears of economic volatility were “reasonable” but predicted they would not last long.


The collapse of SVB and Signature had a domino effect on both large US banks and smaller regional banks as investors lost confidence. Market value losses in the 10 largest bank stocks exceeded $165 billion since the SVB’s last trading session on Wednesday before its sudden collapse.

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In his first speech on the banks since the collapse of the SVB last week, President Joe Biden said Americans can “breathe easier” on Monday after his administration took a series of measures over the past few days that he believes will weaken the banking system made “safe”. Those measures included a plan, announced by the Treasury Department, the FDIC and the Federal Reserve in a joint statement Sunday, to secure all deposits at Signature Bank and SVB and give depositors at SVB full access to theirs Monday morning to grant deposits. Biden also said he will urge Congress and banking regulators to “tighten the rules on banks” to reduce the risk of future bank failures.


Not all economists or policymakers were optimistic about the Biden administration’s approach. in one New York Times In the column published Monday, Sen. Elizabeth Warren (D-Mass.) expressed skepticism about federal regulators’ goal of having banks, not taxpayers, “bear the cost of the federal insurance needed to protect depositors,” writing, “We’ll see.” if that’s true.” In the column, Warren also argued that banks would have been required to conduct regular “stress tests” at their own risk of vulnerability if Congressional lawmakers and the Federal Reserve accepted “the tighter oversight” from the Dodd-Frank -law would not have reversed.

Further reading

Bank stock crash deepens: Losses top $165 billion as analyst warns SVB default risks face intense regulatory scrutiny (Forbes)

What to know about the Silicon Valley bank collapse – the biggest bank collapse since 2008 (Forbes)

Biden says bailing out Silicon Valley bank helped economy ‘breathe easier’ – but not all pundits agree (Forbes)

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