Over the weekend, regulators announced that they had taken over New York-based Signature Bank to protect its depositors and the stability of the U.S. financial system. The move came after the bank experienced a run on deposits last Friday that saw customers withdraw more than $10 billion in response to the sudden collapse of Silicon Valley Bank. According to a board member and former congressman, Barney Frank, the deposit run was sparked by contagion from SVB and was not due to any underlying problems at Signature Bank.
Barney Frank, who helped draft the landmark Dodd-Frank Act after the 2008 financial crisis, has said that
there was “no real objective reason” for Signature to be seized. Instead, he believes that regulators wanted to send a very strong anti-crypto message and that Signature Bank had become the poster child for this message.
Signature Bank had 40 branches, assets of $110.36 billion, and deposits of $88.59 billion at the end of 2022.
Signature Bank opened itself up to the crypto industry in 2018, which helped turbocharge deposit growth in recent years. The bank created a 24/7 payments network for crypto clients and had $16.5 billion in deposits from digital-asset-related customers.
The sudden move by regulators to take over Signature Bank has raised some eyebrows among observers. In the same announcement that identified SVB and Signature Bank as risks to financial stability, regulators also announced new facilities to shore up confidence in the country’s other banks. A
Signature's top managers have been summarily removed, and the bank was shuttered on Sunday. Regulators are now conducting a sales process for the bank, while guaranteeing that customers will have access to deposits and service will continue uninterrupted.
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