This decision was made two days after Signature Bank customers, spooked by the overnight collapse of Silicon Valley Bank, withdrew more than $10 billion in deposits from the bank. The bank run quickly led to Signature Bank's collapse, making it the third-largest bank in the United States to collapse. At the end of 2022, the New York-based bank had 40 branches, assets of $110.36 billion and deposits of $88.59 billion. (Related: Latest bank to collapse is same one that closed Trump's accounts after Jan 6th.)
By comparison, Silicon Valley Bank had $209 billion in assets at the time of failure. The largest bank failure was Washington Mutual in 2008 with $307 billion in assets at the time of failure.
New York Gov. Kathy Hochul said the closure decision was made in collaboration with federal partners and the state's chartering authority to "stabilize the banking sector and protect the hard-earned money of New Yorkers whose livelihoods depend on impacted companies."
"I'm grateful that the federal regulators have taken steps to do just that, and I hope that these actions will provide increased confidence in the stability of our banking system," said Hochul. "Many depositors at these banks are small businesses, including those driving the innovation economy, and their success is key to New York's robust economy."
In December 2022, Signature Bank had around $17.79 billion in cryptocurrency-related deposits. At the time, bank executives announced that they would shrink this massive crypto investment by about $8 billion to reduce risk in "a challenging cryptocurrency environment."
Signature Bank, founded in 2001 to be a more business-friendly alternative to big banks, opened itself up to the crypto industry in 2018. Since then, it has helped turbocharge deposit growth. The bank even created a 24/7 payments network for cryptocurrency clients.
Barney Frank, a member of Signature Bank's board of directors and a Democrat from Massachusetts who served in the House of Representatives from 1981 to 2013, claims that state officials behind the action wanted to make an example out of Signature Bank to warn other banks and finance companies against participating in the crypto industry.
"I think part of what happened was that regulators wanted to send a very strong anti-crypto message," said Frank. "We became the poster boy because there was no insolvency based on the fundamentals."
"This was just a way to tell people, 'We don't want you dealing with crypto,'" added Frank. He noted how the bank's former executives were given no recourse and no warning by state and federal authorities. But he does expect some vindication when Signature is finally sold.
"I believe they're going to get a very good price," said Frank. "Proof that it was not a bank problem."
For her part, Hochul denied that Signature Bank's involvement in crypto was a factor in its shuttering. She said the bank run was intensifying, making the shut down necessary.
New York Financial Services Superintendent Adrienne Harris went further by saying Signature wasn't a crypto bank. "This is not about a particular sector in the case of Signature Bank, but we moved quickly to make sure depositors were protected."
Learn more about the collapse of Signature Bank and Silicon Valley Bank at DebtBomb.news.
Watch this clip from "Reality Rants" with Jason Bermas as he discusses how the collapse of Signature Bank and Silicon Valley Bank is just the beginning, and America is sitting on top of a $620 billion ticking time bomb.