US Regulators Close Another Bank as Financial Concerns Grow

    US Regulators Close Another Bank as Financial Concerns Grow
    Last updated Mar 13, 2023
    Image credit: Reuters [via CNBC]


    • On Sunday, New York bank regulators shut down Signature Bank to protect consumers and the financial network. The closing marks the third major bank collapse in less than a week.
    • A joint statement from the US Treasury, Federal Reserve, and Federal Deposit Insurance Corporation (FDIC) announced the closing and said that: "as with the resolution of Silicon Valley Bank (SVB), no losses will be borne by the taxpayer. Shareholders and certain unsecured debtholders will not be protected."
    • Signature Bank is the second well-known cryptocurrency bank to fail recently. Silvergate, valued at $4.4B, announced it would close and liquidate all assets last week. Security filings at the close of 2022 showed Signature Bank had more than $110B in assets.
    • The bank held more than 40 branches across New York, California, Connecticut North Carolina, and Nevada. Its $83B in deposits were transferred to the FDIC-operated Signature Bridge Bank to "maximize the value of the institution for a future sale and maintain banking services in the communities formerly served by Signature Bank." Banking operations for existing consumers were expected to return on Monday.
    • Barney Frank, a Signature Bank board member, blamed the bank's collapse on the fallout from the SVB failure. After the news of SVB shuttering, consumers reported that they felt more confident in banking with larger institutions such as JP Morgan Chase.
    • With several banks shuttering, US regulators are facing a potential financial crisis. US Treasury Secretary, Janet Yellen, has committed to considering extraordinary measures to protect small banking institutions that may be at risk.


    Narrative A

    The banking collapse last week set off more than a financial panic. Key players in the crypto, tech, and government sectors are now playing the blame game. Crypto backers and fans blame centralized banking and the feds for over-regulating, while the tech investors are pointing the finger at the bad actors of the crypto realm like Sam Bankman-Fried that resulted in the overnight collapse. One thing is for certain, it's been a hard year for both tech and crypto and the outlook isn't getting any better.

    Narrative B

    The US government is very concerned about protecting depositors through this banking collapse but make no mistake, a bailout for these banking institutions is not an option. Following the last financial collapse, a major government bailout took place forcing a reform to our systems and it cannot happen again. Regulators must review their options while considering that the fallout will be far-reaching and extraordinary measures should be used to provide protection and rights during this crisis. Those graces should not be extended to shareholders.

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