March 28, 2023

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Signature Seized by Regulators as Pain Spreads From SVB’s Fall

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(Bloomberg) — The sudden closure of New York’s Signature Bank by state regulators Sunday underscored the urgency of extraordinary of US efforts to backstop the nation’s banking system and quell mounting concerns among customers about the safety of their deposits.

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Federal regulators swept the lender into receivership just days after the demise of fellow crypto-friendly bank Silvergate Capital Corp. and SVB Financial Group’s Silicon Valley Bank. The announcement coincided with a slate of measures out of Washington, including the Federal Reserve’s creation of a new lending program for banks, aimed at ensuring they can meet any customer requests to withdraw money.

Both Signature’s insured and uninsured customers will be able to access all their deposits under the same “systemic risk exception” that will give Silicon Valley Bank customers access to their cash starting Monday, regulators said.

The decision to close Signature came as a surprise to its managers, who found out shortly before the public announcement, according to a person familiar with the matter. The bank faced a torrent of deposit outflows on Friday, but the situation had stabilized by Sunday, the person said, asking not to be identified discussing a private matter.

“I think that if we’d been allowed to open tomorrow, that we could’ve continued — we have a solid loan book, we’re the biggest lender in New York City under the low-income housing tax credit,” said former Congressman Barney Frank, a Signature Bank board member known for the Dodd-Frank Act, which overhauled US financial regulation in the wake of the global financial crisis. “I think the bank could’ve been a going concern.”

Read more: US backstops bank deposits to avert crisis after SVB collapse

A Signature Bank representative declined to comment.

‘Singled Out’

The Federal Insurance Deposit Corp. said it transferred all Signature Bank deposits and substantially all of the…

2023-03-13 01:44:47

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