On March 12, New York state financial regulators closed the Signature Bank after the fallout from Silicon Valley Bank’s implosion spread to others.
The Treasury Department, the Federal Reserve and the Federal Insurance Deposit Corporation (FDIC) released a joint statement which said, “We are also announcing a similar systemic risk exception for Signature Bank, New York, New York, which was closed today by its state chartering authority. All depositors of this institution will be made whole. As with the resolution of Silicon Valley Bank, no losses will be borne by the taxpayer.”
“Shareholders and certain unsecured debtholders will not be protected. Senior management has also been removed. Any losses to the Deposit Insurance Fund to support uninsured depositors will be recovered by a special assessment on banks, as required by law,” the joint statement added.
“Signature Bank is a New York state-chartered commercial bank and is FDIC-insured, with total assets of approximately $110.36 billion and total deposits of approximately $88.59 billion as of December 31, 2022,” said New York Department of Financial Services said in a separate statement. The Signature Bank’s failure is the third-largest bank failure in US history.
On March 12, United States President Joe Biden tweeted, “I’m firmly committed to holding those responsible for this mess fully accountable and to continuing our efforts to strengthen oversight and regulation of larger banks so that we are not in this position again. I’ll have more to say on this tomorrow morning,” on the failure of Silicon Valley Bank and Signature Bank. “The American people and American businesses can have confidence that their bank deposits will be there when they need them,” he added.
Furthermore, he tweeted, “At my direction, @SecYellen and my National Economic Council Director worked with banking regulators to address problems at Silicon Valley Bank and Signature Bank. I’m pleased they reached a solution that protects workers, small businesses, taxpayers, and our financial system.”
Earlier, California regulators closed the Silicon Valley Bank, which catered to the tech industry, after it witnessed a bank run with depositors rushing to withdraw their deposits last week amid concerns about the bank’s balance sheets.
As a result, the FDIC was appointed receiver, and regulators are working to find a buyer for the institution, ranked as the 16th bank in the US before its failure. The Silicon Valley Bank’s failure is the largest financial institution to collapse since the failure of Washington Mutual in 2008.
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