- Executives from Signature Bank were left baffled when they were suddenly shut down.
- They maintain the bank could have survived the $16 billion bank run.
- Regulators are being questioned on their snap decision to shutter banks.
In March, the sudden collapse of three banks in the U.S. led many to fear a banking crisis was looming, with crypto inadvertently being made the primary scapegoat.
Following these collapses, a Senate Banking Committee heard from the former banking executives on Tuesday, May 17, including two from Signature who maintain that the bank did not need to be shut down.
“Withstand the Economic Earthquake”
Signature co-founder and former chairman Scott Shay said Signature was ready to stay in business despite $16 billion in customer withdrawals that followed Silicon Valley Bank’s failure. The collapse of other banks around Signature led to the bank run, which executives felt the bank could handle.
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Signature’s former President, Eric Howell, added that the lender was “well-capitalized, solvent, and had sufficient borrowing capacity to withstand these and future withdrawals.”
Regulators stepped in rapidly over the course of five days to shutter all three banks and prevent further losses from the bank run. However, the decision to step in so abruptly has questioned regulatory neutrality and discrimination.
Moreover, many feel that the decision to close the banks was a hidden agenda to launch an attack on crypto, with all three banks renowned for serving crypto companies. Ex-congressman Barney Frank said Signature was shuttered to damage the crypto industry purposefully.
An Anti-Crypto Agenda?
How the crypto-friendly banks were shuttered, and the aftermath of dealing with the defunct lenders, has brought an anti-crypto agenda into the spotlight. Frank, as well as U.S. Representative Tom Emmer, are just two who have highlighted this.
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In the wake of the bank closures, Emmer said the “FDIC is weaponizing recent instability in the banking sector to purge legal crypto activity from the U.S.” after the agency blocked buyers of Signature from offering crypto services.
However, the New York Department of Financial Services (DFS) denied such claims, saying Signature’s shutdown wasn’t crypto-related.
On the Flipside
- In the same hearing, executives from Silicon Valley Bank and Signature Bank refused to commit to voluntarily handing back the millions of dollars they were paid before the collapse of their banks.
Why You Should Care
It will never be known if Signature could have ridden out the bank run and stayed afloat. However, the snap decision by regulators to shut down the banks will continue to be questioned.
Read more about the impact on crypto when the banks were shuttered:
“Crypto Has Been De-Banked:” Impact of Signature, Silvergate, and Silicon Valley Bank Collapse.
Read more about the DOJ’s crackdown on exchanges:
U.S. DOJ Targets Crypto Exchange, Mixer & Tumbler Crackdown.
