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- Signature Bank collapsed on Monday morning, after which Barney Frank says regulators shut down the bank to send “a strong anti-crypto message.”
- In the last 4 days, this was the second US bank collapse by the US regulators after Silicon Valley Bank.
Signature Bank (NASDAQ:SBNY), once the best recommendation from CNBC’s Jim Cramer, collapsed on March 13th, Monday. In 2022, Cramer said one could make “a lot of money” with Signature bank. The collapse of this crypto-linked bank by regulators made it the 3rd largest banking failure in US history.
In a phone interview with CNBC, Barney Frank said, “We had no indication of problems until we got a deposit run late Friday, which was purely contagion from SVB.” Signature executives explored “all avenues” to support its situation, including finding more capital and gauging interest from potential acquirers. The deposit exodus had slowed by Sunday, Frank said, and executives thought they had stabilized the situation.
Barney Frank has been a member of the Board since June 2015. As a Chair of the House of Financial Services Committee, he was instrumental in crafting the short-term $550 billion rescue plan in response to the nation’s 2008-2009 financial crisis. After the Signature bank closure, he said there was “no real objection reason” that Signature had to be seized.
As CNBC reported, Frank said, “I think part of what happened was that regulators wanted to send a very strong anti-crypto message. We became the poster boy because no insolvency was based on the fundamentals.”
The FDIC Took Control of Signature Bank
US President Joe Biden also wrote that “on Friday, the Federal Deposit Insurance Corporation (FDIC)– the government regulator in charge– took control of Silicon Valley Bank’s assets. Over the weekend, it did the same with Signature Bank.”
Biden also mentioned in his tweet about the next move. He wrote “Everyone who had deposits at those banks can access their money today. That includes small businesses that need to pay their employees and stay open. No losses will be borne by the taxpayer. We’ll pay for it from the fees that banks pay into the Deposit Insurance Fund.”
Meanwhile, as Biden wrote, the SVB and Signature bank management team will be fired. And in case the FDIC took over the control of any of these banks then the people associated with the banks shouldn’t be able to continue their work. The investors in the banks also “will not be protected.” As they “knowingly” took a risk and when risks don’t pay off, investors lose their money. That’s how capitalism works, he continued.
Biden also added that they must get a full accounting of what actually happened. And they must reduce the risk of this happening again. Banking regulators need to strengthen the rules for banks to make it less likely that this bank failure happens again.
With a background in journalism, Ritika Sharma has worked with many reputed media firms focusing on general news such as politics and crime. She joined The Coin Republic as a reporter for crypto, and found a great passion for cryptocurrency, Web3, NFTs and other digital assets. She spends a lot of time researching and delving deeper into these concepts around the clock, and is a strong advocate for women in STEM.
