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- 1 Joseph J. DePaolo stepped-down as President of now-closed crypto-friendly Signature Bank (SBNY).
- 2 DePaolo planned to transition into a senior advisor role in2023.
- 3 The 62 year old began his journey in banking as an auditor at KPMG and worked at various other institutions subsequently.
Joseph J. DePaolo has been the Co-founder, President and Chief Executive Officer (CEO) of now-closed crypto-friendly bank, Signature Bank (NASDAQ: SBNY). Mid-February 2023, he planned to transition into a senior advisor role during this year. As reported by Business Wire, an American media company, released on February 16, 2023, Chief Operating Officer (COO) Eric R Howell.
The Leadership Transition Plans of Joseph J. DePaolo: The CEO of Now-Closed Signature Bank
DePaolo retains the CEO role and also remains on the Bank’s Board of Directors. Eric Howell continues to serve as COO and a member of the Board of Directors. As the report mentioned, DePaolo gradually completed his transition into this newly created advisory role. But, it is not clear how long the transitionary period will last.
It must be noted that under the leadership of DePaolo, SBNY share price soared as high as $344.89 a year ago amid the last crypto bull market. Whereas, by the end of 2022, after the collapse in cryptocurrency valuations and the onset of the crypto winter, SBNY stock lost 66% of its value, closing 2022 at around $113. Meanwhile, this year SBNY stock gained about 18%, rising alongside the crypto market.
About The CEO Of Now-Closed Signature Bank?
Joseph J. DePaolo worked as a President, CEO and Director of Signature Bank since its inception. He also served as a Director of Signature Securities Group since its inception and served as its Chairman of the Board until December 2006. Before joining Signature Bank, he was a Managing Director and member of the Senior Management Committee of the Consumer Financial Services Division at Republic National Bank, which he joined in 1988.
At Republic National Bank, Joseph J. DePaolo held multiple positions which included First Vice President and Deputy Auditor, First Vice President and Senior Vice President of Consumer Banking, Managing Director, Chairman of Republic Financial Services Corporation (Republic National Bank’s retail broker-dealer group), and Chairman of Republic Insurance Agency.
Furthermore, before working with Republic National Bank, he was a senior audit manager with KPMG Peat Marwick. Joseph J. DePaolo is also a member of the New York State Society of CPAs. While working at Signature Bank, the total compensation of DePaolo was nearly $7,830,540. No executives at Signature Bank were paid more than DePaolo.
The Crypto-Friendly Signature Bank
Now-closed crypto-friendly Signature Bank was a full-service commercial bank with 29 offices throughout the metropolitan New York area. The bank served the financial needs of privately owned businesses, their owners and senior managers–a group of clients who often found themselves underserved by the area’s larger financial institutions.
Since commencing operations in May 2001, Signature Bank reported $110.36 Billion in assets and $88.59 Billion in deposits as of December 31, 2022. The crypto-friendly bank placed 19th on S&P Global’s list of the largest banks in the U.S., based on deposits as of year-end 2021.
The Failure of Signature Bank
As Signature Bank was indirectly exposed to the crypto market, it collapsed in the aftermath of the FTX bankruptcy drama..depositors withdrew large sums of money when Silicon Valley Bank (SVB) collapsed. Regulators feared the contagion would continue in the banking sector and closed Signature Bank to try to contain the panic.
It must be noted that over 550 banks shut down from 2001 to so far in 2023, as the Federal Deposit Insurance Corp. (FDIC) report stated. But Signature Bank’s breakdown stands out because of its connection to the SVB failure and ensuing fears about the health of the banking sector as a whole.
SVB was the biggest bank failure whereas Signature Bank is the second biggest since Washington Mutual closed in 2008. Notably, both the collapses have since been eclipsed by the failure of First Republic Bank in April 2023. The failures of t
his year prompted a controversial rescue that called into question FDIC limits and which banks are “too big to fail.”
The Reason of Signature Bank Collapse
It can be said that the failure of Silicon Valley Bank (SVB) led to a Signature bank run on March 10, 2023, Friday. The depositors panicked after SVB failed whereas Signature had high amounts of uninsured deposits and was exposed to the crypto industry. On March 12, 2023, Sunday, the New York State DFS took possession of the bank “in order to protect depositors” and named the FDIC as receiver.
New York state and U.S. federal regulators announced that there was a plan to make sure all depositors were protected, even those with uninsured deposits. In late April, the FDIC issued a report over the failure of Signature Bank. The report concluded that the root cause was “poor management.” The timeline of the Signature Bank collapse in the aftermath of FTX’s collapse is alarming
The Saviour of Signature Bank
As per FDIC’s estimates, the cost of the failure of Signature Bank to the Deposit Insurance Fund was around $2.5 Billion. Here, the Deposit Insurance Fund can be understood as the private insurer that guarantees deposits at FDIC-insured institutions. FDIC also stated that if the Deposit Insurance Fund loses money because of the support it’s giving uninsured depositors, U.S. banks will pay a special assessment or fee.
This special assessment or fees could eventually impact Americans in the form of higher fees or lower interest rates on deposits—what U.S. Sen. James Lankford, R-Okla., called a “backdoor tax increase.” The FDIC controversially used a “systemic risk exception” for Signature Bank to make all deposits available to customers. Signature Bank was the third-biggest bank failure in America’s history, and came directly after the collapse of SVB.
Nancy J. Allen is a crypto enthusiast, with a major in macroeconomics and minor in business statistics. She believes that cryptocurrencies inspire people to be their own banks, and step aside from traditional monetary exchange systems. She is also intrigued by blockchain technology and its functioning. She frequently researches, and posts content on the top altcoins, their theoretical working principles and technical price predictions.
