Signature Bank becomes the latest victim of the banking crisis in the US

New York state financial regulators shut down Signature Bank on Sunday as fallout from the collapse of SVB Financial Group’s Silicon Valley bank last week spreads to other lenders. Depositors at New York banks will be able to access their money under a “systemic risk exemption similar to the one that allowed Silicon Valley bank customers to access their money on Monday,” the Treasury Department, Federal Reserve, and Federal Insurance Deposit Corp. said in a joint statement on Sunday.
“All depositors at this institution will be sanitized,” regulators said. “As with the Silicon Valley banking settlement, there will be no harm to taxpayers.”
Signature Bank, a commercial bank chartered by the State of New York and insured by the FDIC, had approximately $110.36 billion in assets and approximately $88.59 billion in deposits as of December 31, New York’s Department of Financial Services said in a separate statement.
Signature Bank representatives did not immediately respond to a request for comment.

Silicon Valley Bank suddenly became America’s biggest failed lender in more than a decade on Friday, bailing out less than
48 hours after revealing a plan to raise capital. The bank made huge losses from the sale of its securities when interest rates rose, which scared investors and depositors, who quickly began to withdraw their money. On Thursday alone, investors and depositors scrambled to grab about $
42 billion. 
US regulators are racing against the clock to find solutions for the failed Silicon Valley bank and prevent potential contagion from spreading to other lenders. Treasury Secretary Janet Yellen said Sunday that she agrees with the Silicon Valley bank’s decision, which “fully protects all depositors.” Concerns about the health of other small banks focused on venture capital and startups are prompting regulators to consider emergency measures to protect financial institutions and their depositors.

The New York Department of Financial Services “is in close contact with all regulated entities due to market events, monitors market developments, and works closely with other state and federal regulators to protect consumers, ensure the health of our regulated entities, and maintain stability in the global financial system,” Superintendent Adrienne A. Harris said in her agency’s statement.

After SVB went into liquidation on Friday in the biggest bank failure in more than a decade, the Federal Deposit Insurance Corp. began its active auction process late Saturday as it aims to make some of its customers’ uninsured deposits available as early as Monday, according to people familiar with the situation. As part of a broader contingency plan, the agency and the Federal Reserve have also discussed a fund to protect the ability to guarantee deposits if more banks fail, the people said.

The purpose of these efforts is to protect depositors, not bail out investors, Yellen said Sunday on CBS’ Face the Nation.
“During the financial crisis, there were investors and owners of large systemic banks that were saved”, said the finance minister. “And we’re certainly not looking, and the reforms we’ve put in place mean we won’t be doing that anymore. But we care about depositors and focus on meeting their needs. Rep. Ro Khanna whose California district SVB lives, said the FDIC would find a buyer and called on the US government to guarantee all of the bank’s deposits. House Speaker Kevin McCarthy, R-Calif., told Fox News’ “Sunday Morning Futures” that he is “hopeful that something can be announced today to move forward.”

Concerns about the health of other small banks that focus on venture capital and startups are prompting regulators to consider emergency measures. Officials have discussed a new deposit protection fund in talks with bank managers in the hope that creating such a vehicle will reassure depositors and help curb panic, the people said. They asked not to be identified because the discussions were not public.

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