Signature Bank shut down by regulators
- The crypto-friendly Signature Bank was shut down by regulators on Sunday.
- In a joint statement, the Federal Reserve, the US Treasury and the FDIC said the bank's depositors would be made whole.
In an attempt to prevent a spreading financial crisis, regulators shut down the crypto-friendly Signature Bank, New York, on Sunday, promising to make its depositors whole.
Signature Bank's closure comes on the heels of the shuttering of Silicon Valley Bank on Friday. Customers of both tech-friendly institutions will be bailed out by the US Treasury, Federal Reserve, and Financial Deposit Insurance Corporation, with their funds available beginning Monday.
In a joint statement between the regulatory institutions released Sunday, Silicon Valley Bank's depositors will be "fully" protected from financial losses, which are ordinarily guaranteed by the FDIC only up to $250,000.
"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," the statement continued. "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."
Signature Bank has assets of more than $110 billion as of December 31.
By announcing that depositors will be made whole and have access to their funds beginning Monday, regulators have removed the risk that companies with deposits in Signature Bank or SVB could be unable to make payroll or cover other expenses.
Here's the full statement:
Washington, DC -- The following statement was released by Secretary of the Treasury Janet L. Yellen, Federal Reserve Board Chair Jerome H. Powell, and FDIC Chairman Martin J. Gruenberg:
Today we are taking decisive actions to protect the U.S. economy by strengthening public confidence in our banking system. This step will ensure that the U.S. banking system continues to perform its vital roles of protecting deposits and providing access to credit to households and businesses in a manner that promotes strong and sustainable economic growth.
After receiving a recommendation from the boards of the FDIC and the Federal Reserve, and consulting with the President, Secretary Yellen approved actions enabling the FDIC to complete its resolution of Silicon Valley Bank, Santa Clara, California, in a manner that fully protects all depositors. Depositors will have access to all of their money starting Monday, March 13. No losses associated with the resolution of Silicon Valley Bank will be borne by the taxpayer.
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.
Finally, the Federal Reserve Board on Sunday announced it will make available additional funding to eligible depository institutions to help assure banks have the ability to meet the needs of all their depositors.
The U.S. banking system remains resilient and on a solid foundation, in large part due to reforms that were made after the financial crisis that ensured better safeguards for the banking industry. Those reforms combined with today's actions demonstrate our commitment to take the necessary steps to ensure that depositors' savings remain safe.
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