JUST IN: Poor risk management, a lack of liquidity controls and exposure to the crypto industry were all contributing factors to Signature Bank’s collapse, but its key issue was contagion from a bank run, an FDICgov report said. nikhileshde reports
Explore the policy fallout from the 2022 market crash, the advance of CBDCs and more.Signature Bank fell apart due to mismanagement by its officers and “contagion effects” after the collapse of Silicon Valley Bank and wind-down of Silvergate Bank, a federal bank regulator said Friday.
“Additionally, SBNY failed to understand the risk of its association with and reliance on crypto industry deposits or its vulnerability to contagion from crypto industry turmoil that occurred in late 2022 and into 2023,” the report said. Despite industry claims that Signature was shut down specifically for serving crypto customers, NYDFS Superintendent Adrienne Harris has repeatedly said the bank had other issues.
The GAO report noted that Signature had “reduced its exposure to deposits” from the crypto industry over the 12 months prior to its collapse.
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