From Boom to Bust: The Story of Signature Bank's Demise in a Shifting Banking Landscape
On Sunday, Signature Bank, based in New York, was closed by state regulators, making it the third-largest banking failure in US history. The Federal Deposit Insurance Corporation (FDIC) took control of the bank, which had $110.36 billion in assets and $88.59 billion in deposits at the end of 2022. This comes just two days after Silicon Valley Bank was closed, which is the second-largest failure in US
history. Both banks were closed due to customer withdrawals and other financial issues.Despite the closures, the US Treasury Department and other bank regulators have assured depositors that they will be made whole and that "no losses will be borne by the taxpayer." The FDIC has established a "bridge" successor bank to allow customers to access their funds, with the former CEO of Fifth Third Bancorp, Greg Carmichael,
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named as the CEO of the bridge bank.In September 2022, almost a quarter of deposits at Signature Bank came from the cryptocurrency sector. Surprisingly, the financial institution divulged its intentions in December to diminish their cryptocurrency-related deposit by a staggering $8 billion. Additionally, former President Donald Trump and his family had received financing and checking accounts through this institution but ended those connections following events at Capitol
Hill on January 6th of last year.The closures of Signature Bank and Silicon Valley Bank have led to concern among investors about the stability of the US banking system, with over $100 billion in market value being erased from US banks. However, officials have taken swift action to try and restore confidence in the financial system, and shareholders and unsecured debtholders of both banks will not be protected.