Signature Bank Seized as Feds Aim to Stem Run on Banks

Signature Bank
Signature Bank in Woodmere (Google Maps)

Regulators seized Signature Bank, a cryptocurrency lender with seven branches on Long Island, after the financial institution became the third largest bank failure in U.S. history — and the second in two days.

The collapse of the New York-based bank and seizure of its $110 billion in assets Sunday came after regulators Friday seized California-based Silicon Valley Bank and its $200 billion in assets when a run of depositors withdrawing funds made it the second-largest U.S. bank failure, behind the 2008 failure of Washington Mutual.

“Throughout the weekend, [Department of Financial Services] Superintendent Adrienne Harris and I have been working closely with federal partners on ways to stabilize the banking sector and protect the hard-earned money of New Yorkers whose livelihoods depend on impacted companies,” Gov. Kathy Hochul said.

The U.S. government took extraordinary steps Sunday to stop a potential banking crisis from escalating after the back-to-back failures signaled how fast the financial bleeding was occurring. But regulators stopped short of bailing out banks like they did 15 years ago.

In an effort to shore up confidence in the banking system, the Treasury Department, Federal Reserve and FDIC said Sunday that clients at both failed banks would be protected and able to access their money. They also announced steps that are intended to protect the bank’s customers and prevent additional bank runs.

“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,” the agencies said in a joint statement.

Under the plan, depositors at Silicon Valley Bank and Signature Bank, including those whose holdings exceed the $250,000 insurance limit, will be able to access their money on Monday.

As recently as Thursday, March 9, Signature Bank — which has 40 branches — claimed it remained in a “strong, well-diversified financial position” with “well-diversified assets across nine national business lines and nearly 130 commercial banking teams spanning its metropolitan New York area and the west coast.” That news came a day before the Silicon Valley Bank takeover.

The Signature Bank takeover resulted in the dismissal of all senior management, according to the joint statement. The bank’s LI locations are in Hauppauge, Great Neck, Melville, Garden City, Woodmere, Jericho, and Rockville Centre.

“DFS is in close contact with all regulated entities in light of market events, monitoring market trends, and collaborating closely with other state and federal regulators to protect consumers, ensure the health of the entities we regulate, and preserve the stability of the global financial system,” according to an announcement from the DFS. 

Any Signature Bank depositors or investors with questions about FDIC coverage limits and requirements can visit fdic.gov or call 877-ASK-FDIC.

With Associated Press and amNewYork Metro