Second Bank Fails In Spreading Crisis; Feds Say Depositors At Both Will Be “Made Whole”

New York State regulators took over Signature Bank today, the second financial institution to fold in less than a week as the FDIC and Treasury, however, assured depositors at both that they would be made whole in an attempt to stem the growing crisis.

Signature was a banker to crypto clients. It recently indicated plans to retreat from that business, but customers grew concerned recently given its high share of uninsured deposits — especially in the wake of Friday’ collapse of Santa Clara, Calif.-based SVB, or Silicon Valley Bank, which housed assets of Roku and many other tech companies and startups.

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“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,” the Treasury Department, Federal Reserve, and Federal Deposit Insurance Corporation said in a joint statement Sunday.

“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,” said Secretary of the Treasury Janet L. Yellen, Federal Reserve Board Chair Jerome H. Powell, and FDIC Chairman Martin J. Gruenberg.

New York Gov. Kathy Hochul said in a statement Sunday evening: “Throughout the weekend, DFS 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.”

“I’m grateful that the Federal regulators have taken steps to do just that, and I hope that these actions will provide increased confidence in the stability of our banking system. Many depositors at these banks are small businesses, including those driving the innovation economy, and their success is key to New York’s robust economy.”

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