NY regulators take control of another crypto-friendly bank – Signature Bank, government will provide financial assistance to protect depositors

On Sunday, the New York Department of Financial Services, or DFS, announced that it had taken over Signature Bank. DFS has named the Federal Deposit Insurance Corporation, or FDIC, as the bank’s trustee. The Federal Reserve, the Treasury Department and the FDIC explained in a joint statement that all Signature depositors will be insured against the federal government’s bailout, similar to California’s Silicon Valley Bank (SVB).

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The government is taking decisive action to protect depositors and strengthen public confidence in the U.S. banking system.

Signature Bank, which supports the cryptocurrency sector, has been shut down by financial regulators, and the FDIC is now taking control of the New York-based financial institution. In press release In a statement released Sunday evening, Superintendent Adrienne Harris of the New York Department of Financial Services, or DFS, announced the decision. Harris said Signature Bank had approximately $110.36 billion in assets and approximately $88.59 billion in total deposits as of Dec. 31, 2022.

This news follows the collapse of Silvergate Bank and the failure of Silicon Valley Bank or SVB, which was the second largest bank collapse in the US since the bankruptcy of Washington Mutual in 2008. Many market observers had to wait all weekend to see what would happen to SVB, but now they don't have to wait anymore, as the US Federal Reserve, the Treasury Department and the FDIC have commented on the situation in a press release. declaration.

The update, released at 6:15 p.m. ET, explains that the U.S. government is taking “decisive action to protect the American economy” and strengthen “public confidence in our banking system.” After consulting with Treasury Secretary Janet Yellen, the FDIC and the Federal Reserve approved a plan that fully protects all depositors. The government says the funds will be available to all depositors on March 13 and the resolution “will not be at the taxpayer’s expense.” In addition to the application of this plan to SVB, the decision to fully merge all depositors will also apply to Signature Bank.

@federalreserve announces Bank Term Funding Program (BTFP) to support American businesses and households, assure banks have ability to meet needs of all their depositors: https://t.co/JIMjkooIDV

— Federal Reserve (@federalreserve) March 12, 2023

At the same time as the joint statement was issued, next update, in which the Federal Reserve said it had created the Bank Term Funding Program, or BTFP, to help failed banks and their depositors. “With the approval of the Secretary of the Treasury, the Treasury will make available up to $25 billion from the Stabilization Fund as collateral for the BTFP. However, the Federal Reserve does not anticipate that it will be necessary to draw on these collateral,” the U.S. central bank said.

The US central bank added:

The Board of Directors is closely monitoring developments in financial markets. The capital and liquidity positions of the U.S. banking system are strong and the U.S. financial system is resilient.

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All content in this article is for informational purposes only and does not in any way serve as investment advice. Investing in cryptocurrencies, commodities and stocks is very risky and can lead to capital losses.