Regulators have shut down Signature Bank, the third bank in the last week, citing “systemic risk.”
The last few days have been difficult for banks, especially those servicing the tech industry. Silicon Valley Bank has been in the news as the second-largest bank collapse in US history. With the financial downturn, tech customers withdrew enough funds to help cause a run on the bank, leading to its collapse. Regulators see the same kind of risk with Signature Bank, leading them to shut it down.
A joint statement by Treasury, Federal Reserve, and FDIC announced the closure:
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.
Shareholders and certain unsecured debtholders will not be protected. Senior management has also been removed. Any losses to the Deposit Insurance Fund to support uninsured depositors will be recovered by a special assessment on banks, as required by law.
Regulators did reaffirm that Silicon Valley Bank depositors will have access to their money on Monday:
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.