Bank / Credit Union

Regulators seize Signature Bank, SVP Bank following collapse

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March 14, 2023

Signature Bank collapsed earlier this week due to customers withdrawing more than $10 billion in deposits, which was in turn driven by the collapse of Silicon Valley Bank. Signature Bank was the third largest bank collapse in U.S. history, according to a report by CNBC.

Silicon Valley Bank began to unravel on March 8 when it announced to investors that it would need to raise $2.25 billion for its balance sheet. This was driven by higher rates by the Feds, which led to startup clients withdrawing deposits, leaving SVB behind on capital. Customers in turn withdrew $42 billion, leading to SVB with a negative cash balance of $958 million, according to another report by CNBC.

In turn, regulators seized SVB on March 10, which led to the rush to Signature Bank. As a result, regulators had to seize that bank as well on March 12. Signature Bank in particular has been involved in cryptocurrency, and had $16.5 billion in deposits from digital asset related customers.

"We had no indication of problems until we got a deposit run late Friday, which was purely contagion from SVB," Barney Frank, former U.S. Rep. and author of the Dodd-Frank Act, told the news outlet.

Frank said there was, "no objective reason" behind the seize of Signature Bank.

"I think part of what happened was that regulators wanted to send a very strong anti-crypto message," Frank said in the CNBC report. "We became the poster boy because there was no insolvency based on the fundamentals."