The New York Department of Financial Services (DFS), which took control of Signature Bank on Sunday, made the announcement. The Federal Deposit Insurance Corporation, or FDIC, was designated as the bank’s receiver by the DFS. All Signature depositors will be made whole, according to a joint statement by the U.S. Federal Reserve, Treasury Department, and FDIC. This decision is comparable to the federal government’s bailout of California’s Silicon Valley Bank (SVB).
Government Takes Decisive Action to Protect Depositors and Boost Public Confidence in U.S. Banking System
Financial watchdogs have closed the crypto-friendly bank Signature Bank, and the FDIC now has jurisdiction over the New York-based business. Superintendent Adrienne Harris of the New York Department of Financial Services, or DFS, made the announcement in a press statement that was released on Sunday night. According to Harris, as of December 31, 2022, Signature had total deposits of about $88.59 billion and assets at about $110.36 billion.
The revelation comes in the wake of Silicon Valley Bank’s and Silvergate Bank’s failures, which together represented the second-largest bank failure in the United States since Washington Mutual’s bankruptcy in 2008. The public no longer needs to wait to learn what will happen with SVB, as the U.S. Federal Reserve, Treasury Department, and FDIC addressed the problem in a press release. Many market observers had to wait the entire weekend to learn what would happen.
Also Read: Bitcoin, ether fall after go-to crypto bank Silvergate announces liquidation
According to the statement, which was sent at 6:15 p.m. ET, the American government is taking “decisive efforts to defend the American economy” and boosting “public confidence in our banking system.” A strategy that completely safeguards all depositors was approved by the FDIC and Federal Reserve after consultation with Treasury secretary Janet Yellen. According to the government, all depositors will have access to their money on March 13 and the cost of the resolution “will not be borne by the taxpayer.” The resolve of making all depositors whole will be applied to Signature Bank in addition to executing this plan to SVB.
The Federal Reserve established the Bank Term Financing Program, or BTFP, to assist failed banks and their depositors, according to another update that was released at the same time as the joint statement. The Department of the Treasury will make up to $25 billion from the Exchange Stabilization Fund available as a backup for the BTFP with the Treasury Secretary’s approval. According to the Federal Reserve, it is not expected that it will be required to use these backup funds.
The Board is carefully 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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