Barney Frank, a former member of the United States House of Representatives, has reportedly suggested that New York regulators closed the crypto-friendly Signature Bank as part of a seeming show of force.
According to a March 13 CNBC report, Frank — also a board member of Signature Bank — said the only indication of problems at the bank was a deposit run of more than $10 billion on March 10, which he called “purely contagion” from the Silicon Valley Bank fallout. The New York Department of Financial Services took control of Signature on March 12 and appointed the U.S. Federal Deposit Insurance Corporation to handle the insurance process.
“I think part of what happened was that regulators wanted to send a very strong anti-crypto message,” said Frank. “We became the poster boy because there was no insolvency based on the fundamentals.”
Signature was the third major bank with ties to crypto to collapse in the last week following Silvergate Bank’s parent company announcing it would “voluntarily liquidate” the firm on March 8 and California’s financial watchdog shutting down Silicon Valley Bank on March 10. Messari founder and CEO Ryan Selkis echoed Frank’s statements, claiming both Silvergate and Signature were solvent at the time authorities acted.
Silvergate is still solvent, despite an unprecedented 90 day $12 billion liquidation sparked by a corrupt sitting Senator who coordinated a bank run w/ short sellers.
Signature was healthy. NYDFS went rogue in shutting them down, and surprised even the FDIC.
— Ryan Selkis (@twobitidiot) March 13, 2023
Senator Elizabeth Warren, a well-known anti-crypto voice in the U.S. government, said in a New York Times op-ed that the blame for Silicon Valley Bank largely rested on the former presidential administration, which rolled back “critical parts” of the Dodd-Frank Act in 2018, as well as federal regulators who “made a bad situation worse.” She called for Congress, banking regulators and the current administration to reverse these actions as an “immediate priority.”
“Had Congress and the Federal Reserve not rolled back the stricter oversight, S.V.B. and Signature would have been subject to stronger liquidity and capital requirements to withstand financial shocks,” said Warren. “They would have been required to conduct regular stress tests to expose their vulnerabilities and shore up their businesses. But because those requirements were repealed, when an old-fashioned bank run hit S.V.B., the bank couldn’t withstand the pressure — and Signature’s collapse was close behind.”
Related: Silicon Valley Bank collapse: Everything that’s happened until now
The situation with Signature Bank, Silicon Valley Bank and Silvergate Bank is still developing, but affected SVB shareholders have already filed a lawsuit in federal court, accusing the crypto bank and two of its executives of fraud. USD Coin (USDC) temporarily depegged from the dollar amid reports issuer Circle had more than $3 billion of the stablecoin’s reserves at SVB, but it has since returned to $1.