The falling dominoes continue – After the serious difficulties of the Silvergate Bankthere deadly liquidity crisis of Silicon Valley Bank (SVB)here it is Signature Bank who gets the rug pulled out from under them by the regulators. The crypto-friendly bank is closed by authority to avoid any systemic risk. An act of war “anti crypto” ?
Remake of ” Minority Report “: the Signature Bank closed preventively
Do the regulators have a team of ” precogs » like in this movie starring Tom Cruise? In any case, they obviously chose to follow the adage ” Prevention is better than cure ” about the Signature Bank.
In a communicated released Sunday, March 12, Federal Reserve American (the Fed) thus announces that the Signature Bank has been closed. His guilt? Risk of causing a “systemic risk”. The bank therefore had it, of course, not provoked yetbut was still arrested by the police brigade. ” Precrime ». If the depositors are “saved” (from a risk of which we do not know if it would have taken place!), the shareholders of Signature Bank are themselves ruins.
“All applicants of [Signature Bank] will be compensated. (…) Shareholders and certain unsecured debt holders will not be protected. The leaders were also removed from their posts. (…)”
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Killing of a crypto-friendly bank, “for example”?
But why the Signature Bank rather than the many other banks that have seen a bank run last Friday, following the collapse of the Silicon Valley Bank (SVB)? Well, as luck would have it, this bank happened to be particularly close to the Bitcoin and cryptocurrency sector. Chance, all the same!
Barney Frankformer member of the United States Congress and member of the board of directors of the Signature Bank, was surprised by this suddenness and of this violence. At a interview with the CNBC channel, the former politician even considered that the US regulators had literally to pillory the New York bank, to make it an “anti-crypto” example for all banks wanting to get too close to the young crypto-asset sector.
Indeed, on Sunday, the exodus of deposits “had slowed down”. Signature Bank executives thought they had stabilized the situation. And it is curiously this precise moment that the regulators have chosen to “summary dismiss” its managers from their functions, and decide that the bank will be closed and seized ex officio. This, without “no objective reason”according to Barney Frank.
“We had no indication of problems until we had a run on deposits (deposit run) at the end of Friday [10 mars], which was purely due to an SVB contagion. (…) I think part of what happened was because the regulators wanted to send a very strong anti-crypto message. (…) We were given as an example, when there was no insolvency based on fundamentals. »
Regulators are quick to blame Bitcoin and cryptocurrencies for blame them of the current banking crisis. Signature Bank paid the price. But remember that these are more likely the reassuring words of Jerome Powell (Chairman of the Fed) Tuesday, March 7, which – after months of sharp rise in key rates of the US central bank – will no doubt have been there drop too much in the strangulation of the banking and financial sector.
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