Economy Desk: After Silicon Valley, another US bank was closed. New York-based Signature Bank was shut down by the regulator on Sunday (March 12). This is the third-largest bank foreclosure in US history. Reuters news.
As usual, the US Federal Deposit Insurance Corporation (FDIC) took control of Signature Bank. According to Reuters news, Signature Bank’s total assets are $11,360 million, and their deposits are $8,850 million.
According to the US Department of Revenue, the closure of this bank will not put any new pressure on US taxpayers, i.e., SVB or Signature Bank will not be bailed out. The interest of depositors will also be protected.
The announcement of the closure of Signature Bank, like SVB, comes as a surprise. Despite the weekend, employees gathered at Signature Bank’s Manhattan headquarters for a meeting on Sunday. They even ordered lunch from the Italian restaurant Carmine, along with Starbucks coffee. But as soon as the announcement came to close the bank, the employees came out one by one from the head office.
Although the specific reason for closing the bank is not known, the joint announcement of the US Department of Revenue and the Federal Reserve said that this decision was taken to protect the US economy and maintain people’s confidence.
To protect depositors’ interests, the FDIC transferred all of Signature Bank’s accounts to Fifth Third Bank Corporation. Customers can use their accounts starting Monday.
Shareholders and certain unsecured creditors will not be covered, the joint announcement said. The bank’s top management has already been removed. In addition, any losses incurred by the FDIC in protecting uninsured depositors will be compensated through a special assessment of Signature Bank. It will be done under legal interpretation.
The joint statement also said that despite the two bank closures, the US financial sector remains on a strong foundation. Essentially, the reforms that followed the 2008 financial crisis are what protect the US banking sector today. Depositors are protected by combining the then-reform program with the current program.
