/biz/ - Business & Finance

>>54125965
But we talked yesterday about the failure of Signature Bank, which is a strange sort of bank failure. It did not particularly seem to be insolvent or experiencing an ongoing bank run on Sunday, but it was seized by the government anyway. Bloomberg’s Max Reyes reports today:

>Signature Bank was seized by the government Sunday after regulators lost faith in management, according to New York officials.

>“The bank failed to provide reliable and consistent data, creating a significant crisis of confidence in the bank’s leadership,” a spokesperson for the state’s Department of Financial Services said in an emailed statement Tuesday. “The decision to take possession of the bank and hand it over to the FDIC was based on the current status of the bank and its ability to do business in a safe and sound manner on Monday.”

They can just do that! What I said yesterday was:

>Every other bank’s shareholders and bondholders and executives will benefit from those measures [that the Fed and FDIC took to rescue SVB’s depositors]. If you are an uninsured depositor at a medium-sized bank that made some dumb rates bets, there is no reason to move your money now; the Fed has made it clear that it will support that bank. This (probably!) takes run risk off the table for those banks, making them less likely to fail, making their stocks and bonds more valuable than they would be if the Fed hadn’t acted to limit contagion. (In actual fact many bank stocks are down big today, though presumably they’d be down more without these measures.) The rescue of Silicon Valley Bank’s depositors comes too late for Silicon Valley Bank’s shareholders, but it’s good for every similar bank’s shareholders.

>>54101521
SIGNATURE!!
Oh yeah, Signature Bank failed?

>Both Signature’s insured and uninsured customers will be able to access all their deposits under the same “systemic risk exception” that will give Silicon Valley Bank customers access to their cash starting Monday, regulators said.

>The decision to close Signature came as a surprise to its managers, who found out shortly before the public announcement, according to a person familiar with the matter. The bank faced a torrent of deposit outflows on Friday, but the situation had stabilized by Sunday, the person said, asking not to be identified discussing a private matter.

>“I think that if we’d been allowed to open tomorrow, that we could’ve continued — we have a solid loan book, we’re the biggest lender in New York City under the low-income housing tax credit,” said former Congressman Barney Frank, a Signature Bank board member known for the Dodd-Frank Act, which overhauled US financial regulation in the wake of the global financial crisis. “I think the bank could’ve been a going concern.” …

>Much like Silicon Valley Bank, with clients made up almost entirely of businesses, Signature had a deposit base that was mostly uninsured — roughly 90% of deposits for Signature, and north of 93% of domestic deposits at SVB. That may have attracted the attention of regulators looking into banks with large uninsured deposit bases.

>“What happened at Silvergate and SVB was a very traditional bank failure,” said J. Austin Campbell, an adjunct professor of Columbia Business School. “This, unless there was a bigger run on deposits than we know about, is less so. If there’s not some pretty gory details that came out after about the balance sheet, it’s hard to figure out why they were singled out.”