Signature Bank fails to understand the risks associated with cryptography
Investigations point to a bank collapse Signatureto the conditions of lack of liquidity and mismanagement, but the Chairman of the Board of Directors Federal Deposit Insurance Corporation FDIC, Martin GruenbergIt is believed that the bank’s failure to understand the risks associated with cryptocurrency has accelerated its downfall.
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where shed Gruenberg highlight recent failures Silicon Valley Bank SVB AndSilvergate Bankwhich eventually manifested itself in significant declines in stock prices and subsequent deposit flows to banks, he said during a recent hearing by the US House Financial Services Committee on oversight of prudential regulators.
On the other hand, a relevant report by the Chief Risk Officer at FDIC Federal Deposit Insurance Corporationto poor management as the root cause of failure Signature BankHowever, he pointed to the bank’s excessive reliance on unsecured deposits without proper risk controls, as he said:
“The Bank failed to understand the risks of its association with and reliance on crypto industry deposits, or its exposure to infection from crypto industry disruptions, which occurred in late 2022 and into 2023.”
Although regulators and banking professionals agree that deposit operations are one of the main drivers of bank failures, the former CEO of Silicon Valley Bank SVB, Greg BeckerHe blamed rising interest rates as one of the factors that led to their collapse.
where he believes Beckerthat no bank can escape a large flight of deposits with such speed and severity, as revealed Gruenberg that failed Silicon Valley Bank SVB AndSignature It led to losses amounting to 16.1 billion and 2.4 billion dollars, respectively.
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At the end of the discussion he said Gruenberg Banks with assets of $100 billion or more deserve special attention, including consideration of long-term debt requirements, to facilitate orderly decisions.