Signature Bank Cut Ties with Trump After Jan. 6 - Guess Who Just Came Knocking on Its Door?
Signature Bank — which cut ties with then-President Donald Trump in the wake of the Jan. 6, 2021, Capitol incursion — was shut down by federal regulators Sunday evening.
The move was announced in a joint statement by the Treasury Department, the Federal Reserve and the Federal Deposit Insurance Corp.
The shutdown of Signature — which had 40 branches, assets of $110.4 billion and deposits of $88.6 billion at the end of last year — represents the third-largest bank failure in U.S. history, according to CNBC.
The bank was reeling from its investments in Silicon Valley Bank — which had been seized by federal regulators two days before — and its deep exposure in cryptocurrencies, which have been crashing for months, according to The Wall Street Journal.
Sunday’s seizure made it the second major banking institution to fail in recent days after federal regulators moved to take control of SVB on Friday.
Signature was racing to line up a buyer to shore up its finances but was unable to find a deal before Monday, prompting federal regulators to move in to prevent a sudden collapse.
As with SVB, regulators said the U.S. government will ensure that all depositors get their money, even those whose accounts are in excess of the $250,000 FDIC insurance limits.
Signature had moved to specialize in cryptocurrencies and garnered one of the largest crypto portfolios in the industry, the Journal reported: About 27 percent of its deposits came from crypto investors.
But with the collapse of Democratic mega-donor Sam Bankman-Fried’s crypto exchange, FTX, Signature lost billions in deposits, setting it on the path to failure.
The bank tried to stanch the bleeding late last year by dialing back on crypto and parting ways with crypto clients such as Binance and Silvergate Capital Corp., but it wasn’t soon enough to stop the slide.
Signature’s stock had lost 75 percent over the last 12 months.
It all led to federal regulators stepping in to prevent more panic as the New York Department of Financial Services placed the bank into receivership with the FDIC on Sunday.
“We are also announcing a similar systemic risk exception for Signature Bank, New York, New York, which was closed today by its state chartering authority,” the Treasury Department, Fed and FDIC said in their joint statement.
“All depositors of this institution will be made whole. As with the resolution of Silicon Valley Bank, no losses will be borne by the taxpayer,” they said.
Still, even as depositors will be able to take their full measure, equity and bondholders at both banks will be wiped out, a senior Treasury official said Monday, according to CNBC.
These two failures are causing small runs on other banks, the outlet reported. First Republic Bank suffered a large number of depositors closing their accounts Monday, but it was able to meet the withdrawal demands after getting some help from JPMorgan Chase.
Still, First Republic Bank’s stock plunged 75 percent as trading opened Monday and safeguards kicked in to stop trading in hopes that the stock would stabilize. Federal officials hoped to avoid this being repeated in banks across the nation by moving quickly to shutter SVB and Signature.
Of note, Signature is one of the banks that cut ties with Trump days after the Jan. 6, 2021, Capitol incursion, which Democrats claimed was an “insurrection.”
The New York Post reported Jan. 12, 2021, that Signature and Deutsche Bank had informed the then-president they were ending their business relationships with him.
The report said Signature confirmed it had “begun the process of closing Trump’s two personal accounts” and would “not do business in the future with any members of Congress who voted to disregard the Electoral College” following the November 2020 presidential election.
It seems as though some financial institutions have been more focused on woke priorities than managing their assets, but their apparent financial malfeasance is finally starting to catch up to them.
To borrow a phrase from one of Barack Obama’s closest buddies, their chickens are coming home to roost.
This article appeared originally on The Western Journal.