A Headline Few Saw Coming: "Barney Frank Was Right About Signature Bank"
Authored by Mike Shedlock via MishTalk.com,
The FDIC all but confirms Signature was closed to send a message about crypto...
Barney Frank Was Right About Signature Bank
The Wall Street Journal comments Barney Frank Was Right About Signature Bank
We never thought we’d write that headline. But on Sunday the Federal Deposit Insurance Corp. announced that New York Community Bancorp’s Flagstar Bank will assume all of Signature Bank’s cash deposits except for those of crypto companies. This confirms Mr. Frank’s suspicions—and ours—that Signature’s seizure was motivated by regulators’ hostility toward crypto.
Mr. Frank alleged last week that regulators seized Signature, whose board he served on, “to send a message to get people away from crypto.”
CoinDesk reported last week that crypto firms were looking for bank accounts off-shore such as at FV Bank in Puerto Rico, Jewel Bank in Bermuda, and Tether and FTX-tied Deltec in the Bahamas. Moving dollar deposits of U.S. crypto companies and their customers offshore will make them less safe and potentially more vulnerable to money laundering.
In other words, regulators are undermining their ostensible goals. As usual, financial regulators shoot first, and make others pay later.
Everything But Crypto
PYMNTS reports Everything But the Crypto: Flagstar Scoops Up Failed Signature Bank
While the Federal Deposit Insurance Corporation (FDIC) denied reports that any buyer of Signature Bank would need to divest its crypto business, the buyer, New York Community Bancorp-owned Flagstar Bank, did anyway.
This, as the FDIC noted in a press release announcing the sale, that Flagstar Bank’s bid for Signature Bank did not include around $4 billion of deposits tied to the failed institution’s digital banking business.
“The FDIC will provide these deposits directly to customers whose accounts are associated with the digital banking business,” the agency said in a Sunday (March 19) announcement.
The shuttering of both Silvergate Bank, which voluntarily liquidated, and Signature Bank, which failed, has made it increasingly difficult for crypto platforms and investors to transfer traditional currencies by closing two critical banking on-ramps for the digital asset industry.
Depositors of Signature Bridge Bank, N.A., other than cash depositors related to the digital-asset banking businesses, will automatically become depositors of the assuming institution. All deposits assumed by Flagstar Bank, N.A., will continue to be insured by the FDIC up to the insurance limit.
Flagstar Bank's bid did not include approximately $4 billion of deposits related to the former Signature Bank's digital-assets banking business. The FDIC will provide these deposits directly to customers whose accounts are associated with the digital-asset banking businesses. Questions may be directed to (866) 744-5463.
The FDIC estimates the cost of the failure of Signature Bank to its Deposit Insurance Fund to be approximately $2.5 billion. The exact cost will be determined when the FDIC terminates the receivership.
FDIC Statement Translated
The FDI made a Statement on Signature Bank. Here is my translation:
To punish crypto, we are willing to lose $2.5 billion, even though our solution will require offshore funding, which in turn will make the deposits less safe and more vulnerable to money laundering.
Zero Reserve Banking
Meanwhile, please note Fed Policy: It's Not Fractional Reserve Banking, It's ZERO Reserve Banking
If you think I am joking, I am not.
We are in a banking crisis precisely because of Fed actions coupled with zero reserve requirements on deposits.
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