Key takeaways:
- The New York Department of Financial Services has taken possession of Signature Bank and appointed the FDIC as receiver.
- Sheila Bair, a top banking regulator during the 2008 financial crisis, has called for the Fed to hit pause and assess the full impact of its actions before raising short rates further.
- The FDIC is now working to protect the interests of Signature Bank’s customers and ensure that their deposits are safe.
On Sunday, the New York Department of Financial Services announced that it had taken possession of Signature Bank and appointed the Federal Deposit Insurance Corporation (FDIC) as the bank’s receiver. With assets of around $110.36 billion, total deposits of about $88.59 billion as of December 31, 2022, and more than $110 billion in assets, Signature Bank is now the third-largest bank failure in U.S. history.
The news comes just days before the Federal Reserve’s anticipated March 21-22 interest rate hike of a half percentage point. In response to the news, Sheila Bair, a top banking regulator during the 2008 financial crisis, has called for the Fed to hit pause and assess the full impact of its actions before raising short rates further. Bair, the former chair of the Federal Deposit Insurance Corporation, believes that a pause would have a settling effect on the markets.
The failure of Silicon Valley Bank is the second-largest in U.S. history, only behind Washington Mutual. The FDIC is now working to protect the interests of Signature Bank’s customers and ensure that their deposits are safe. The FDIC has also provided information on how customers can access their accounts and transfer funds.
The news of Signature Bank’s failure is a stark reminder of the fragility of the banking system and the importance of financial regulation. With the Fed’s upcoming interest rate hike, it is more important than ever for the Fed to assess the full impact of its actions before making any further decisions.
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