Former NY Regulator: Crypto Isn't the Reason Why Signature Bank Was Closed

The bank did not provide reliable and consistent data, said Maria Vullo, a former superintendent of the New York State Department of Financial Services.

AccessTimeIconMar 17, 2023 at 6:59 p.m. UTC

New York State regulators did not shut down Signature Bank (SBNY) because of the firm’s crypto clients, said Maria Vullo, a former superintendent at the New York State Department of Financial Services (NYDFS).

The decision was “based upon whatever the data was with respect to the withdrawals by customers,” Vullo told CoinDesk TV’s “First Mover” on Friday.

On Sunday, New York-based Signature Bank closed its doors following action by state regulators in what appeared to be a preventive measure to reduce further contagion following the collapse of Silicon Valley Bank (SVB).

A joint statement by the Federal Reserve, Federal Depository Insurance Corporation (FDIC) and the U.S. Treasury Department said depositors at Signature Bank would be made whole.

According to Vullo, echoing recent comments by current Superintendent Adrienne Harris, Signature Bank did not provide reliable and consistent data, creating a significant crisis of confidence in the bank’s leadership.

“I don't think you close down a bank because of a policy reason, you do because its risk management or its financial picture is unsafe and unsound,” said Vullo, who served as NYDFS superintendent from 2016 to February 2019.

She said Signature Bank “may have also suffered the consequences of contagion risks” that were ongoing following the closure of SVB just days earlier.

Nonetheless, the timing by regulators is significant, Vullo said. By quickly dealing with SVB and Signature, bank regulators were able to “send a very strong message to the public that the system is OK and that we're going to take care of depositors,” she said.

The latter was important, Vullo said, because it gave depositors a reason “to not pull out their money from other banks.”


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Fran Velasquez

Fran is CoinDesk's TV writer and reporter.