U.S. Senator Elizabeth Warren claims that Signature Bank failed because it “believed in get-rich-quick stories” and “accepted crypto customers without adequate safeguards” . Emphasizing that the bank took “excessive risk,” the senator demanded answers from Signature Bank’s CEO regarding the “economically disastrous consequences you have created.”
Senator Elizabeth Warren’s letter to Signature Bank CEO
U.S. Senator Elizabeth Warren (D-MA) blames Signature Bank’s failure on accepting crypto customers without adequate safeguards, Yahoo Finance reported Thursday.Signature Bank was forced to close last foreclosed by the New York State Department of Financial Services on Sunday, making it the third largest bank failure in the United States.
In a letter to Signature Bank CEO Joseph DePaolo, Senator Warren wrote
You owe your customers and the public an explanation for the economically disastrous consequences you have created. You worked hard to weaken the rules, promised “good omens” for your bank, and then destroyed it with bad decisions and excessive risk-taking.
“Congress and the public must learn the lessons from Signature Bank’s failure,” the Congressman stressed.
The congressman claimed that Signature Bank supported efforts to curb the capital requirements set forth in the Dodd-Frank Wall Street Reform Act, and that the bank also directed thousands of dollars in campaign contributions to leaders of efforts to deregulate banking in Congress.
“Despite assurances to Congress that a midsize bank like Signature Bank could manage risk independently, it was subsequently revealed that your bank had absolutely no ability to do so, and that failure caused the bank to close and be taken over by government regulators,” Sen. DePaolo told DePaolo.
Signature Bank allegedly “accepted Crypto customers with inadequate safeguards”
. Senator Warren further alleged that Signature Bank took “undue risk” to serve and generate revenue for crypto customers such as NASDAQ-listed crypto exchange Coinbase, blockchain infrastructure platform Paxos, and collapsed crypto exchange FTX By last December, crypto customers accounted for about 30% of Signature Bank’s total deposits. Warren stated.
Signature Bank rode a get-rich-quick story… Signature Bank was caught short when it accepted crypto customers with inadequate security measures…
According to Bloomberg, the U.S. Department of Justice (DOJ) and the Securities and Exchange Commission (SEC) had been investigating Signature Bank’s dealings with cryptocurrency customers before regulators let it go last Sunday. The news outlet noted that the DOJ had focused its investigation on whether Signature Bank was taking proper care of its cryptocurrency customers.
