To the FDIC: Where’s the Money From the Signature Shutdown?

The FDIC shuttered Signature Bank more than two years ago now. 

Isn’t it time for the billions of dollars that the FDIC has collected in selling off the bank’s assets to be distributed to creditors, bondholders and shareholders?

It has been reported that the FDIC criticized executive management for becoming a significant depository for cryptocurrency money. Unlike Silicon Valley Bank, however, Signature did not lend to these companies. Instead, it focused on accepting deposits, which was legal. Interestingly, the FDIC had criticized Signature for many years for being overly concentrated in commercial real estate lending, which was highly profitable. Regulators pressured Signature and other banks to reduce their exposure to CRE loans.

I’ve written a few op-eds for Commercial Observer stating that Signature’s shutdown was not necessary. Former Congressman Barney Frank — of Dodd-Frank banking regulation fame — has also reportedly said that he thought that a shutdown wasn’t necessary. 

In 2022, crypto companies ran into trouble and defaulted on loans, which caused them to withdraw substantial deposits overnight. That, in turn, caused Signature’s capital ratios to fall below regulatory requirements. Signature was able to arrange a loan secured by its CRE loan portfolio, which would have satisfied the ratio requirement. On Monday, March 12, 2023, New York State regulators shut down Signature, and the FDIC took it into receivership. 

The federal agency apparently decided to make an example out of Signature. It has been reported that officials, including then-U.S. House Speaker Nancy Pelosi, pressured the FDIC to do so. Has the Securities and Exchange Commission investigated to see if she or others shorted Signature’s stock?

What a difference a couple of years make and a new administration. President Donald Trump recently signed a bill promoting crypto companies and the blockchain industry. 

Since Signature did not break any laws and crypto has now been legitimized, isn’t it time for the billions of dollars that the FDIC has collected to be disbursed, including returning any and all fees and penalties the FDIC charged?

George Klett was chairman of the commercial real estate committee of Signature Bank and a shareholder.