U.S. FDIC: Signature Bank failed due to mismanagement and "contagion effect."

ChainCatcher News: The report from the Federal Deposit Insurance Corporation (FDIC) indicates that the failure of Signature Bank was due to mismanagement and the "contagion effect" from the collapses of Silicon Valley Bank and Silvergate Bank. The FDIC stated that Signature Bank heavily relied on uninsured deposits and lacked strong liquidity risk management measures, overall demonstrating poor risk management. Additionally, the bank run triggered by the failures of other banks exacerbated the situation. Furthermore, Signature Bank's services to the crypto industry were also considered a major risk.

The FDIC noted that shortly after the New York State Department of Financial Services (NYDFS) took over Signature Bank in March, the FDIC began reviewing its oversight of the bank. Although the industry claims that Signature failed specifically due to its services for crypto clients, NYDFS head Adrienne Harris has repeatedly stated that the bank had other issues.

Moreover, the Federal Reserve and the Government Accountability Office (GAO) released their respective assessments of Silicon Valley Bank and Signature Bank, with the Federal Reserve attributing the collapse of Silicon Valley Bank to a series of mismanagement issues, while factors such as interest rate hikes and liquidity risks further worsened the situation. The GAO pointed out that Signature had "reduced its exposure to crypto deposits" in the 12 months prior to its failure. Silicon Valley Bank was affected by rising interest rates, while Signature Bank had exposure in the digital asset sector. These banks failed to adequately manage deposit risks.

All three reports highlighted that the lack of action from federal regulators was a contributing factor, stating that banking regulators could have taken action earlier to request more information or otherwise manage the banks and their risks. (source link)