On Monday, about a week after the collapse of Signature Bank, the Federal Deposit Insurance Corporation (FDIC) revealed that Flagstar Bank, an entirely owned subsidiary of New York Community Bancorp, obtained 40 previous branches of Signature and its assets. Flagstar presumed almost all of Signature’s deposits, other than for $4 billion of deposits associated with the bank’s crypto banking service.
FDIC Expects $2.5 Billion Loss from Signature Bank Failure, Extends Bid Window for Silicon Valley Bank
The FDIC has actually revealed that Flagstar Bank, a subsidiary of New York Community Bancorp, has actually obtained the assets and bank branches of Signature Bank since March 20, 2023. The branches will continue to run throughout routine service hours. With the exception of depositors associated with the digital banking service, depositors of Signature Bank will instantly end up being depositors of Flagstar Bank.
I actually hope we will comprehend how Signature Bank was selectively removed of its digital assets service prior to being obtained.
— David Marcus (@davidmarcus) March 20, 2023
Despite declarations from the FDIC to the contrary, Flagstar bought Signature Bank without getting its cryptocurrency operations. Sources knowledgeable about the sale had actually recommended that divestment of crypto activities was needed, however the FDIC firmly insisted recently that it would not be essential. The New York State Department of Financial Services also specified openly that Signature’s shutdown was unassociated to cryptocurrency, prior to the FDIC’s statement. Former political leader Barney Frank hypothesized that the closure of Signature was meant to communicate an “anti-crypto” message.
The FDIC’s news release on Monday specified that Flagstar Bank will not presume any of Signature Bank’s cryptocurrency depositors or customers. “Flagstar Bank’s bid did not include approximately $4 billion of deposits related to the former Signature Bank’s digital banking business,” the FDIC revealed. The firm also stated that it will supply the deposits straight to consumers related to the digital banking service.
The FDIC’s statement on Monday triggered a conversation on social networks, with some hypothesizing that a conspiracy theory had actually been shown real. Caitlin Long, creator and CEO of Custodia Bank, tweeted about the news: “They indeed kept out the crypto deposits. Investigation time.” In addition to Flagstar not presuming Signature Bank’s cryptocurrency deposits, the FDIC also kept in mind that the federal government prepares for losses.
The FDIC approximated the expense of Signature Bank’s failure to its Deposit Insurance Fund to be around $2.5 billion, according to the firm’s statement. “The exact cost will be determined when the FDIC terminates the receivership.” In addition, the FDIC extended the quote window for Silicon Valley Bank (SVB) on Monday. Bids for SVB’s personal bank are due on March 22, 2023, and quotes for the bridge bank, Silicon Valley Bridge Bank, N.A., will be due 2 days later on.
What are your ideas on the FDIC’s choice not to consist of Signature Bank’s cryptocurrency deposits in the acquisition by Flagstar Bank? Share your viewpoint in the comments area below.
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