The collapse of Silicon Valley Bank was a purely California event.
The Federal Reserve has been raising interest rates. Investors have had less appetite for risk as the money available to them has become more expensive. Investors in technology startups, the primary clients of Silicon Valley Bank, became more risk-averse. The overextended bank collapsed
If you believe that it can’t happen here, I’ve got a bank stock I want to sell you. It’s called Signature Bank.
“We are also announcing a similar systemic risk exception for Signature Bank, New York, New York, which was closed today by its state chartering authority,” the Treasury, Federal Reserve, and FDIC said in a joint statement Sunday evening.
Though mostly a New York City presence, Signature Bank had branches in the wider metropolitan area, including in New Rochelle and White Plains.
It can happen here
As of December 31, 2022, Signature had $110.4 billion in total assets and $88.6 billion in total deposits, according to a securities filing.
It had become one of the main banks to the cryptocurrency industry. Crypto companies’ cash played a large role in increasing the bank’s deposits from $40 billion in 2019 to $106 billion in 2021. After Bitcoin, the most well-known cryptocurrency, plunged in price from $60,000 to about $16,000 and crypto financial companies, including FTX, collapsed. Signature was left with fewer deposits to lend. It had to cut back on lending.
Prior to that, Signature had been a major lender to developers and landlords, especially those that owned rent-regulated buildings. Building its business on relationships developed by its bankers, according to The City website, Signature had become a key banker for lawyers, accountants, healthcare companies and other small and mid-sized companies.
With SVB imploding, companies with money at Signature feared a similar run on the bank and began trying to withdraw their money last Friday, leading to banking regulators to seize the bank.
In July 2018, The New York Times featured a full-length article on Signature Bank being the “go-to bank” to Donald Trump and the Trump family. Over the past decade, the bank provided loans to people connected with the Trump Organization while Ivanka Trump sat on its board of directors. On January 11, 2021, the bank closed two of Trump’s personal accounts containing $5.3 million and called for Trump to resign from office in the aftermath of his role in the January 6 storming of the U.S. Capitol, citing “the best interests of our nation and the American people.”
With the real possibility of a panic spreading throughout the banking industry, the financial regulators and the Biden administration promised that the federal government would make whole all deposits with SVB and with Signature even beyond the $250,000 insurance that is the legal maximum.
Stock process declined only slightly on Monday, January 13. The Dow Jones Industrial Average was fewer than 100 points down, and a reassured Nasdaq average rose slightly.
Join the family! 
