One of Signature’s specialties was financing the purchase of taxi medallions, which authorize holders to operate cabs. Shay described himself as a “thought leader, and author of several widely read books on profound issues facing the Jewish community.” The bank went public in 2004. Scott Shay, Joseph DePaolo and John Tamberlane founded Signature in 1999 with backing from Israel’s biggest lender, Bank Hapoalim. The bank long specialized in providing banking services to law firms, providing escrow accounts for holding client money and other services. The demise of Signature, with assets of under $100 billion, is a blow to many of the professional services firms that have come to rely on it. In shuttering the bank, New York bank regulators, acting in concert with the F.D.I.C., also removed its executive team. When regulators told bank executives that they were effectively seizing the bank, which had 40 branches across the country, some of them were shocked. Still, the bank’s leaders expected to be able to weather the storm because the outflows had slowed by Sunday morning, the person said. Its stock, along with the stocks of some of its peers, also continued to tank. Kathy Hochul of New York said in a statement.īut on Friday, with customers panicking about their money, Signature saw a torrent of deposits leaving its coffers, according to a person with knowledge of the matter. “Many depositors at these banks are small businesses, including those driving the innovation economy, and their success is key to New York’s robust economy,” Gov. In announcing the closure of Signature on Sunday, regulators said that customers of both banks would be made whole regardless of how much they held in their accounts. The Federal Deposit Insurance Corporation, the entity that seized Silicon Valley, insures deposits only up to $250,000. Many were worried that their deposits could be at risk because, like business customers of Silicon Valley, most had more than $250,000 in their accounts. Similarly, Signature became one of the few banks to welcome cryptocurrency deposits, just before the overheated industry blew up last year.Īs word about Silicon Valley Bank’s troubles began to spread last week, business customers of Signature began calling the bank, asking if their deposits were safe. Silicon Valley Bank, a lender to start-ups, imploded on Friday after some ill-timed financial decisions left it struggling to meet customer withdrawal requests - and just as slowing venture capital funding prompted fledging companies to tap their accounts more. That leaves them especially vulnerable to old-fashioned bank runs. Its closing underscores the challenges that face small and midsize banks, which often focus on niche lines of business and have a narrower base of customers than Goliaths like JPMorgan Chase or Bank of America. To some extent, Signature is a victim of the panic around Silicon Valley Bank, which regulators seized on Friday. Signature Bank, a New York financial institution with a big real estate lending business that had recently made a play to win cryptocurrency deposits, closed its doors abruptly on Sunday, after regulators said that keeping the bank open could threaten the stability of the entire financial system.
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