April

Recently, the Federal Deposit Insurance Corporation (FDIC) released a statement stating the failure of <a href="https://www.cryptopolitan.com/signature-bank-accused-facilitating-ftx-collapse/?swcfpc=1">Signature Bank (SBNY). </a>According to the accusation laid by the FDIC, the New York-based financial institution failed because of a lack of proper management within the bank&#8217;s management.



On March 12, U.S. regulators shut down Signature Bank, a prominent financial institution based in New York, to boost public confidence in the banking system and safeguard the U.S. economy. The bank&#8217;s closure paved the way for the FDIC to handle the insurance process.&nbsp;



Additionally, a report <a href="https://www.fdic.gov/news/press-releases/2023/pr23033a.pdf" rel="nofollow noopener" target="_blank">released </a>by the FDIC on April 29 stated that the leading cause of the collapse of U.S. financial institutions like the Silvergate Bank and <a href="https://www.cryptopolitan.com/svb-uk-hands-out-bonuses-after-hsbc-bailout/?swcfpc=1">Silicon Valley Bank </a>(SVB) was liquidity due to the deposit runs.



According to the FDIC, the collapse of Signature Bank was also attributed to the bank&#8217;s management board, which needed to prioritize better corporate governance practices.



The allegations put forward by the FDIC suggest that the management team disregarded the concerns of FDIC examiners and failed to respond promptly and effectively to supervisory recommendations (SRs).



The FDIC pointed fingers at the board of directors and management of SBNY, accusing them of recklessly chasing after expansion by leveraging uninsured deposits while neglecting to establish proper protocols for managing liquidity risks.



Signature Bank&#8217;s downfall was ultimately sealed when it faltered under the weight of fulfilling sizable withdrawal requests, revealing its inability to handle liquidity effectively.



The recent report has shed light on Signature Bank&#8217;s refusal to address regulatory concerns raised by the FDIC. It has come to light that the FDIC has been sending multiple letters to the bank since 2017, urging it to acknowledge issues related to regulatory compliance, auditing, and risk management.



However, the bank failed to respond to these warnings and take corrective measures, ultimately leading to its current predicament.



The FDIC&#8217;s findings highlight the importance of robust corporate governance practices and prompt action on supervisory recommendations to ensure financial institutions&#8217; stability and viability.

Signature Bank’s collapse attributed to poor management practices, says FDIC

Cryptopolitan_News

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