NY Gov. Hochul tries to reassure depositors after state takeover of Signature Bank
NEW YORK (WABC) -- Gov. Kathy Hochul sought to reassure depositors Monday after Signature Bank, a New York State based financial institution with a big real estate lending business that recently also began serving the cryptocurrency industry, was closed by state authorities in the wake of the Silicon Valley Bank collapse.
"This is an unusual circumstance," Hochul said during a news conference at her office in Lower Manhattan. "But the main message I want to deliver is that New Yorkers should have confidence that their money is secure, and wherever they have chosen to bank, that that is protected."
Signature suffered a crisis of confidence stemming from SVB Financial Corp's seizure Friday, losing billions of dollars in a bank run.
"It was an SVB-generated panic," Signature board member Barney Frank said.
On Sunday, the Federal Deposit Insurance Corporation (FDIC) took over its assets worth more than $110 billion and more than $88 billion in deposits.
Signature is the third largest bank to fall into financial failure in U.S. history.
On Friday, the second largest bank to go belly up sent shockwaves from California.
John Jay College Professor J. W. Mason breaks down the banking crisis
Silicon Valley Bank (SVB), which catered to the tech industry started selling assets last Wednesday to balance its books. Instead, panic took over as customers and investors demanded their money. The FDIC had to step in to contain the fire.
Early Monday, the UK Treasury and the Bank of England announced they had facilitated the sale of SVB UK to HSBC, Europe's biggest bank, ensuring the security of 6.7 billion pounds ($8.1 billion) of deposits.
Watch Governor Hochul's full speech:
Federal regulators are still searching for a U.S. buyer for the bank.
President Joe Biden addressed the failure of both SVB and Signature Bank on Monday amid remarks on maintaining a resilient banking system and protecting our historic economic recovery.
He stressed that the efforts to insure depositors at both banks do not amount to a taxpayer-funded bailout, as happened in 2008.
"Instead, the money will come from the fees that banks pay into the deposit insurance fund," Biden said.
Financial regulators continue to assure customers of "Mom and Pop" banks on Main Street will not get burned.
But the fallout appeared to be taking a toll on at least one regional bank Monday morning.
Shares of First Republic Bank plummeted more than 60% in early trading.
But Hochul insisted no other banks were in danger of failing.
"We don't have any evidence that anyone else is in a situation like Signature at this moment," she said. "But again, we want to make sure that there's not a ripple effect, because if people getting anxious start withdrawing, that creates instability."
The Associated Press contributed to this report.
ALSO READ | Top 7 ways to protect yourself from consumer fraud
----------
* Get Eyewitness News Delivered
* Download the abc7NY app for breaking news alerts
Submit a tip or story idea to Eyewitness News
Have a breaking news tip or an idea for a story we should cover? Send it to Eyewitness News using the form below. If attaching a video or photo, terms of use apply.
