Signature Bank Bites the Dust As Feds Scramble to Contain Losses
Signature Bank is the next bank to be closed by Federal regulators. Regulators closed the crypto-focused bank, citing systemic risk.
Signature joins Silvergate and Silicon Valley banks as targets for regulators to turn the crypto market into a niche ghetto.
Joint Statement by Treasury, Federal Reserve, and FDIC
Here is the big lie:
The U.S. banking system remains resilient and on a solid foundation, in large part due to reforms that were made after the financial crisis that ensured better safeguards for the banking industry.
The US banking system has been skating on thin ice since 2008, when the Fed decreased reserve requirements, so that most corporations can be as greedy as possible with the thinnest possible margin for errors. Any bank, and mainly smaller state banks, that do screw up their risk profiles shall be put out of their misery, scythed down and bought by larger banks.
That those three banks were all heavily involved in the crypto industry is no coincidence.
On the subject of "big lies", when banks calculate their risk profiles, government bonds are given a risk-assessed-weight of 0%. As we are seeing, this is totally untrue. Of course, the risk of defaulting on such bonds is zero, but the risk of price fluctuations is not.
Those banks holding long-dated treasuries, such as 10-year bonds, will have seen those values decimated over the past two years. The accounting trick performed by the large banks is to take those bonds off their books and place them in a bucket known as HTM (held till maturity), then calculate the current loss and then amortise those losses across the remaining life of the bonds. neat trick - if you can do it!
All of which means that those banks need not be closed down, and that any large banks that will take on their customers and assets will perform the same accountancy trick and - by magic - the losses disappear, at least in the immediate term.
However, what will happen to funds held by crypto corps remains to be seen.
and in the metaworse, here is what democracy, freedom...
... and the rule of law look like.
agents provocateurs
they are not there to really help, merely to make life worse.
Once More, If You Can’t Price Risk-Free Assets…
so "risk-free assets" are just a banking accountancy con.
Signature Bank Board Member Says Shutdown Was Political
One of the Dodd-Frank Act drafters, Barney Frank, said regulators shut Signature Bank down to send an anti-crypto message.
https://beincrypto.com/signature-bank-board-member-says-shutdown-political/
"banksters" is the correct word.
The losses don't quite disappear - they are shoved into a can and kicked down the road. As these are bonds, they may even be a profit in years to come, just not now. The real problem is if a bank holds too many such assets, then that impacts its liquidity, esp to pay withdrawals.