The collapse of Signature Bank continues to make headlines as former executives face the Senate Banking Committee. Scott Shay, the former chairman of the now-defunct bank, has been criticized for attempting to blame the cryptocurrency industry while potentially reaping millions in bonuses and stock options. During the May 16 hearing, United States Senator Cynthia Lummis confronted Shay over his remarks regarding the role digital assets played in his bank’s demise.
Shay’s testimony revealed that Signature Bank accepted deposits from digital asset businesses in 2018 and then significantly reduced these deposits in 2022 due to market volatility. He claimed that a bank with strong ties to the digital asset sector fell, prompting a massive $16 billion withdrawal from Signature. Lummis accused Shay of deflecting blame onto digital asset depositors and regulators without acknowledging his own culpability. In response, Shay denied targeting the digital asset industry, though Lummis countered that he mentioned the term 10 times during his testimony.
The hearing also saw Senator Elizabeth Warren take aim at Silicon Valley Bank (SVB) CEO Gregory Pecker and Shay, accusing them of “keeping millions after recklessly crashing banks.” She argued that current laws allow executives like Becker and Shay to collect millions of dollars in bonuses and stock options while their banks crumble. She went on to assert that it is “plain wrong” for them to keep all the money, warning that such greed could jeopardize the stability of multibillion-dollar banks and the U.S. economy.
Senator Warren informed the committee that she is working with a bipartisan group to introduce a bill that would claw back “these crazy paychecks.” Both Shay and Becker were contacted by Cointelegraph for their comments but have yet to respond.
Adrienne Harris, superintendent of the New York Department of Financial Services (NYDFS), has previously dismissed the notion that cryptocurrency is to blame for Signature Bank’s collapse. Speaking at a Chainalysis Links conference in New York City in April, Harris described the situation as a “new-fashioned bank run” rather than a consequence of the bank’s involvement with digital assets.
On March 12, the NYDFS seized control of Signature Bank to protect the U.S. economy from “system risk.” The bank’s failure followed the collapses of crypto-friendly Silvergate Bank and SVB. As these events continue to unfold, it remains crucial for legislators, businesses, and individuals alike to understand the complexities of the rapidly evolving digital asset landscape.
Source: Cointelegraph
