The second bank to fold...

New York State regulators took over Signature Bank today, the second financial institution to fold in less than a week as the FDIC and Treasury, however, assured depositors at both that they would be made whole in an attempt to stem the growing crisis.

Signature was a banker to crypto clients. It recently indicated plans to retreat from that business, but customers grew concerned recently given its high share of uninsured deposits — especially in the wake of Friday’ collapse of Santa Clara, Calif.-based SVB, or Silicon Valley Bank, which housed assets of Roku and many other tech companies and startups.

  Deadline

I understand that the fallout from not making all these people and companies "whole" would be tremendous. But that means to me there should be some serious restructuring of banking regulations. 

And perhaps people shouldn't be allowed to put more than $250,000 (the insured limit) in any one bank without a signed agreement that they understand any more than that is not insured through FDIC, and therefore, they will not be getting it back in case of bank failure or bank runs. Or maybe they could purchase individual insurance - perhaps even through the FDIC - for higher amounts of deposits. Or maybe $250,000 just isn't high enough these days.

...but hey, do what you want...you will anyway.

UPDATE 03/16/2023:  

Justice Department’s offices in Manhattan and Washington were investigating whether the bank took enough measures to detect possible money laundering schemes orchestrated by clients.

[...]

Signature Bank was seized by The New York Department of Financial Services on Sunday “to protect depositors” after its customers withdrew billions from the bank after the Silicon Valley Bank collapsed on Friday. The bank had $89 billion in deposits end of last year, according to the department, but more than $79 billion of those deposits were not insured by the Federal Deposit Insurance Corporation (FDIC), The New York Times reported.

  

Shouldn't regulations prevent that kind of ratio? The answer is, yes. And they used to.

The pair of bank closures over the weekend has raised concerns in the banking industry, and has prompted some lawmakers to call for reform. Sen. Elizabeth Warren (D-Mass.) and Rep. Katie Porter (D-Calif.) introduced a bill to repeal rollbacks in banking regulations that was enacted during the Trump administration.

If enacted, the bill would put banks with at least $50 billion in assets back under strict Federal Reserve oversight and make them subject to Dodd-Frank Act stress tests. This would reverse at the Trump-era banking regulation rollback that raised the limit to $250 billion that exempted dozens of banks — including Silicon Valley Bank and Signature Bank — from the strictest federal oversight.