Signature Bank closure seems increasingly more like an abuse of power to attack crypto. This is illegal

Barney Frank seems to think this is true, but he has alot at stake so you cant really read much into that. The CEO also said the wire transfer issues probably couldve been resolved by Monday. The FDIC cited “systematic risk” but Signature Bank is not considered a systemically important bank. They were a prominent lender in NY commercial real estate (3rd in volume behind Morgan Chase + Wells Fargo) which can pose credit risk, but an unprecedented closure doesn’t exactly mitigate that and alot of that exposure is multifamily mortgages which are much more resilient. Their HTM securities were far better than that of SVB, and their CET1 capital ratio (basically a symbol of financial strength) when adjusted for unrealized losses is higher than SVB, Comerica, First Republic, and PacWest. They also passed a KPMG audit 11 days ago.

There was a drastic drop in liquidity and the stock was tanking, but more than 30 banks had trading halted on Friday. Even Schwab had 2 days in a row of -20%. If they shut them down it basically wouldve been entirely from commercial real estate loan exposure which feels unlikely.

SBNY is a state-chartered bank, meaning that state regulators can decide to call in the FDIC for receivership (NY really loves crypto eh). More people are questioning how distressed SBNY really was, and may have grounds to sue if shareholders feel that FDIC protocols were abused resulting in losses on their equity.

This will all come to light during the unwind of their assets through the bailout process, and if it turns out that their balance sheet was actually sound they could file a class action on behalf of investors.

TLDR: The government may have taken an opportunity to unilaterally close a crypto bank under the guise of risk management and there may be recourse from investors