Signature Bank Exec Faces Criticism from Senators for Shifting Blame on Crypto
US Senator Cynthia Lummis claims Signature Bank’s former chair doesn’t want to take the blame for the bank’s collapse.
On May 16th, during a Senate Banking Committee hearing, US Senator Cynthia Lummis did not hold back her criticism of a former chairman of Signature Bank, Scott Shay, who had previously tried to pin his bank’s collapse on its involvement with the digital asset sector.
According to Shay’s testimony, Signature Bank began accepting deposits from crypto businesses in 2018 but reduced this involvement significantly in 2022 due to market volatility.
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On top of that, in his statement, the man claimed that the bank was seized by regulators after “a bank with strong ties to the digital asset sector” collapsed. It can be assumed that Shay is referencing to the Silvergate Bank.
However, Lummis wasn’t buying Shay’s narrative, accusing him of deflecting blame onto crypto depositors and regulators while avoiding any personal responsibility.
It looks like there has been a lot of deflection of blame onto those particular depositors that deal in digital assets and onto regulators, but you haven’t accepted any blame yourself.
Despite Shay’s denial of any blame-shifting, Lummis pointed out that he referenced digital assets ten times in his testimony.
Further criticism came from Senator Elizabeth Warren, who took aim at both Shay and Silicon Valley Bank CEO Gregory Becker for allegedly profiting from their banks’ failures.
Senator Warren argued that the law, as it stands, allows bank executives like Shay and Becker to walk away with millions in bonuses and stock options, even as their banks crumble.
Right now, the law says that people like Mr. Becker and Mr. Shay <…> can pay themselves tens of millions of dollars in bonuses and stock options, and when the banks blow up, Mr. Becker and Mr. Shay get to keep all the money. And that is just plain wrong.
Warren also stated that she is part of a bipartisan group within the Banking Committee aiming to introduce legislation that could recover these “crazy paychecks.”
However, the United States Federal Deposit Insurance Corporation (FDIC) Chair, Martin Gruenberg, claimed that Signature Bank collapsed because it “failed to understand the risk of its association with” the crypto industry.