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The FDIC’s Report on the Failure of Signature Bank

FDIC Releases Report Detailing Supervision of the Former Signature Bank, New York, New York – April 28, 2023 “Federal Deposit Insurance Corporation (FDIC) Chief Risk Officer Marshall Gentry released FDIC’s Supervision of Signature Bank, an internal review evaluating the agency’s supervision of Signature Bank, New York, New York, from 2017 until its failure in March 2023. The internal review report identifies the causes of Signature Bank’s failure and assesses the FDIC’s supervision of the bank. The review was conducted at the request of FDIC Chairman Martin J. Gruenberg. This detailed analysis identifies clearly that “the root cause of [Signature Bank’s] failure was poor management. [Signature Bank’s] board of directors and management pursued rapid, unrestrained growth without developing and maintaining adequate risk management practices and controls appropriate for the size, complexity and risk profile of the institution. [Signature Bank’s] management did not prioritize good corporate governance practices, did not always heed FDIC examiner concerns, and was not always responsive or timely in addressing FDIC supervisory recommendations (SRs). [Signature Bank] funded its rapid growth through an overreliance on uninsured deposits without implementing fundamental liquidity risk management practices and controls.” In regard to the FDIC’s supervision of Signature Bank, the report finds that “the FDIC conducted a number of targeted reviews and ongoing monitoring, issued Supervisory Letters and annual roll–up reports of examination (ROEs), and made a number of SRs to address supervisory concerns. In retrospect, FDIC could have escalated supervisory actions sooner, consistent with the Division of Risk Management Supervision’s (RMS) forward–looking supervision concept. Additionally, examination work products could have been timelier and communication with [Signature Bank’s] board and management could have been more effective.” The report also finds that: “The FDIC experienced resource challenges with examination staff that affected the timeliness and quality of [Signature Bank] examinations.”

FDIC’s Supervision of Signature Bank
Chairman Gruenberg’s statement on the release of FDIC’s Supervision of Signature Bank

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