Senators slam bank execs for blaming collapses on crypto, pocketing millions

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A for­mer Sig­na­ture Bank exec­u­tive has been slammed for seem­ing­ly try­ing to place the blame for his bank’s col­lapse on cryp­to while pur­port­ed­ly being able to pock­et mil­lions in bonus­es and stock options. 

Dur­ing a Sen­ate Bank­ing Com­mit­tee hear­ing on May 16, Unit­ed States Sen­a­tor Cyn­thia Lum­mis lashed out at Scott Shay, the for­mer chair­man of the now-defunct bank, in rela­tion to his pre­pared state­ment on what led to his bank’s collapse.

In his tes­ti­mo­ny, Shay not­ed the bank began accept­ing deposits from busi­ness­es in the dig­i­tal asset sec­tor in 2018 and then “sig­nif­i­cant­ly” reduced its dig­i­tal asset deposits in 2022 as the indus­try expe­ri­enced volatility. 

He said his bank was seized by reg­u­la­tors after “a bank with strong ties to the dig­i­tal asset sec­tor” fell, which then led to $16 bil­lion being with­drawn from Signature. 

“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,” Lum­mis said. 

Shay, how­ev­er, denied point­ing the fin­ger at dig­i­tal assets dur­ing the Sen­ate hearing. 

“You use the term 10 times dur­ing your tes­ti­mo­ny,” respond­ed Lummis. 

‘Keeping millions’

Dur­ing anoth­er part of the hear­ing, Sen­a­tor Eliz­a­beth War­ren blast­ed Sil­i­con Val­ley Bank  CEO Gre­go­ry Peck­er and Sig­na­ture Bank’s Shay for alleged­ly “keep­ing mil­lions after reck­less­ly crash­ing banks.”

“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.”

“If we don’t fix it, every CEO for these multi­bil­lion-dol­lar banks will keep right on load­ing up on risks and blow­ing up banks, and every­body else is going to have to pay for it.”

War­ren not­ed that she is work­ing with­in a bipar­ti­san group in the Bank­ing Com­mit­tee to intro­duce a bill that can claw back “these crazy paychecks.”

Coin­tele­graph con­tact­ed Shay and Beck­er for com­ment but did not receive an imme­di­ate response.

Relat­ed: Sig­na­ture Bank failed to under­stand risks asso­ci­at­ed with cryp­to: FDIC chair

In April, Adri­enne Har­ris, super­in­ten­dent of the New York Depart­ment of Finan­cial Ser­vices (NYDFS) report­ed­ly said it was “ludi­crous” that one could blame cryp­to for Sig­na­ture Banks collapse. 

Dur­ing a Chainal­y­sis Links con­fer­ence in New York City, she said the events lead­ing up to the fail­ure of Sig­na­ture were instead a “new-fash­ioned bank run.”

The NYDFS took con­trol of Sig­na­ture Bank on March 12, claim­ing it was pro­tect­ing the U.S. econ­o­my from “sys­temic risk.” The bank was the lat­est fail­ure fol­low­ing the col­lapse of the cryp­to-friend­ly Sil­ver­gate Bank and SVB.

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