By The Editorial Board. March 20, 2023. (Wall Street Journal)
We never thought we’d write that headline. But on Sunday the Federal Deposit Insurance Corp. announced that New York Community Bancorp’s Flagstar Bank will assume all of Signature Bank’s cash deposits except for those of crypto companies. This confirms Mr. Frank’s suspicions—and ours—that Signature’s seizure was motivated by regulators’ hostility toward crypto.
Mr. Frank alleged last week that regulators seized Signature, whose board he served on, “to send a message to get people away from crypto.” It increasingly appears that way. Reuters reported last week that the FDIC was requiring any buyer of Signature to give up all crypto business at the bank. The FDIC denied this.
But the agency’s statement says that “Flagstar Bank’s bid did not include approximately $4 billion of deposits related to the former Signature Bank’s digital-assets banking business.” That means crypto companies will have to find another bank to safeguard their deposits. Many say that government warnings to banks about doing business with crypto customers is making that hard.