Bank Execs Face Senate Ire for Blaming Bank Collapse on Crypto While Amassing Millions
US Senators have slammed executives of failed banks for trying to deflect blame away from their poor management practices and toward digital asset firms.
During a Tuesday Senate Banking Committee hearing, Senator Cynthia Lummis lashed out at Scott Shay, the former chairman of now-collapsed Signature Bank, for his statement regarding what led to his bank’s collapse.
“You mentioned, in your testimony, digital assets 10 times, implying that digital assets was a driver of Signature Bank’s collapse,” she said.
“It looks like there's been a lot of deflection of blame on to those particular depositors that deal in digital assets.”
In his testimony, Shay said 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 regulators seized the bank after a lender "with strong ties to the digital asset sector” fell, which then led to $16 billion being withdrawn from Signature.
However, Lummis argued that the record $16 billion in outflows came as both crypto customers and other clients pulled their money out of Signature, arguing crypto wasn’t to blame.
“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.
In response, Shay denied pointing fingers at digital assets as the main cause for the bank's closure. “I did not point earlier [...] to digital assets being a particular cause or not,” he said.
As reported, the first week of March saw the downfall of three US banks.
After struggling for several months in the wake of the collapse of FTX, Silvergate Bank, a
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