FDIC's Supervision of Signature Bank (report) (Part 2 of 2)
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Research, not advice. Part of the Bitcoin research archive (October 2026). Claims labelled unverified, contested or fringe are reported, not endorsed; statuses of bills and rules are as of the date checked. Government, court and patent records are public domain; the research notes are CC BY 4.0.
actions are taken to
return the bank to the approved risk appetite and other
actions are taken to control and appropriately manage and
monitor the bank’s increasing liquidity risks. The board
should institute processes to make certain that business
liquidity strategies align with the board’s risk appetite.
(MRBA)
Ensure that adequate liquidity contingency planning is in ✓ ✓ ✓ ✓
place. Liquidity contingency planning should include a
well-developed and supported liquidity stress test (LST)
framework and a comprehensive contingency funding plan
(CFP). (MRBA)
Better support the assumptions for deposit run-off, in ✓ ✓ ✓ ✓
adverse LST scenarios. (SR)
Review and support the deposit growth assumption in the ✓
Prompt Corrective Action stress test scenario. (SR)
Consider the impact of high rate deposits in the Prompt ✓ ✓ ✓
Corrective Action LST scenario and ensure that the
calculation and applicability of the local rate cap is
appropriate. (SR)
Identify and model run-off rates for municipal deposits. (SR) ✓
Develop documented support for the deposits quantitative ✓ ✓ ✓ Recast
risk rating framework. (SR)
Consider depositor’s sensitivity to the bank’s condition as ✓ ✓ ✓ Recast
part of the deposit rating framework. (SR)
Support the assignment of the average sampled depositor ✓ ✓
runoff to the remaining un-sampled deposit portfolio. (SR)
Establish metrics and limits to ensure that the level of ✓ ✓ ✓
liquidity is sufficient at each intervening time interval, up to
and including the final time period. (SR)
Conduct sensitivity testing of key assumptions in the LST. ✓ ✓ ✓
(SR)
Improve the LST model documentation, so that its ✓ ✓ ✓ ✓
utilization, limitations, and key assumptions are clear. (SR)
Ensure that an adequate validation of the LST is performed ✓ ✓ ✓
that includes effective challenge. (SR)
Expand and document their process for identifying specific ✓ ✓ ✓
liquidity risks and developing and selecting LST scenarios.
(SR)
Complete more frequent liquidity stress tests for scenarios ✓ ✓ ✓
that significantly impact the liquidity position. (SR)
Lengthen the time horizon of LSTs to ensure that they ✓ ✓ ✓
include the entirety of the stress event. (SR)
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Issue Description 2019 2020 2021 2022*
Consider the potential impact on capital from actions taken ✓ ✓ ✓ ✓
to raise liquidity. (SR)
The scope of the periodic CFP operational test should be ✓
expanded beyond the confirmation of borrowing line
availability. A complete operational test should ensure
administrative, legal, and communication hurdles are
understood prior to an actual contingency situation. (SR)
Improve the system of effective challenge for the liquidity ✓ ✓ ✓
stress modeling methodology. (SR)
Improve the internal controls relating to liquidity risk ✓ ✓ ✓ Recast
management, including the internal audit of the liquidity
function. (SR)
Source: Internal Review Analysis of SBNY targeted review Supervisory Letters.
*SR and MRBA status from the 2022 Liquidity targeted review Supervisory Letter in process at the time of SBNY’s failure. Two
MRBAs and 19 SRs, which includes recast SRs, were open based on the 2022 Liquidity targeted review Supervisory Letter in
process at the time of SBNY’s failure.
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Appendix 5: Other Supervisory Efforts
LBS Proposed LIDI and Management Downgrades
The first quarter 2022 LIDI report included comments that appear to indicate a downgrade to the
Management component rating was warranted. In addition, the LBS analyst who reviewed the LIDI
suggested that SBNY’s outlook be downgraded from C Stable to C Negative due to increased funding
stress, continued management weaknesses noted, and preliminary concerns with corporate
governance. The NYRO agreed with the downgrade.
The LBS analysis recommended a second downgrade from C Negative to D Stable for the second
quarter 2022 LIDI report based on the increasing risk profile of the institution, rapid capital call
lending growth, increased funding stress, and digital assets-related deposit activity. The second
quarter LIDI report noted that material weaknesses had been identified with the bank’s corporate
governance, credit, and liquidity/funds management practices that deserved the board’s attention.
The NYRO did not accept the LBS analyst’s second quarter downgrade recommendation. The NYRO
ultimately downgraded SBNY’s LIDI rating to D Stable and also changed the Management Component
rating outlook from “Stable” to “Negative” in the third quarter 2022 LIDI report, issued in January
2023.
During 2022, LBS also provided comments on the draft 2021 roll-up ROE suggesting a downgrade in
the Management component rating from “2” to “3.” At the time, the NYRO disagreed with the
approach and timing of the recommendation and explained that the NYRO would be considering
multiple downgrades as it worked through the ongoing 2022 targeted reviews and the 2022 roll-up
examination. The NYRO noted that some of the support for the Management downgrade related to
2022 findings, which were outside the scope of the 2021 roll-up ROE. In addition, given the extremely
extended timeline of the 2021 roll-up report, the NYRO was working to issue the 2021 roll-up ROE in
order to shift its focus to 2022 targets and findings, which were identifying a number of weaknesses.
The NYRO worried that adjusting ratings at that late point would have added time to an already-
extended process and, due to a number of factors, was not deemed advisable. The NYRO issued the
2021 ROE with a “2” Management component rating. NYRO management wanted to maintain the
linear integrity of the 2021 examination cycle and the 2022 Corporate Governance Targeted Review
was part of the 2022 examination cycle. The NYRO planned to issue the 2021 roll-up ROE, then move
to issuing the Corporate Governance Supervisory Letter and completing the ongoing 2022 Liquidity,
Fund Banking, and AML/CFT targeted reviews. During this process, the NYRO planned to initiate
interim ratings downgrades, including the Management component. The NYRO also planned to
pursue enforcement actions based on 2022 examination results. SBNY failed before the NYRO could
complete the three ongoing targeted reviews and initiate commensurate enforcement actions.
Heightened Liquidity Monitoring Efforts
In November 2022, the Dedicated Team began submitting daily requests to SBNY for deposit and loan
balance information and borrowing capacity reports. The requests were in response to increasing
reputation risk from SBNY’s association with digital asset-related entities that were subject to public
announcements regarding fraud and law enforcement investigations.
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The NYRO escalated daily monitoring on March 1, 2023, given events at Silvergate, another bank
commonly referenced in press articles with SBNY. Starting March 7, 2023, the Dedicated Team asked
SBNY to provide more granular daily reports on digital asset deposits, including daily balance sheet
and cash flow information, following publication of an unfavorable news article. Starting March 8,
2023, the Dedicated Team initiated daily liquidity calls with the bank.
The Dedicated Team was alarmed by SBNY management’s lack of urgency, formality, and
preparedness. These concerns were escalated to NYRO management who promptly met with SBNY
executives to stress the seriousness of the situation and importance of proactive liquidity risk
management. The NYRO began preparing interim ratings downgrades to Liquidity (“3” to “4”),
Management (“2” to “3”), and the Composite (“2” to “3”) on March 10, 2023.
The Dedicated Team held a daily liquidity call with the bank at noon on March 10, 2023. At that time,
SBNY had experienced $2.5 billion in net deposit outflows, which was easily covered by available on-
balance sheet liquidity and borrowing capacity. By 6:00 that evening, SBNY had experienced a
significant deposit run, with $18.6 billion leaving the bank, most of which left in the last two hours of
the day. Bank management had a difficult time initially ascertaining how much borrowing it needed
to fund pending wires, had approached the FHLB too late in the day to draw against its line, and did
not have sufficient collateral pledged at the Federal Reserve’s Discount Window to cover pending wire
requests. Bank officials worked with officials at the FHLB and the FRB-NY to resolve the bank’s
funding shortfall through actions of the FHLB to subordinate its interest in collateral to the FRB-NY, to
allow Discount Window access just before the Federal Reserve’s wire room closed. The FDIC and
NYSDFS met with SBNY staff around midnight to discuss the bank’s plans and the unacceptable
reporting during the evening hours. SBNY proposed pledging additional collateral to the FRB-NY,
including collateral that had previously been rejected.
On March 11, 2023, the Dedicated Team, the NYRO, and Washington officials met throughout the day
to discuss SBNY’s liquidity. Meetings were also held throughout the day with FDIC officials in the
Division of Resolutions and Receiverships (DRR), the NYSDFS, FRB-NY, FHLB, and SBNY’s management
and board. These meetings were held to try to determine SBNY’s then-existing liquidity position.
Concurrently, the NYRO and NYSDFS expanded the in-process interim ratings changes and that night
downgraded Liquidity, Management, and the Composite ratings to “5” and Capital to “3” based on
management’s inability to properly identify, measure, monitor, and control the bank’s liquidity
position.
On March 12, 2023, the Dedicated Team continued to perform liquidity analyses based on updated
information obtained from SBNY. These analyses continued to require the FDIC to correct information
SBNY provided them, based on information they received from FRB-NY and the FHLB. Throughout the
day, NYRO officials met with various parties, including the RMS headquarters office, DRR, and Legal
Division officials; NYSDFS officials; FRB-NY officials; and FHLB officials to discuss SBNY’s liquidity
position and the resolution process.
Liquidity risk at the bank continued to rise to a critical level as withdrawal requests mounted, along
with uncertainties about the bank’s ability to meet those requests and potentially others. The high
level of uninsured deposits and the growing demand for withdrawals raised significant doubts about
the bank’s continued viability. Regulatory staff were monitoring the amount of deposit withdrawals
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that had been queuing up, as compared to on-balance sheet liquidity resources and then-existing
borrowing capacity. At 5:47 pm EDT, maximum outgoing wires for Monday, March 13, 2023, had
increased to $7.9 billion. The wire queue had been steadily growing all weekend. Based on a best-
case scenario, FDIC determined SBNY had $3 billion in available liquidity, or 4 percent of total
deposits. At 5:30 p.m. EDT on Sunday, March 12, 2023, the NYSDFS closed SBNY and appointed the
FDIC as receiver—within 53 hours of SVB’s failure.
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Appendix 6: Acronyms
AML Anti-Money Laundering
BSA Bank Secrecy Act
C&I Commercial and Industrial
CAMELS Capital, Asset Quality, Management, Earnings, Liquidity and Sensitivity to Market Risk
CEP Continuous Examination Process/Program
CISR Division of Complex Institution Supervision and Resolution
CFP Contingency Funding Plan
CFT Countering the Financing of Terrorism
CRA Community Reinvestment Act
CRE Commercial Real Estate
DIF Deposit Insurance Fund
DRR Division of Resolutions and Receiverships
EIC Examiner-in-Charge
FDIC Federal Deposit Insurance Corporation
FHLB Federal Home Loan Bank of New York
FIL Financial Institution Letter
FRB-NY Federal Reserve Bank of New York
GAO U.S. Government Accountability Office
IDI Insured Depository Institution
IT Information Technology
LBS Large Bank Supervision Branch
LFI Large Financial Institution
LIDI Large Insured Depository Institution
MRBA Matter Requiring Board Attention
MRM Model Risk Management
NYRO New York Regional Office
NYSDFS New York State Department of Financial Services
PCG Private Client Group
RADD Regional Automated Document Distribution and Imaging System
RMS Division of Risk Management Supervision
ROE Report of Examination
SBNY Signature Bank of New York
SE Supervisory Examiner
SR Supervisory Recommendation
UFIRS Uniform Financial Institutions Rating System
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