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Senators Challenge Bank Executives over Crypto Blame Game
U.S. Senator Cynthia Lummis expressed her disbelief that Scott Shay from Signature Bank repeatedly referenced digital currencies in his defense during the inquiry into the bank's downfall. Scott Shay, a former executive of Signature Bank, faced criticism for his attempts to shift the responsibility for the bank's failure onto cryptocurrencies, all while reportedly raking in millions from bonuses and stock options.
Scott Shay's Testimony and the Senators' Reactions
At the Senate Banking Committee hearing on May 16, Senator Cynthia Lummis challenged Shay, the ex-chairman of the now insolvent bank, regarding his explanation for the bank's downfall. Shay informed the committee that the bank started accepting deposits from digital asset firms in 2018. He stated that they significantly cut back on these deposits in 2022 due to market fluctuations in the digital asset sector.
He further claimed that regulators took control of the bank following the collapse of a bank closely linked to the digital asset industry. This event, according to Shay, triggered a withdrawal of $16 billion from Signature Bank.
Lummis, however, countered Shay's narrative, saying, “It appears you have shifted the blame onto your digital asset depositors and regulatory bodies, yet you have not taken any responsibility yourself.” Shay refuted the claim that he was blaming cryptocurrencies, to which Lummis retorted, “You mentioned it 10 times during your testimony.”
Accusations of Pocketing Millions
Senator Elizabeth Warren also entered the fray, criticizing both Scott Shay of Signature Bank and Gregory Becker, CEO of Silicon Valley Bank, for allegedly profiteering while their banks crumbled.
Warren stated, "The current legislation allows individuals like Mr. Becker and Mr. Shay to reward themselves with multi-million dollar bonuses and stock options. When their banks go under, they are able to retain all of their earnings. This is outright unjust."
She further warned, "Unless we address this, CEOs of these multi-billion-dollar banks will continue to accumulate risks, causing more bank failures, and leaving the rest of us to foot the bill." Warren revealed that she is collaborating with a bipartisan group within the Banking Committee to propose a bill that would reclaim "these outrageous salaries."
Cointelegraph reached out to Shay and Becker for their remarks but did not receive an immediate reply.
NYDFS Superintendent's Remarks
Earlier in April, Adrienne Harris, the Superintendent of the New York Department of Financial Services (NYDFS), reportedly declared it “absurd” to attribute the downfall of Signature Bank to cryptocurrencies.
Speaking at the Chainalysis Links conference in New York City, Harris argued that the chain of events leading to Signature's demise was more akin to a “modern bank run.” The NYDFS seized control of Signature Bank on March 12 to protect the U.S. economy from “systemic risk.” This action followed the failures of other crypto-friendly banks like Silvergate Bank and SVB.
