Senator Lummis pointed out that Scott Shay from Signature Bank mentioned digital assets 10 times while discussing the bank’s collapse.
A former executive from Signature Bank has faced criticism for attempting to blame cryptocurrency for the bank’s collapse while allegedly benefiting from millions of dollars in bonuses and stock options.
During a hearing held by the Senate Banking Committee on May 16, Senator Cynthia Lummis strongly criticized Scott Shay, the former chairman of a bank that is no longer operational. She expressed her dissatisfaction with his prepared statement, which discussed the factors contributing to the bank’s collapse.
In his statement, Shay mentioned that the bank started accepting deposits from businesses involved in digital assets in 2018. However, he also mentioned that the bank substantially decreased its digital asset deposits in 2022 due to the industry’s high level of price changes and unpredictability.
According to Shay, regulators took control of his bank after another bank connected to the digital asset sector experienced a collapse. As a result, a significant amount of money, totaling $16 billion, was withdrawn from Signature Bank.
Lummis criticized Shay for shifting the blame onto depositors involved in digital assets and regulators, without taking any responsibility himself.
During the Senate hearing, Shay denied accusing digital assets, but Lummis pointed out that he mentioned them multiple times in his testimony.
Pocketing millions
Senator Elizabeth Warren criticized Silicon Valley Bank (SVB) CEO Gregory Pecker and former Signature Bank Chairman Scott Shay for allegedly retaining millions of dollars despite their alleged involvement in bank failures.
“Currently, the law allows individuals like Mr. Becker and Mr. Shay to receive large bonuses and stock options worth tens of millions of dollars. But when the banks they are associated with collapse, they still get to keep all the money they earned. This is unfair and needs to be changed.”
“If we don’t address this issue, CEOs of these large banks will continue taking excessive risks and causing bank failures, while ordinary people will have to bear the consequences and pay for it.”
Warren mentioned that she is collaborating with a bipartisan team in the Banking Committee to propose a bill that can recover or reclaim excessive salaries and compensations.
According to reports, in April, Adrienne Harris, the superintendent of the New York Department of Financial Services (NYDFS), expressed disbelief at the idea of blaming cryptocurrency for the collapse of Signature Bank.
During a conference called Chainalysis Links held in New York City, Adrienne Harris described the events that led to the collapse of Signature Bank as a modern version of a bank run.
On March 12, the New York Department of Financial Services (NYDFS) assumed control of Signature Bank, stating that it was safeguarding the U.S. economy from potential risks to the financial system. This action was taken after the collapse of other banks, including the crypto-friendly Silvergate Bank and SVB.
This information is for general knowledge only and should not be considered as advice for investing or making financial decisions.
