A former Signature Bank executive has been slammed for seemingly trying to place the blame for his bank’s collapse on crypto while purportedly being able to pocket millions in bonuses and stock options.
During a Senate Banking Committee hearing on May 16, United States Senator Cynthia Lummis lashed out at Scott Shay, the former chairman of the now-defunct bank, in relation to his prepared statement on what led to his bank’s collapse.
In his testimony, Shay noted 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 his bank was seized by regulators after “a bank with strong ties to the digital asset sector” fell, which then led to $16 billion being withdrawn from Signature.
“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.
Shay, however, denied pointing the finger at digital assets during the Senate hearing.
“You use the term 10 times during your testimony,” responded Lummis.
During another part of the hearing, Senator Elizabeth Warren blasted Silicon Valley Bank CEO Gregory Pecker and Signature Bank’s Shay for allegedly “keeping millions after recklessly crashing banks.”
“Right now, the law says that people like Mr. Becker and Mr. Shay […] can pay themselves tens of millions of dollars in bonuses and stock options, and when the banks blow up, Mr. Becker and Mr. Shay get to keep all the money. And that is just plain wrong.”
“If we don’t fix it, every CEO for these multibillion-dollar banks will keep right on loading up on risks and blowing up banks, and everybody else is going to have to pay for it.”
Warren noted that she is working within a bipartisan group in the Banking Committee to introduce a bill that can claw back “these crazy paychecks.”
In April, Adrienne Harris, superintendent of the New York Department of Financial Services (NYDFS) reportedly said it was “ludicrous” that one could blame crypto for Signature Banks collapse.
During a Chainalysis Links conference in New York City, she said the events leading up to the failure of Signature were instead a “new-fashioned bank run.”
The NYDFS took control of Signature Bank on March 12, claiming it was protecting the U.S. economy from “systemic risk.” The bank was the latest failure following the collapse of the crypto-friendly Silvergate Bank and SVB.