An internal review of the Federal Deposit Insurance Corporation’s (FDIC) supervision of Signature Bank concluded “poor management” led to the financial institution’s collapse.
According to the FDIC report, the lender’s board of directors and management pursued rapid, unrestrained growth without developing and maintaining adequate risk management practices and controls appropriate for the size, complexity and risk profile of the institution.
Meanwhile, “Signature Bank’s management did not prioritize good corporate governance practices, did not always heed FDIC examiner concerns, and was not always responsive or timely in addressing FDIC supervisory recommendations,” the FDIC said in the report. “Signature Bank funded its rapid growth through an overreliance on uninsured deposits without implementing fundamental liquidity risk management practices and controls.”
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Amid a weakened economy, the report also showed the FDIC conducted targeted reviews and ongoing monitoring, issued supervisory letters and annual roll–up reports of examination.
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“Maintaining safety and soundness requires effective challenge from the regulators and receptivity and responsiveness from the banks,” according to the report. “In the case of Signature Bank, the bank could have been more measured in its growth, implemented appropriate risk management practices, and been more responsive to the FDIC’s supervisory concerns, and the FDIC could have been more forward-looking and forceful in its supervision.”
The internal review was conducted at the request of FDIC Chairman Martin Gruenberg.
Signature Bank was closed by the New York Department of Financial Services on March 12, 2023.