Shay was accused of trying to shift blame onto crypto while benefiting from lucrative bonuses and stock options. He acknowledged that the bank accepted deposits from the digital asset sector but significantly reduced them due to industry volatility in 2022. Regulators seized the bank after another institution with ties to the digital asset sector fell, resulting in a massive $16 billion withdrawal from Signature Bank. Senator Lummis pointed out that while Shay blamed depositors and regulators, he failed to accept any personal responsibility.
Shay, however, denied specifically blaming digital assets during the Senate hearing, prompting Senator Lummis to highlight his repetitive use of the term "digital assets" in his testimony.
Another senator, Elizabeth Warren, criticized both Shay and the CEO of Silicon Valley Bank, Gregory Pecker, for allegedly profiting millions of dollars while recklessly causing bank collapses. Warren argued that existing laws allow CEOs like Shay and Pecker to receive enormous compensation and retain the money even when banks fail, emphasizing the need to address this issue. She mentioned her involvement in a bipartisan effort within the Banking Committee to introduce a bill that would claw back such excessive paychecks.
Adrienne Harris, the superintendent of the New York Department of Financial Services (NYDFS), criticized the notion of blaming crypto for Signature Bank's collapse, deeming it ludicrous. During the Chainalysis Links conference in New York City, Harris described the events that caused Signature Bank's collapse as a modern version of a bank run.
On March 12, the NYDFS took control of Signature Bank to safeguard the U.S. economy from systemic risks. The bank's collapse followed the earlier failures of the crypto-friendly Silvergate Bank and SVB.
In conclusion, the Senate hearing witnessed sharp criticisms of Scott Shay for his emphasis on digital assets in relation to Signature Bank's collapse. Senator Lummis challenged Shay's attempt to deflect blame, while Senator Warren condemned Shay and Silicon Valley Bank's CEO for allegedly profiting from bank failures. The conversation surrounding the role of crypto in Signature Bank's collapse remains contentious, with the NYDFS characterizing it as a bank run rather than solely attributing it to digital assets.
Also read- Fed Research: Whales Played Key Role in 2022 'Crypto Bank' Runs
