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Thank you for posting Ted Dziekanowski. The review by the NYDFS of regulatory oversight of Signature bank and its closure make for a comprehensive and worrying read. Signature bank was under the supervision of NYDFS and its predecessor since its Charter in 2001 and one may suggest that the report aims to pre-empt questions of regulatory oversight.
‘The Bank⬢s growth outpaced the development of its risk control framework. Issues relating to the Bank⬢s liquidity risk management were identified in the Reports of Examination issued by the Regulators for the years 2018 and 2019. These issues were highlighted in the Report of Examination as either a matter requiring board attention (â¬ÅMRBAâ¬) or a supervisory recommendation (â¬ÅSRâ¬).’
Matters requiring board attention were identified by regulators in 2018 and 2019, with issues relating to liquidity risk metrics in 2018, downgrading Signature banks liquidity rating in 2019. Signature banks liquidity was still of concern in 2022, with a Supervisory Letter being drafted at the time of Signature bank failed in 2023. The regulator issued further MRBA in early 2023 focused on the banks corporate governance, operational risk management oversight, the RCSA process and controls environment.
Remediation actions and lessons to be learnt by DFS from the collapse include a slow response by DFS to fast moving changes in the financial system. Not enough people in DFS to oversight and assure covered entities. Signature bank failed to identify concerns fully and report them to the regulator. Improvements need to be made in risk modelling. Finally DFS will develop appropriate regulatory tools to hold executives accountable for misconduct.
With the regulator raising issues requiring attention since 2018, that the bank struggled to address, one wonders if these finding were open to market interpretation or not?
#liquidity #liquidityrisk #regulatorycompliance #alm #modelriskmanagement
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