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Signature Bank tapped its local home-loan bank for nearly $10b in the fourth quarter, among the largest such borrowings by any bank since early 2020, according to securities filings. Silvergate Capital, a competing lender that shifted its business toward crypto a decade ago, received at least $3.6b. Although helping banks shore up liquidity is part of the mission of FHLBs, some observers say backstopping the crypto industry’s fallout is far removed from the original intent.
“This is why I’ve been warning of the dangers of allowing crypto to become intertwined with the banking system,” said Sen. Elizabeth Warren (D., Mass.). “Under no circumstance should taxpayers be left holding the bag for collapses in the crypto industry—a market brimming with fraud, money laundering and illicit finance.”
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