US Senator Cynthia Lummis has criticized a statement in Congress by a former Signature Bank executive. Scott Shay has come under scrutiny for allegedly trying to shift the blame onto the cryptocurrency industry while personally benefiting from huge bonuses and stock options. During a Senate Banking Committee hearing on May 16, Senator Cynthia Lummis criticized Shay’s prepared statement on the bank’s collapse.
Senator Lummis seeks flaws in his statement
Scott Shay acknowledged that Signature Bank began accepting deposits from digital asset businesses in 2018, but significantly reduced its exposure to the industry in 2022 due to volatility. He claimed that the bank seizure by regulators was triggered by the failure of a bank involved in the digital asset sector, which led to the withdrawal of $16 billion from Signature Bank.
Senator Lummis accused Shay of shifting the blame onto cryptocurrency depositors and regulators while avoiding personal responsibility. Shay denied blaming Digital Assets, but Lummis said he mentioned them ten times in his testimony.
Elsewhere in the hearing, Senator Elizabeth Warren criticized Silicon Valley Bank CEOs Gregory Pecker and Scott Shaye for allegedly holding onto millions of dollars in bonds and stock options despite their banks’ reckless failures. Warren argued that existing laws allowed CEOs to get rich while leaving others to suffer the consequences.
To address the problem, Warren announced her collaboration with a bipartisan group on the Banking Committee to introduce a bill to recapture executive compensation. He stressed the need to hold CEOs accountable for their risky actions, warning that failure to do so would perpetuate the cycle of bank collapse and taxpayers would bear the brunt.
US lawmakers want to curb overcompensation of executives
In April, New York Department of Financial Services (NYDFS) Det. Adrienne Harris debunked the idea that cryptocurrencies were to blame for the collapse of Signature Bank. Speaking at the Chainalysis Link conference in New York City, Harris characterized the events that led to the bankruptcy as “the new run on the bank.”
On March 12, the NYDFS assumed control of Signature Bank, citing the need to protect the US economy from systemic risk. The collapse of Signature Bank follows the failures of Silvergate Bank and SVB, both known for their involvement in the cryptocurrency industry.
Efforts are underway within the Senate Banking Committee to address the issues raised during the hearing. The proposed legislation aims to curb excessive executive compensation and prevent CEOs from profiting while their banks face financial ruin.
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