Regulators are shutting down Signature Bank, the second the Fed shut down after the SVB debacle

On Sunday, the federal government announced the failure of a second bank with deep ties to the tech industry — as regulators scrambled to try to stem losses from last week’s Silicon Valley bank collapse.

Manhattan-based Signature Bank — a major financial institution for the cryptocurrency industry — has been closed due to a “similar systemic risk exception,” according to a joint statement from the heads of the US Treasury, Federal Reserve and Federal Deposit Insurance Corporation.

Silicon depositors and depositors will become full, officials said, but bank shareholders and unsecured debtors will not be protected.

The Federal Reserve said it would create a new bank financing program to provide depository institutions with loans of up to one year, backed by US Treasury securities and other assets, to help banks.

The Feds said the steps they are taking will “ensure that the US banking system continues to perform its vital roles of protecting deposits and providing access to credit to households and businesses in a way that promotes strong and sustainable economic growth.”

California-based Silicon Valley had $209 billion in assets when it failed on Friday, while Signature Bank had more than $110 billion.

Silicon was the second largest bank to fail in US history, after Washington Mutual in 2008. Signature was the third largest bank.

President Biden on Sunday praised the feds for finding a “quick fix” that would “ensure that taxpayers’ money is not at risk.”

“The American people and American businesses can be confident that their bank deposits will be there when they need them,” Biden said.

But hedge financier Thomas Hayes of Great Hill Capital told The Post, “It only took two days of seeing regional banks fail to do the right thing.”

One tech insider added, “Regulators made a huge mistake in allowing her access to this, but this was the best way to prevent infection.”

A banking source in San Francisco described the developments as “good for depositors, but more orderly – and bringing us closer to nationalizing banking”.

Meanwhile, executives at Signature Bank are calling wealthy clients, begging them to stay, telling them “your money is safe here,” a source told the newspaper.

“I was ready to withdraw everything, and now I’m reconsidering. There’s no promise anywhere else it would be safer,” the source said. “I’m still withdrawing some money…we shouldn’t even have that conversation.”

The government’s extraordinary action came hours after Treasury Secretary Janet Yellen said publicly that the government would not bail out the Silicon Valley bank, a favorite of tech startups focused on climate change, as well as California wineries.

Appearing on CBS’ “Face the Nation,” Yellen rejected a government bailout of the nation’s 16th bank, as happened to hundreds of institutions in 2008 due to the subprime mortgage meltdown.

“During the financial crisis, there were investors and owners of large, systemic banks who were bailed out,” Yellen said. “And the reforms that have been put in place mean we will never do that again.”

Yellen also insisted that officials are “concerned about depositors and focused on trying to meet their needs.”

“I have been working all weekend with our banking regulators to design appropriate policies to address this situation,” Yellen said. “I really can’t give you more details at the moment.”

Yellen’s subsequent statement with Federal Reserve Chairman Jerome Bauer and Federal Insurance Corporation Chairman Martin Gruenberg said that taxpayers would not have to cover any of the banks’ losses, an apparent reference to the bank’s term financing program.

Customers were widely expected to run Monday mornings at Silicon Valley Bank and many others.

Fox Business chief Charlie Gasparino tweeted Sunday afternoon that “major financial players” have told the White House to “expect big bank runs and major market turmoil on Monday unless a solution to the SVB meltdown is found.”

Companies realize that their short-term deposits with banks are at risk because of FDIC govlimits. They are preparing to withdraw money from medium-sized financial institutions Moon, bank executives say.

Earlier, Gasparino, a Post columnist, tweeted that depositors were “told they’ll get 30% to 50% of their money on Monday,” citing bankers familiar with the situation.

Gasparino added that bank customers will get “most of the remainder over time if there is no solution, such as FDICgov coverage or an outright sale.”

Billionaire hedge fund billionaire Bill Ackman of Pershing Square Capital Management also raised the specter of massive economic collapse in a 649-word tweet Saturday morning that warned the government had “about 48 hours to fix a near irreversible mistake.”

“Absent @jpmorgan @citi or @BankofAmerica take over SVB before opening Monday, a possibility I think is very unlikely, or the government doesn’t insure all deposits, the giant sucking sound you’re going to hear would be a massive draw down of all uninsured deposits from everyone,” the activist investor wrote. Excluding System-wide Significant Banks (SIBs).

“These withdrawals will drain liquidity from local, regional and other banks and begin to destroy these important institutions.”

While appearing on “Fox & Friends,” Gasparino called the collapse of the Silicon Valley bank “a warning sign of how much the plumbing is failing our banking system and our economy.

“I mean, let’s just rewind the video a little bit here. You know, we’ve had years and years of money printing by the Federal Reserve. You know, you do things like that, you mess with the economy like that… you’re going to get some, some things that happen.”

Additional reporting by Jesse O’Neill and PostWires