The recent collapse of Signature Bank and the better-known Silicon Valley Bank dominated the news for a couple of weeks. In the midst of the banking chaos, us workers have had to deal with the uncertainty of what the future holds.
I have worked for Signature Bank for a few years before its collapse, but I have been a socialist and member of International Socialist Alternative (ISA) much longer. Like most workplaces under capitalism, workers are at the mercy of their bosses, who hold the fate of our livelihood in their hands. Former Signature Bank employees are now in the midst of a transition process that has no exact timeline, and we have no real assurance of our long-term employment stability. We continue to hear that it is all “business as usual,” and “just continue to do what you’ve been doing” in the midst of all this chaos is the assurance we get from new senior management.
Many people have a negative opinion of banks — and believe me, rightly so! I think what is overlooked frequently are the workers like myself, who because of the decisions and risky ventures of a few greedy capitalists, now face the uncertainty of whether or not we can expect job security in the long term.
Corporate media usually reports on the banking industry’s “success stories” of executive bigwigs. Signature Bank was one of the success stories not too long ago: A small bank turned midsized with a special focus on one-on-one relationship building and a direct line to your banker. It was this “people-centric” approach and business model that gave Signature Bank its rise to prominence. A Bloomberg article sums up neatly what it was like working for Signature Bank back when it was starting:
“Former executives and investors describe an outer-borough, scrappy, blue-collar group of New York Bankers. It was a place with ambition but not prestige, where branding was an afterthought and the CEO thought art on the walls was a sign of complacency.”
Capitalism rewards risky business. It doesn’t care if it’s detrimental to the environment, exploits, or violently displaces poor people for luxury condos. Capitalism will reward this barbaric behavior because the end goal is always to maximize profits.
Signature Bank maximized its profits, took risks, and in the course of two weeks: 1. it has been bailed out by the government and taken into receivership, and 2. the FDIC has gone into agreement with Flagstar Bank (a subsidiary of New York Community Bank) at a discounted price to buy a portion of the Signature Bank loan portfolio.
Some will cry crocodile tears at the losses suffered by the bank’s founders. Working people will care that Signature Bank was invested in rent-controlled housing in New York City. As of now, the impact on this is unclear, with the potential to put more pressure on landlords who are already searching for ways to profit from high rents.
There are many factors that led to Signature Bank’s collapse.
The volatility of cryptocurrency has played a major role in bank failures. Silicon Valley and Signature Bank both were advocates for Crypto-Currency and held deposits for many Crypto platforms. Signature Bank ran a blockchain-based, real-time payment platform called Signet, a crucial system for large cryptocurrency exchanges. The recent downfall of FTX and the exposure of co-founder, Sam Bankman-Fried rang alarm bells for financial regulators and was a precursor to the run on the banks.
Like dominoes falling, after the collapse of Silicon Valley Bank and Silvergate Bank, the only remaining crypto-friendly bank was Signature Bank. Signature Bank was overly exposed to cryptocurrency – meaning it had too much invested in different currencies – and its dealing and embracing of the crypto-world spooked regulators and investors, causing the run.
The years after the financial collapse of ‘07-’08 saw a loosening in scrutiny of banks, due largely to lobbying for deregulation and relaxed oversight. The lobbying from the financial sector, including executives of both Silicon Valley Bank and Signature Bank, allowed the asset threshold for mid-size banks to rise, enabling them to operate freely with less oversight. It was during this period we saw small banks become mid-sized banks in no time. This was done with smart political moves. For example, Barney Frank, former U.S. State Senator, made well over $2.4 million during his time as a Signature Bank board member, giving direct access to the political establishment to change policies in favor of Signature and other banks.
In the midst of all this madness, many working people like myself are really forced to think about how things could be different, whether or not this could have been avoided, and what the future holds for us. Just last year, we witnessed unionizing attempts by workers at Wells Fargo, the third-largest bank in the U.S. A series of scandals including fake accounts, consumer protection violations, and mass overtime pay violations prompted this unionizing effort. It is in the face of this uncertainty and undemocratic nature of workplaces under capitalism that we need to build movements that call into question capitalism, the role of the Democrats and Republicans, and the laws that uphold this barbaric behavior.
The scarier thing is that more uncertainty like what I currently face will be the reality for many more workers in the financial sector. It is only through building our own political party and the overthrow of capitalism, that we could begin to truly transform society to serve the working class and poor. These events only further make the urgent need to build a better world, where our workplaces are democratically controlled. It will be through mass movements and struggle that working people will make social gains and could put an end to the capitalist nightmare we are living.