Observations and Implications of the Fallout from Silvergate, SVB and Signature
The views expressed below are those of the author and not necessarily of the New York City Bar Association.
By Jerome Walker
Co-Chair, City Bar Task Force on Digital Technologies; Co-Chair, Technology, Cybersecurity and Data Privacy Subcommittee, City Bar Compliance Committee
Even a cursory review of the voluntary liquidation of Silvergate Bank (Silvergate), and the failures of Silicon Valley Bank (SVB) and Signature Bank (Signature) bring into sharper focus the critical importance of trust and confidence in the financial system. Indeed, many of the responses by the California Department of Financial Protection and Innovation (DFPI) with respect to Silvergate; the DFPI, the Board of Governors of the Federal Reserve System (Federal Reserve) and the Federal Deposit Insurance Corporation (FDIC) with respect to SVB; the New York State Department of Financial Services (DFS) and the FDIC with respect to Signature; and the Federal Reserve, the FDIC and the US Department of the Treasury (Treasury) with respect to SVB and Signature were motivated by the need to restore trust and confidence in the US financial system.
One of the primary lessons learned from the recent financial crisis has been that when trust and confidence are eroded in one segment of the US financial system, then that erosion of trust and confidence could rapidly spread to other types of financial institutions and threaten the entire financial system. The fear of this type of systemic risk, and the potential contagion that could have spread more rapidly across the financial system is what prompted quick intervention and extraordinary measures taken by Treasury and the prudential supervisors at the state and federal levels.
While historically the importance of trust and confidence in the financial system has been understood and protected, what has not been understood and what has left the financial system unprotected in this financial crisis is the lightning speed at which the fear of contagion and lack of trust and confidence could spread in such a short period of time. US policymakers are now asking whether the US needs to rethink the causes and consequences of systemic risk and how to prevent it, manage it, and contain it. While there continues to be widespread disagreement on what caused the recent crisis, there is also a consensus expressed by the Federal Reserve, the FDIC, and the Treasury that prudential supervisors must make changes to their supervisory policies and their regulations to ensure the US financial system is even stronger and more prepared to withstand shocks to the financial system caused by advances in technology, and especially the speed at which information, even incorrect information, is spread and acted upon to the detriment of some market participants. For instance, some commentators have suggested that the failure of FTX was a cause of the voluntary liquidation of Silvergate. Similarly, other commentators have asserted that the bank run on SVB was caused and exacerbated by hasty decisions made by venture capitalists (in some cases through social media like Twitter), that not only withdrew funds from SVB, but also caused their portfolio companies to withdraw funds from SVB. Likewise, still other commentators have posited that fears about the failure of SVB caused a bank run not only on Signature, but also on First Republic Bank (First Republic). Many commentators also believe the risk of the spread of contagion was a decisive factor in DFS’s decision to close Signature, and but for the actions of the Federal Reserve, the FDIC, the Treasury, and a number of the largest US commercial banks, the fear of the spread of contagion would have brought down First Republic and a number of other regional banks. In a very negative, but very extraordinary way, these events all occurred (often simultaneously) over the course of a matter of weeks during March.
Fortunately, the prompt, coordinated and timely actions taken by governmental agencies at the state and federal level, and by some of the largest commercial banks in the US, have now calmed markets, showcased the resiliency of the US banking system, and returned the US financial system to a solid footing. It appears that the contagion has been contained and now the focus can shift from preventing untold harm to the financial system to reviewing the supervisory approach to financial institutions with different business models; the efficacy of current financial institutions laws; the appropriate roles and responsibilities and supervision of existing and new market participants; how each of the different market participants interact with each other; and how that interplay could affect the financial stability of the US financial system when a panic occurs. Indeed, the current financial crisis creates an opportunity for policymakers and governmental agencies to determine how to modernize US financial regulation and supervisory policy in light of the different market participants; the role of technology in creating and enhancing the products and services offered; the technology driven assets created; and the types of entities participating in the financial system. This opportunity must not be slowed or halted by the commencement or continuation of numerous necessary investigations to determine what happened, how to prevent or limit future occurrences, and how and to whom to hold accountability. There is certainly enough blame to go around. Nonetheless, policymakers and regulatory agencies should forge ahead and review, and, in some cases, update existing laws and make new laws that take into account current market participants and the roles and responsibilities they play in the financial system. Policymakers and governmental agencies should avoid the endless series of finger pointing that normally accompanies a financial crisis.
This article summarizes the events surrounding the collapse of Silvergate, SVB, and Signature, and then provides some observations and implications arising from the fallout from the collapse.
The Voluntary Liquidation of Silvergate
On March 8, 2023, the DFPI announced that Silvergate, a $11.353 billion (as of December 31, 2022) California state member bank under the supervision of the DFPI and the Federal Reserve, had voluntarily begun the process of liquidation. Media reports indicate that Silvergate operated under a nondiverse business model that focused primarily on providing services to the cryptocurrency industry. If this is true, then a plausible case could certainly be made that Silvergate’s demise was caused by its risky business model; its concentration risk; the volatility of the cryptocurrency market, including the crypto winter; and the lack of confidence and trust investors showed in cryptocurrency and cryptocurrency platforms. The voluntary liquidation of Silvergate is yet another opportunity for the Securities and Exchange Commission (SEC) and the Commodities Futures Trading Commission (CFTC) to work together with policymakers to develop a comprehensive framework for regulating and supervising the cryptocurrency industry. The current approach of both the SEC and the CFTC is to use enforcement actions to provide guidance in some cases, and, in other cases, to make public announcements on what the law is rather than to work together with policymakers and other stakeholders to develop a balanced approach that takes into account the global nature of cryptocurrency transactions and the clear need for the US to lead the effort to provide clarity.
The Failure of SVB
Two days later, on March 10, DFPI announced that it had taken possession of SVB, a $209.026 billion (as of December 31, 2022) California state member bank under the supervision of DFPI and the Federal Reserve, citing inadequate liquidity and insolvency. DFPI appointed the FDIC receiver of SVB, and, on the same day, the FDIC announced that to protect insured depositors, the FDIC created the Deposit Insurance National Bank of Santa Clara (DINB) and immediately transferred to the DINB all insured deposits of SVB. The FDIC also pointed out that all insured depositors would have full access to their insured deposits no later than March 13, and the FDIC would pay uninsured depositors an advance dividend within the next week. These uninsured depositors would receive a receivership certificate for the remaining amount of their uninsured funds and as the FDIC sells the assets of SVB, future dividend payments may be made to uninsured depositors. The process of indicating that uninsured depositors may not be protected is the normal process during the appointment of the FDIC as receiver. The normal process is to protect insured depositors rather than uninsured depositors.
Early reports indicate that SVB’s failure was primarily based upon bank mismanagement. In a Statement by Federal Reserve Vice Chair for Supervision Michael S. Barr before the Senate Committee on Banking, Housing, and Urban Affairs on March 28, Barr laid the blame squarely on SVB’s leaders:
To begin, SVB’s failure is a textbook case of mismanagement. The bank had a concentrated business model, serving the technology and venture capital sector. It also grew exceedingly quickly, tripling in asset size between 2019 and 2022. During the early phase of the pandemic, and with the tech sector booming, SVB saw significant deposit growth. The bank invested the proceeds of these deposits in longer-term securities, to boost yield and increase its profits. However, the bank did not effectively manage the interest rate risk of those securities or develop effective interest rate risk measurement tools, models, and metrics. At the same time, the bank failed to manage the risks of its liabilities. These liabilities were largely composed of deposits from venture capital firms and the tech sector, which were highly concentrated and could be volatile. Because these companies generally do not have operating revenue, they keep large balances in banks in the form of cash deposits, to make payroll and pay operating expenses. These depositors were connected by a network of venture capital firms and other ties, and when stress began, they essentially acted together to generate a bank run. The bank waited too long to address its problems, and ironically, the overdue actions it finally took to strengthen its balance sheet sparked the uninsured depositor run that led to the bank’s failure. Specifically, on Wednesday, March 8, SVB announced that it realized a $1.8 billion loss in a sale of securities to raise liquidity and planned to raise capital during the following week. Uninsured depositors interpreted these actions as a signal that the bank was in distress. They turned their focus to the bank’s balance sheet, and they did not like what they saw. In response, social media saw a surge in talk about a run, and uninsured depositors acted quickly to flee. Depositors withdrew funds at an extraordinary rate, pulling more than $40 billion in deposits from the bank on Thursday, March 9. On Thursday evening and Friday morning, the bank communicated that they expected even greater outflows that day. The bank did not have enough cash or collateral to meet those extraordinary and rapid outflows, and on Friday, March 10, SVB failed.
Concerned with the risk that a contagion may be spreading from one bank to another bank, on March 10, Secretary of the Treasury Janet L. Yellen also convened leaders from the Federal Reserve, the FDIC, and the OCC to discuss developments around SVB. Based upon media reports and prudential supervisor disclosures, it appears that no national bank faced the type of stress that would have caused the OCC to intervene and take actions similar to the actions taken by DFS and DFPI.
The Failure of Signature and the Use of the Systemic Risk Exception
In addition, on March 12, New York State Superintendent of Financial Services Adrienne A. Harris announced that DFS had taken possession of Signature Bank, a $110.364 billion (as of December 31, 2022) New York state nonmember bank under the supervision of DFS and the FDIC in order to protect depositors. DFS also appointed the FDIC receiver. On the same day, the FDIC transferred all the deposits and substantially all of the assets of Signature Bank to Signature Bridge Bank, N.A. (Signature Bridge Bank), a full-service bank that was operated by the FDIC as the FDIC marketed the institution to potential bidders. The FDIC noted that the Signature Bridge Bank would open for business on March 13, and that depositors and borrowers of Signature Bank would automatically become customers of Signature Bridge Bank. The FDIC stressed that the transfer of all the deposits was completed under the systemic risk exception (SRE) that allows the FDIC more flexibility and frees the FDIC from using the least costly approach when the FDIC takes over a failed bank. Under the SRE, the FDIC is authorized to insure all depositors of a bridge bank rather than insure only the deposits that were insured up to the standard maximum insurance deposit amount. Among the reasons for using the SRE was to prevent the spread of contagion that could harm other banks and to protect small businesses and not for profit corporations. The SRE, however, does not protect shareholders and certain unsecured debt holders. The FDIC also pointed out that it had replaced senior management of the failed bank. On March 19, the FDIC announced that it had entered into a purchase and assumption agreement for substantially all deposits and certain loan portfolios of Signature Bridge Bank with Flagstar Bank, National Association (Flagstar), Hicksville, New York, a wholly owned subsidiary of New York Community Bancorp, Inc., Westbury, New York. The FDIC pointed out that depositors of Signature Bridge Bank, other than cash depositors related to the digital-asset banking businesses, will automatically become depositors of Flagstar, and all deposits assumed by Flagstar will continue to be insured by the FDIC up to the insurance limit. Flagstar’s bid did not include approximately $4 billion of deposits related to the former Signature Bank’s digital-assets banking business. The FDIC will provide these deposits directly to customers whose accounts are associated with the digital-asset banking businesses. The transaction included the purchase of about $38.4 billion of the bridge bank’s assets, including loans of $12.9 billion purchased at a discount of $2.7 billion. Approximately $60 billion in loans will remain in receivership for later disposition by the FDIC. In addition, the FDIC received equity appreciation rights in New York Community Bancorp, Inc., common stock with a potential value of up to $300 million. The FDIC estimates the cost of the failure of Signature Bank to the Deposit Insurance Fund (DIF) to be approximately $2.5 billion. The exact cost will be determined when the FDIC terminates the receivership.
The FDIC also pointed out that this was not a bailout because any losses to the DIF to support uninsured depositors will be recovered by a special assessment on banks, as required by law. The FDIC, as receiver for Signature Bank, has also transferred all Qualified Financial Contracts (QFC) of the failed bank to the bridge bank. These actions will protect depositors and preserve the value of the assets and operations of Signature Bank, which may improve recoveries for creditors and the DIF. The FDIC also noted that as receiver, except where an SRE applies, the FDIC is required to operate Signature Bridge Bank to maximize the value of the institution for a future sale and to maintain banking services in the communities formerly served by Signature Bank. In this case, the bridge bank assumed the deposits and certain other liabilities and purchased certain assets of Signature Bank. The bridge bank structure was designed to “bridge” the gap between the failure of Signature Bank and the time when the FDIC can stabilize the institution and implement an orderly resolution.
Joint Actions by the Treasury, the Federal Reserve, and the FDIC
On March 12, in an attempt to calm financial markets, bank depositors, small businesses and others with more than $250,000 in a bank, and bank investors, Treasury Secretary Yellen, Federal Reserve Chair Jerome H. Powell, and FDIC Chairman Gruenberg also issued a statement emphasizing that they have acted in coordination to protect the US economy by strengthening public confidence in our banking system. They also emphasized that they had obtained approval to use the SRE. “After receiving a recommendation from the boards of the FDIC and the Federal Reserve, and consulting with the President, Secretary Yellen approved actions enabling the FDIC to complete its resolution of SVB in a manner that fully protects all depositors… We are also announcing a similar systemic risk exception for Signature Bank, which was closed today by its state chartering authority. Any losses to the DIF to support uninsured depositors will be recovered by a special assessment on banks, as required by law.” This coordinated statement was critical and was made on a Sunday before the markets opened in Asia. The Treasury, the Federal Reserve and the FDIC and other stakeholders were worried that if such a statement were not made, then other similarly sized regional banks could fail. The statement was also important because the governmental officials wanted to send a strong message that the SRE would be used to do whatever was necessary to prevent contagion and protect the US financial system.
Also on March 12, the Federal Reserve announced that it would create a Bank Term Funding Program (BTFP) to support American businesses and households. Under the BTFP, the Federal Reserve will make available additional funding to eligible depository institutions to help assure banks have the ability to meet the needs of all their depositors. The Federal Reserve announced this action was a means to provide liquidity to any bank that might experience a run on its deposits. The Federal Reserve was concerned that a number of regional banks, including several regional banks in California and other banks that used a nondiverse business model or served a large number of cryptocurrency firms, were vulnerable to bank runs on March 13. The BTFP offers loans of up to one year in length to banks, savings associations, credit unions, and other eligible depository institutions pledging US Treasuries, agency debt and mortgage-backed securities, and other qualifying assets as collateral. According to the Federal Reserve, these assets will be valued at par, and the BTFP was designed to eliminate a depository institution’s need to quickly sell high-quality securities to raise enough money to cover deposit withdrawals. Treasury also indicated that it would make available up to $25 billion from the Exchange Stabilization Fund as a backstop for the BTFP.
In addition, on March 26, the FDIC announced that the FDIC and First–Citizens Bank & Trust Company (First Citizens) had entered into a loss–share transaction on the commercial loans First Citizens purchased from SVB Bridge Bank. Under the loss share transaction, the FDIC as receiver and First Citizens will share in the losses and potential recoveries on the loans covered by the loss–share agreement. The FDIC emphasized that the loss–share transaction is projected to maximize recoveries on the assets by keeping them in the private sector and the transaction is expected to minimize disruptions for loan customers. In addition, First Citizens will assume all loan related QFCs. The FDIC estimates the cost of the failure of SVB to the DIF to be approximately $20 billion, and the exact cost will be determined when the FDIC terminates the receivership.
The FSOC Meeting
Since there was still widespread uncertainty about whether the contagion would be contained, on March 12, Treasury Secretary Yellen also convened a meeting of the FSOC in executive session by videoconference. In attendance at the meeting by videoconference were voting members Treasury Secretary Yellen; Federal Reserve Chair Powell; Acting Comptroller Michael J. Hsu; CFPB Director Rohit Chopra; SEC Chair Gary Gensler; FDIC Chairman Gruenberg; CFTC Chairman Rostin Behnam; and National Credit Union Administration Chairman Todd M. Harper. Also in attendance was nonvoting members Office of Financial Research Acting Director James Martin; Federal Insurance Office Director Steven Seitz; and DFS Superintendent Harris.
Joint Action by the Largest Commercial Banks
On March 16, Bank of America, Citigroup, JPMorgan Chase, and Wells Fargo announced they were each making a $5 billion uninsured deposit into First Republic. Similarly, Goldman Sachs and Morgan Stanley announced that they were each making an uninsured deposit of $2.5 billion, and BNY Mellon, PNC Bank, State Street, Truist, and U.S. Bank announced they were each making an uninsured deposit of $1 billion, for a total deposit from the eleven banks of $30 billion. These banks, in consultation with Treasury and the Federal Reserve, took decisive actions to protect the financial system, and especially regional banks like First Republic. These banks realized that they were unintended beneficiaries of the failure of SVB and Signature, and they essentially intended to reverse the outflows of uninsured deposits that left regional banks by returning those deposits back to the regional banks. These large banks did not want to benefit and instead wanted to protect the financial system.
Observations from the Financial Crisis
Cause or Causes of the Financial Crisis
- No one factor caused the recent financial crisis. A combination of factors caused the crisis, a combination of factors exacerbated the crisis, and a combination of factors spread the contagion. Former Federal Reserve Governor Daniel Tarullo identified four potential causes of a financial crisis, and some of these causes were likely present during the recent failures. Governor Tarullo identified four factors:
- Domino or spillover effects—for example, when one firm’s failure imposes debilitating losses on its counterparties. This risk is greatest when counterparty exposure is large and concentrated.
- Feedback loops—for example, when fire sales of assets depress market prices, thereby imposing losses on all investors holding the same asset class. The first round of losses can lead to further fire sales by affected investors who would otherwise not have sold. Another example is deleveraging—when credit is cut in response to financial losses, resulting in further losses that require a further withdrawal of credit.
- Contagion effects—for example, a run in which depositors, creditors, or investors suddenly withdraw their funds from a class of institutions or assets. Banks and some other financial firms, such as money market funds, are vulnerable to runs because they promise withdrawal on demand at par and their assets (e.g., loans) are less liquid than their liabilities (e.g., deposits). This creates an incentive to withdraw before other creditors/depositors do, since assets cannot be liquidated quickly enough to meet all redemption requests during a run.
- Disruptions to critical functions—for example, when a market can no longer operate because of a breakdown in market infrastructure. This could occur because of the failure of one firm that dominates a certain part of market infrastructure or because the infrastructure has been disrupted by, say, a cyberattack.
- Since a combination of factors caused the crisis, it is very difficult to know when the crisis actually started. While many commentators believe Silvergate started the crisis, many other commentators believe Silvergate was an exacerbating factor, and the collapse of FTX, Stable coins Terra and Luna, Celsius, Voyager Digital, and three Arrows Capital started the financial crisis.
- While the cause or causes of the crisis are uncertain, it is certain that once trust and confidence are undermined in an area of the financial system, other areas of the financial system and the financial system as a whole become vulnerable to uncertainty and lack of trust and confidence. The longer the uncertainty and lack of trust and confidence lasts, the more likely areas of the financial system and the financial system as a whole will become weakened and fragile.
- Increasingly the discussion of the failure of SVB to manage and hedge its long-term securities is focused on whether the Financial Accounting Standards Board (FASB) should review and consider changing its current accounting standards on held-to-maturity (HTM) securities in light of recent advances in technology and the speed at which bank runs could occur. This is an important discussion because some commentators believe the current FASB rules allow banks to mask losses that they would have to show if they had to mark to market HTM securities. “If banks designate bonds as held-to-maturity securities, the firms are allowed to exclude unrealized losses on them from equity as long as they don’t sell. Banks have to carry HTM instruments at amortized cost, or an adjusted version of the original price they paid. Bonds the banks plan to sell need to be classified as available-for-sale securities and accounted for at fair market value. If banks sell any HTM securities, they must reclassify all of their HTM securities as available for sale and potentially take a big loss on the securities they didn’t sell.”
Federal Reserve Rethink Strategy for Fighting Inflation
- The fallout from the crisis will affect monetary policy because the Federal Reserve may have to alter its inflation fighting strategy by either pausing or halting the frequency at which it increases interest rates.
Implications from the Financial Crisis
More Emphasis Placed on Core Safety and Soundness Standards
- The recent crisis provides an opportunity for prudential supervisors to take a comprehensive review of core safety and soundness issues like concentration risk; interest rate risk management; the balance between rapid growth and strong controls; and nondiverse business models. This is an important point because some policymakers have asserted that SVB would not have failed if it were subject to enhanced prudential standards set forth in the original version of Dodd Frank and its regulations implemented by the Federal Reserve. The flaw in such thinking is that concentration risk, interest rate risk and the other factors being discussed are core safety and soundness standards that all banks (even the smallest banks) are required to manage. Nonetheless, at a minimum, the prudential supervisors will reassert the importance of core safety and soundness issues by having examiners refocus on core safety and soundness issues.
The Importance of Audit
- Comments about the role of audit in identifying and flagging the problems at Silvergate, SVB and Signature in the general media have been surprisingly muted. Audit plays a critical role in forcing banks to manage the risks involved in Silvergate, SVB, and Signature. Clearly, the problems that occurred at Silvergate, SVB and Signature would normally be in the scope of the coverage of both internal and external audits. To date, it does not appear that any of the prudential supervisors have emphasized the audit failures as a cause of the problems. There is little doubt, however, that Silvergate, SVB, and Signature had major audit failures. To address those failures, the prudential supervisors will place greater emphasis on the audit function both at the management level and the board of director level. In response to the prudential supervisors, it is likely that trade associations representing auditors will enhance their audit standards to take into account the risks that brought down SVB and Signature and caused Silvergate to voluntarily liquidate.
Increase to the FDIC Insurance Maximum Amount
- There is a developing consensus in Congress that the FDIC insurance maximum amount of coverage should be increased. During the 2007/2008 financial crisis, the insurance maximum amount was increased. An increase in the maximum insurance amount to cover small businesses and not-for-profit corporations would not materially increase the risk to the DIF. Some commentators have recommended removing the cap on the insurance amount, but policymakers are likely to conclude that such a result would unreasonably increase the risk to the DIF. The more likely scenario is that the FDIC insurance maximum amount will be increased.
Expanding the Range of Enhanced Prudential Standards
- There is a consensus among federal prudential supervisors that enhanced or heightened prudential standards should now apply to banks with lower total consolidated assets than what is currently required. These changes are likely to be made in the short term even if, in some cases, prudential supervisors will have to change their regulations after a notice and comment period in accordance with the Administrative Procedure Act. In Congressional testimony, the Federal Reserve and the FDIC have already signaled their support for making these changes and have indicated that they may be able to do so without any further action from Congress.
The Fallout from Deficient Federal Reserve Supervision
- The Federal Reserve is substantially likely to determine that the Federal Reserve’s supervision of SVB was deficient in several material respects, including, but not limited to, risk management, interest rate management, liquidity, and concentration risk. The Federal Reserve’s transition rules for moving a bank into enhanced prudential standards was a self-inflicted wound. For different reasons, the Federal Reserve’s supervision of Silvergate was also deficient. The likely consequence of this determination is that in the short-term examiners will be much more aggressive and more conservative in their findings, and supervisory offices and senior staff are likely to hold examiners to a higher standard than before to justify what might be perceived to be strong internal controls established by regulated financial institutions. This will be especially true if any of the senior examiners that worked on the SVB examination team and the Silvergate examination team receive adverse actions to their careers as the result of the SVB and Silvergate failures.
The Fallout from Deficient FDIC Supervision
- The FDIC is substantially likely to determine that the FDIC’s supervision of Signature was deficient in several material respects, including, but not limited to, risk management, interest rate management, liquidity, concentration risk, and the rapid growth of uninsured deposits. While some commentators have harshly criticized DFS for its decision to close Signature, very few commentators have criticized the FDIC. Unlike the Federal Reserve in the case of SVB and Silvergate, the FDIC is not only a prudential supervisor, but is also both an insurer and a receiver. This is a unique role in financial supervision and regulation. The FDIC was in the best position of any prudential supervisor to understand the risk of a vast imbalance of volatile uninsured deposits and yet very little has been discussed about this FDIC failure. The likely consequence of any negative determination is that in the short-term examiners will be much more aggressive and more conservative in their findings, and supervisory offices and senior staff are likely to hold examiners to a higher standard than before to justify what might be perceived to be strong internal controls established by regulated financial institutions. This will be especially true if any of the senior examiners that worked on the Signature examination team receives adverse actions to their careers as the result of the Silvergate failure.
The Fallout from Deficient DFPI Supervision
- DFPI is substantially likely to determine that DFPI’s supervision of SVB was deficient in several material respects, including, but not limited to, risk management, interest rate management, liquidity, and concentration risk. For different reasons, DFPI should reach the same determination regarding Silvergate. While Silvergate’s resolution has been characterized as a voluntary liquidation, DFPI has not yet indicated in a public setting whether DFPI would have forced the closing of Silvergate had Silvergate not voluntarily commenced the liquidation process. DFPI and DFS are among the largest and most well resourced of the state prudential supervisors, and they are likely to be held to a higher standard by policymakers. Both of them are state supervisors for many of the most innovative regulated tech firms. It is likely that DFPI and DFS need to provide more robust supervision to these firms, especially since many of the regulated tech firms have nondiverse business models and weak internal controls. It is likely that DFPI will change its examination process, in part, based upon the failures, and, in part, based upon the changes made by the Federal Reserve and the FDIC.
OCC to Make Changes in Response to Changes by the Federal Reserve and the FDIC
- Since the federal prudential supervisors work very closely, the OCC is substantially likely to make changes to its supervision and regulation of national banks and federal savings banks in response to the changes by the Federal Reserve and the FDIC. This will be true even though no national bank or federal savings bank failed or voluntarily commenced liquidation.
Finding Banks to Provide Banking Services Will Be Harder, but Will Be Available
- One of the likely consequences of the actions taken by prudential supervisors is that some banks that provided banking services to startups and tech firms, including cryptocurrency firms, will stop doing so and some banks that were contemplating providing banking services to these firms will conclude that the risks and administrative costs of doing so are too great. This void should create an opportunity for banks that are willing to require startups, tech firms, including cryptocurrency firms, to substantially enhance their internal controls, hire independent risk managers, and use the three lines of defense approach to protect the firms. Until the SEC and the CFTC and policymakers develop and implement a workable framework for regulating these firms, prudential supervisors will likely remain unsupportive of permitting banks to offer banking services to those firms. While industry groups have asserted that self-regulation is the best approach, to date, there has not been a ground swell of support for that approach. The best and most practical approach is for banks to institute the proper controls within the banks and for banks that wish to offer banking services to those firms to require those firms to make the investment in internal controls as a condition to receiving banking services.
Federal Prudential Supervisors Do Not Trust Nondiverse Business Models or Crypto-Assets
- The prudential supervisors are reiterating the already strong, unadulterated message that banks whose business models target firms with undiversified business models (e.g., startups or crypto firms) will be held to higher prudential standards in the future. The basis for this action is that prudential supervisors view these firms as high risk and prudential supervisors are unpersuaded by claims that those firms are already regulated. Prudential supervisors do not believe those firms are regulated sufficiently and believe many of those firms prefer to be unregulated or to operate under the weakest regulatory regime. This likely means that nondiverse business models and crypto-assets will remain under the microscope by examiners and the costs of operating nondiverse business models or including crypto-assets in the banking system will be even higher.
Nontraditional Financial Institutions Are Now the Focus of Other Key Governmental Agencies
- Nontraditional financial institutions are now on the radar screen of the full range of agencies that directly and indirectly regulate them. This focus will likely mean more attention is focused on financial institutions that engage in services related to crypto-assets. The Federal Trade Commission, the CFPB, state equivalents, state attorneys general, local prosecutors, and many others are now focused on protecting the public. This means nontraditional financial institutions should review and upgrade their internal controls as a means to mitigate risk and avoid government investigations or enforcement actions.
Focus on Holding Executives Accountable
- Both the Federal Reserve and the FDIC have emphasized in Congressional testimony that they have authority to hold accountable those executives responsible for the SVB failure (in the case of the Federal Reserve and the FDIC) and the Signature failure (in the case of the FDIC). If enforcement actions were commenced, the Federal Reserve and the FDIC would likely first look to 12 U.S.C. 1818 to impose cease and desist orders, civil money penalties or prohibition orders. While Title II (Orderly Liquidation Authority), which was not invoked, grants the FDIC claw back authority, 12 U.S.C. 1818 does not expressly grant claw back authority. US Senator Elizabeth Warren (with a number of cosponsors) has already introduced S.1045 in the US Senate to amend the Federal Deposit Insurance Act to clarify that the FDIC and other appropriate Federal regulators have the authority to claw back certain compensation paid to executives.
Refocus on the Mix of Insured Versus Uninsured Deposits
- Much has been written about the large amounts of uninsured deposits held by SVB and Signature. Holding large amounts of uninsured deposits is not in and of itself an unsafe and unsound practice. Indeed, in many cases, there are business reasons for a bank to hold such large amounts such as to help customers with their payrolls, to hold cash security for credit extended, and for compensating balances. Nonetheless, this could be an unsafe and unsound practice if the uninsured deposits are not “sticky” and the deposit holder is not loyal to the bank (e.g., the deposit holder is chasing yield or otherwise willing to move the deposit out of the bank at the first hint of dissatisfaction with the bank). Clearly, many of SVB’s large uninsured deposits were not sticky. The likely outcome of the actions of SVB uninsured deposit holders is that prudential supervisors will now require banks to monitor more closely uninsured deposits versus insured deposits and will include large withdrawals of uninsured deposits in stress test scenarios.
CFPB to Increase Emphasis on Protecting Consumers Involved in Crypto-Assets
- While the CFPB has not played much of a role in the recent financial crisis, many policymakers have called for an increased emphasis on protecting consumers involved in crypto-asset transactions, and the CFPB has taken public positions regarding its intent to address these issues both through education and enforcement actions. Many enforcement actions are likely to be commenced based upon consumer complaints the CFPB tracks very closely.
 Jerome Walker is a Co-Chair of the City Bar Task Force on Digital Technologies and a member of the Compliance Committee, Subcommittee on Technology, Cybersecurity and Data Privacy, Co-Chair. He is also a former Senior Attorney for the Office of the Comptroller of the Currency (OCC) and General Counsel, Chief Compliance Officer, and AML/CFT Compliance Director for a number of financial institutions as well as a former partner and practice group leader in a number of international law firms.
 Treasury Secretary Janet Yellen emphasized this point on March 30. “Even in a well-regulated system, public confidence is key. When there are cracks in confidence in the banking system, the government must act immediately. This includes making forceful interventions – like we did. As I have said, we have used important tools to act quickly to prevent contagion. And they are tools we could use again. The strong actions we have taken ensure that Americans’ deposits are safe. And we would be prepared to take additional actions if warranted. It’s also important that we reexamine whether our current supervisory and regulatory regimes are adequate for the risks that banks face today. We must act to address these risks if necessary. Regulation imposes costs on firms, just like fire codes do for property owners. But the costs of proper regulation pale in comparison to the tragic costs of financial crises.” See Remarks by Secretary of the Treasury Janet L. Yellen at the National Association for Business Economics 39th Annual Economic Policy Conference at https://home.treasury.gov/news/press-releases/jy1376
 On March 17, Patrick McHenry, Chairman, House Committee on Financial Services and Maxine Waters, Ranking Member, sent a letter to the General Accounting Office (GAO). In the letter, they requested the GAO to begin an immediate evaluation and investigation into the financial crisis. They asked GAO to focus on examining the factors that led to potential mismanagement at SVB and Signature; the changing conditions and analyses that occurred between March 10 and 12; any regulatory, supervisory or examination failures in the Federal Reserve and the FDIC. The scope also included competency and qualifications of supervisory management and personnel; the decisions and actions taken by the FDIC, the Federal Reserve, and Treasury surrounding the recent bank failures, enhanced prudential standards, and systemic risks. See March 17, 2023, Letter from Patrick McHenry, Chairman, House Committee on Financial Services and Maxine Waters, Ranking Member, House Committee on Financial Services to the General Accounting Office at https://financialservices.house.gov/uploadedfiles/2023-03-17_mchenry_waters_letter_to_the_honorable_eugene_dodaro_final.pdf
 First Republic is a $212.639 billion (as of December 31, 2022) California state nonmember bank under the supervision of the DFPI and the FDIC. See Federal Reserve Statistical Release on Large Commercial Banks Insured US Chartered Commercial Banks That Have Consolidated Assets of $300 Million or More, Ranked by Consolidated Assets as of December 31, 2022.
 On March 31, the Senate Committee on Banking, Housing and Urban Affairs Chairman Sherrod Brown and other members of the committee sent a letter to Treasury Secretary Yellen urging action from the Financial Stability Oversight Council (FSOC) to “identify risks and vulnerabilities brought to light during this crisis and provide specific recommendations on regulation, legislation, or other actions necessary to address these threats. Areas to assess include:
Traditional, quantifiable risks within prudential regulation, such as liquidity and interest rate risk management of less durable funding sources like non-core or uninsured deposits, and concentrations in asset classes like commercial real estate & long duration bonds;
Qualitative risks, such as the influence of social media and algorithmic marketing on bank safety and soundness and consumer protection, and the related effect of financial stability;
Emerging risks faced by the financial sector, such as market volatility caused by geopolitical, economic, and financial events;
The scope of federal liquidity backstops available to banks and credit unions intended to reduce the risk of contagion and promote financial stability, such as access to the Federal Reserve’s discount window and Federal Home Loan Banks;
The patchwork of state and federal supervision and examination of covered institutions, insufficient communication among regulators, and regulator’s ability to effectively enforce the law; and
The ability of regulators to hold executives accountable for their mismanagement of covered financial institutions. See Letter dated March 31, 2023 to Treasury Secretary Yellen at https://www.banking.senate.gov/imo/media/doc/brown_letter_to_fsoc_yellen_03312023.pdf
 While it is clear that policymakers and governmental agencies should review existing laws and supervisory policies, it may become difficult to make many, if any, material changes in law by Congress, if finger pointing continues to occur during the upcoming presidential election. See March 30, 2023 FACT SHEET: President Biden Urges Regulators to Reverse Trump Administration Weakening of Common-Sense Safeguards and Supervision for Large Regional Banks at https://www.whitehouse.gov/briefing-room/statements-releases/2023/03/30/fact-sheet-president-biden-urges-regulators-to-reverse-trump-administration-weakening-of-common-sense-safeguards-and-supervision-for-large-regional-banks/
 See also Federal Reserve Statistical Release on Large Commercial Banks Insured US Chartered Commercial Banks That Have Consolidated Assets of $300 Million or More, Ranked by Consolidated Assets as of December 31, 2022. During the 2007/2008 financial crisis, much was made of large banks or bank holding companies being “too big to fail” because of their large amounts of consolidated assets and their interconnectedness. It was often asserted that those institutions created systemic risk that could take down the entire financial system and destroy the general economy. During the lead up to the enactment of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd Frank), there was a widespread view that smaller banks or bank holding companies could not create systemic risk that could threaten the stability of the financial system. Those views were untrue then and have been proven to be untrue now because “systemic risk can emanate from financial firms, financial markets, or financial products. It can be caused by the failure of a large, complex and interconnected financial firm (hence the moniker “too big to fail”) or by correlated losses among many small market participants.” See Congressional Research Service Financial Regulation: Systemic Risk (February 1, 2022).
At the Federal level, the Federal Reserve supervises state member banks and all bank holding companies.
DFPI Statement: Silvergate Bank to Begin Voluntary Liquidation (March 8, 2023) at https://dfpi.ca.gov/wp-content/uploads/sites/337/2023/03/Silvergate-Statement-03-08-23.pdf?emrc=6416485ad840c . See also Federal Reserve Statistical Release on Large Commercial Banks Insured US Chartered Commercial Banks That Have Consolidated Assets of $300 Million or More, Ranked by Consolidated Assets as of December 31, 2022.
 Rather than focus on the big picture the SEC focused on one, albeit important issue. See March 17 SEC Commissioner Caroline A. Crenshaw Statement on Retail Options. “I am concerned by reports of retail investors being unable to exercise options they purchased on Silicon Valley Bank and Signature Bank stock. I am hopeful that broker-dealers and clearing agencies will make efforts to assist retail investors in exercising their options if the investors wish to do so, including by exploring possible cash settlements. In addition, I hope that FINRA and my colleagues at the SEC will move forward with efforts to establish a comprehensive regulatory framework around complex products, including options, which are risky and can expose an investor to sudden and severe losses.” https://www.sec.gov/news/statement/crenshaw-statement-retail-options-031723
 See also Federal Reserve Statistical Release on Large Commercial Banks Insured US Chartered Commercial Banks That Have Consolidated Assets of $300 Million or More, Ranked by Consolidated Assets as of December 31, 2022.
 See 12 U.S.C. 1821(c)(3)(A), which provides that whenever the state prudential authority of an insured state depository institution appoints a receiver for such institution and tenders appointment to the FDIC, the FDIC may accept such appointment. See generally 12 U.S.C. 1821(d).
California Financial Regulator Takes Possession of Silicon Valley Bank (March 10, 2023) at https://dfpi.ca.gov/wp-content/uploads/sites/337/2023/03/SVB-Possession-PR-03-10-23.pdf?emrc=7db0ff It is substantially likely that the supervision of SVB was a coordinated effort between the Federal Reserve Bank of San Francisco and the Board of Governors in Washington, D.C. The Federal Reserve generally uses asset size to determine its supervision of banks and bank holding companies. Thus, the larger the bank or bank holding company, the more robust the supervision and the higher the standards. Federal Reserve Vice Chair for Supervision Barr explained it this way: “For all banks but the G-SIBs [Global Systemically Important Banks], the Federal Reserve organizes its supervisory approach based on asset size. The G-SIBs—our largest, most complex banks—are supervised within the Large Institution Supervision Coordinating Committee, or LISCC, portfolio. Banks with assets of $100 billion or more that are not G-SIBs are supervised within the LFBO portfolio. Banks with assets in the $10 to $100 billion range are supervised within the regional banking organization, or RBO, portfolio. Banks with assets of less than $10 billion are supervised within the community banking organization, or CBO, portfolio.” This means that SVB was supervised by the Federal Reserve under a different program and approach than Silvergate was supervised by the Federal Reserve. See also 12 C.F.R. 252.5.
 Under 12 U.S.C. 1821(a)(1)(E), the FDIC insures depositors up to the standard maximum deposit insurance amount, which is defined as $250,000 under current law.
 According to FDIC Chairman Martin Gruenberg, the FDIC only received two bids to purchase DINB and one of those bids failed because it did not have the required authorization from its board of directors and the other bid failed because it was less expensive to liquidate DINB. See Statement of Martin J. Gruenberg Chairman Federal Deposit Insurance Corporation on Recent Bank Failures and the Federal Regulatory Response before the Committee on Banking, Housing, and Urban Affairs (March 28, 2023) at https://www.banking.senate.gov/imo/media/doc/Gruenberg%20Testimony%203-28-23.pdf.
FDIC Creates a Deposit Insurance National Bank of Santa Clara to Protect Insured Depositors of Silicon Valley Bank, Santa Clara, California (March 10, 2023, and updated on March 12, 2023) at https://www.fdic.gov/news/press-releases/2023/pr23016.html
 The normal process also requires the FDIC to use the least cost approach. See 12 U.S.C. 1823(c)(4).
 On March 13, the Federal Reserve announced that Vice Chair Barr would lead a review of the Federal Reserve’s supervision and regulation of SVB in light of its failure. The review will be publicly released by May 1. See Federal Reserve Board announces that Vice Chair for Supervision Michael S. Barr is leading a review of the supervision and regulation of Silicon Valley Bank, in light of its failure at https://www.federalreserve.gov/newsevents/pressreleases/bcreg20230313a.htm
 Statement by Michael S. Barr Vice Chair for Supervision Board of Governors of the Federal Reserve System before the Committee on Banking, Housing, and Urban Affairs U.S. Senate (March 28, 2023) at https://www.federalreserve.gov/newsevents/testimony/files/barr20230328a.pdf
READOUT: Secretary of the Treasury Janet L. Yellen Convenes Financial Regulators (March 10, 2023) at https://home.treasury.gov/news/press-releases/jy1334 . The Federal Reserve, the FDIC and the OCC are the federal baking prudential supervisors. This means the three agencies are responsible at the federal level for the safety and soundness of commercial banks. The Federal Reserve is the prudential supervisor for FDIC-insured state chartered commercial banks that are members of the Federal Reserve System. The FDIC is the prudential supervisor for FDIC-insured state chartered commercial banks that are not members of the Federal Reserve Systems. The OCC is the prudential supervisor for OCC chartered commercial banks and savings banks. The Federal Reserve is also the prudential supervisor for bank holding companies.
 See also Federal Reserve Statistical Release on Large Commercial Banks Insured US Chartered Commercial Banks That Have Consolidated Assets of $300 Million or More, Ranked by Consolidated Assets as of December 31, 2022.
 As pointed out earlier, at the federal level the FDIC supervises state nonmember banks, and a state nonmember bank is not a member of the Federal Reserve System. Most of the smaller banks in the US are state nonmember banks supervised by the FDIC.
Superintendent Adrienne A. Harris Announces New York Department of Financial Services Takes Possession of Signature Bank (March 12, 2023) at https://www.dfs.ny.gov/reports_and_publications/press_releases/pr20230312
 At the federal level, a bridge bank is a temporary national bank chartered by the OCC at the request of the FDIC as a part of the FDIC’s role as the receiver of a failed commercial bank. The FDIC transfers the deposits and other assets from the failed bank to the bridge bank with a view towards selling the bridge bank. See The Role of Bridge Banks in FDIC Receiverships (March 23, 2023) at https://crsreports.congress.gov/product/pdf/LSB/LSB10937#:~:text=As%20part%20of%20the%20process,or%20proceeds%20to%20liquidate%20them.
 See 12 U.S.C. 1823(c)(4)(G). While the SRE became law as a part of the Federal Deposit Insurance Corporation Improvement Act of 1991, the SRE was not used until 2008 as a part of stabilizing the financial system during the financial crisis that occurred during that time. See also The Temporary Liquidity Guarantee Program: A Systemwide Systemic Risk Exception, Chapter 2.
FDIC Establishes Signature Bridge Bank, N.A., as Successor to Signature Bank, New York, NY at https://www.fdic.gov/news/press-releases/2023/pr23018.html
 Subsidiary of New York Community Bancorp, Inc., to Assume Deposits of Signature Bridge Bank, N.A., From the FDIC (March 19, 2023 and updated on March 20, 2023) at https://www.fdic.gov/news/press-releases/2023/pr23021.html
 On March 20, the OCC announced that it had conditionally approved Flagstar Bank, N.A., Hicksville, New York, to purchase assets and assume certain liabilities of Signature Bridge Bank, N.A., New York, New York. The transaction includes the purchase by Flagstar Bank of certain loan portfolios from Signature Bridge Bank, N.A., that total $12.9 billion and the assumption of $34 billion in deposits. The OCC imposed conditions on the approval, including requiring Flagstar Bank to allocate appropriate resources to the assets and liabilities acquired, and to require a supervisory non-objection prior to paying a dividend to shareholders. https://www.occ.treas.gov/news-issuances/news-releases/2023/nr-occ-2023-27.html
 Unfortunately, the special assessment has already been politicized by some policymakers and FDIC Chairman Gruenberg blaming large banks for the failures of SVB and Signature and asserting that no community bank should pay an assessment because no community bank contributed to the financial crisis. While this assertion may ultimately be proven to be true, at this early stage no consensus has been reached regarding banks (or other financial institutions for that matter) to blame. For instance, should the blame be placed only on regional banks since SVB and Signature were regional banks? Should blame be placed only on banks with nondiverse business models since SVB’s business model focused primarily on the tech sector, startups, and venture capital firms? Should the blame be placed only on banks that supported the cryptocurrency industry since some commentators have asserted that the crisis may have been started by the fall of FTX and other cryptocurrency platforms? The point is that decisions about a special assessment should be made only after many more questions have been answered.
 12 U.S.C. 1821(e) and 12 C.F.R. 231.
 Joint Statement by the Department of the Treasury, Federal Reserve, and FDIC at https://www.fdic.gov/news/press-releases/2023/pr23017.html
 Since the SRE was used to cover uninsured deposits, the FDIC is authorized to impose this assessment if there is a loss to the DIF.
 Federal Reserve Board announces it will make available additional funding to eligible depository institutions to help assure banks have the ability to meet the needs of all their depositors at https://www.federalreserve.gov/newsevents/pressreleases/monetary20230312a.htm
 See BTFP Terms and Conditions at https://www.federalreserve.gov/newsevents/pressreleases/files/monetary20230312a1.pdf
 First–Citizens Bank & Trust Company, Raleigh, NC, to Assume All Deposits and Loans of Silicon Valley Bridge Bank, N.A., From the FDIC at https://www.fdic.gov/news/press-releases/2023/pr23023.html
 The CFTC was concerned about the treatment of QFCs and contacted the federal prudential supervisors about the CFTC’s concern on March 16. “The Commission has been in contact with banking regulators following the recent failures of Silicon Valley Bank and Signature Bank concerning the transfer by the Federal Deposit Insurance Corporation (FDIC) of qualified financial contracts (QFCs) from the failed banks to newly established bridge banks, Silicon Valley Bridge Bank, N.A. and Signature Bridge Bank, N.A., respectively. To the extent that the transfer of QFCs that are swaps would cause them to be subject to certain Commission swaps regulations (including business conduct, margin, clearing, and trade execution requirements), the Commission will not commence enforcement action for violations of such regulations resulting solely from the FDIC ordered transfers. The Commission further recognizes that transfer of QFCs that are swaps to the newly established bridge banks may impact the ability of reporting counterparties for such swaps to fulfill their obligations under the Commission’s swaps reporting requirements. Reporting counterparties should use best efforts to fulfill their reporting obligations with respect to such swaps. The Commission will consider further action related to swaps reporting obligations as appropriate.” https://www.cftc.gov/PressRoom/SpeechesTestimony/commissionstatement031623
 READOUT: Financial Stability Oversight Council Meeting on March 12, 2023, at https://home.treasury.gov/news/press-releases/jy1338
 FSOC was established under Title I of Dodd Frank in 2010. FSOC is responsible for identifying risks to the US financial stability, promoting market discipline, and responding to emerging threats to the stability of the US financial system. It is chaired by Secretary Yellen and consists of 10 voting members and 5 nonvoting members, bringing together the expertise of federal financial regulators, state regulators, and an independent insurance expert appointed by the President. It appears Director of the Federal Housing Finance Agency Sandra Thompson and Independent Insurance Expert Thomas E. Workman did not attend the FSOC meeting.
 DFPI applauded the actions by the largest commercial banks. “The deposits made today into California-chartered First Republic Bank by 11 large banks underscores the importance of regional banks in our banking system. Regional banks provide vital banking services relied upon by communities across California.” https://dfpi.ca.gov/wp-content/uploads/sites/337/2023/03/23-03-16-First-Republic-Statement.pdf?emrc=d634d1
 See Silicon Valley Bank’s Failure Sparks Speculation that FASB Accounting Rules for Held-to-Maturity Debt Securities Should be Revised at https://tax.thomsonreuters.com/news/silicon-valley-banks-failure-sparks-speculation-that-fasb-accounting-rules-for-held-to-maturity-debt-securities-should-be-revised/
 Commentators had been warning banks about hold to maturity securities related to rising interest rates for quite some time. See Rising Rates and Considerations for Held-to-Maturity Classification at https://www.eidebailly.com/insights/articles/2022/4/rising-rates-and-considerations-for-held-to-maturity-classification
 Banks, Investors Revive Push for Changes to Securities Accounting After SVB Collapse at https://www.wsj.com/articles/banks-investors-revive-push-for-changes-to-securities-accounting-after-svb-collapse-99caa9ce?utm_campaign=A_FY23Q4_20230405_WSJBarronsCorpSubs_CFO_JOURNAL-RECRUITMENT_bank-collapse_HTML&utm_medium=email&utm_source=Eloqua
 See Joint Statement on Crypto-Asset Policy Sprint Initiative and Next Steps (November 23, 2021) at https://www.federalreserve.gov/newsevents/pressreleases/files/bcreg20211123a1.pdf; Joint Statement on Crypto-Asset Risk to Banking Organizations (January 3, 2023) at https://www.occ.treas.gov/news-issuances/news-releases/2023/nr-ia-2023-1a.pdf; and Federal Reserve Order No. 2023-02 (January 27, 2023) at https://www.federalreserve.gov/newsevents/pressreleases/files/orders20230324a1.pdf
 See Silicon Valley Bank’s Failure and Potential Director/Officer Liability (April 7, 2023) at https://crsreports.congress.gov/product/pdf/LSB/LSB10946
 According to the Federal Reserve, a compensating balance is a deposit maintained by a bank customer to compensate the bank for loans and lines of credit granted to the customer. The Federal Reserve explains that “Often, a commercial bank, when extending credit, requires an average deposit balance equal to a fixed percentage of the outstanding loan balance. Compensating balance requirements vary from informal understandings to formal contracts. Deposits maintained as compensating balances may be demand or time, active or dormant. Frequently, a lending bank will allow compensating balances to be supplied by a depositor other than the borrower itself. If compensating balances are maintained by a BHC’s subsidiary bank on behalf of its parent, the practice is considered a diversion of bank income (i.e., the bank loses the opportunity to earn income on the balances that could be invested elsewhere). In general, this practice is inappropriate unless the bank is being compensated at an appropriate rate of interest. If the bank is not being appropriately reimbursed, the practice should be criticized and action taken to insure that the bank is compensated for the use of its funds.” See Section 2020.4 Federal Reserve Bank Holding Company Supervision Manual.
 See Treasury Report on Crypto-Assets: Implications for Consumers, Investors, and Businesses (September 2020) at https://home.treasury.gov/system/files/136/CryptoAsset_EO5.pdf
 See CFPB Consumer Advisory (August 2014) Risks to consumers posed by virtual currencies at https://files.consumerfinance.gov/f/201408_cfpb_consumer-advisory_virtual-currencies.pdf
 See Nexo Financial LLC 2022-MISC-Nexo Financial LLC-0001 Decision and Order on Petition by Nexo Financial LLC to Modify Civil Investigative Demand at https://files.consumerfinance.gov/f/documents/cfpb_nexo-financial-llc_decision-and-order-on-petition_2022-11.pdf
 CFPB Consumer Complaint Bulletin (November 2022) An analysis of consumer complaints related to crypto-assets at https://files.consumerfinance.gov/f/documents/cfpb_complaint-bulletin_crypto-assets_2022-11.pdf