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ANHD Statement on Signature Bank’s Closure

March 13, 2023

ANHD applauds the New York Department of Financial Services for taking the necessary steps to close Signature Bank, whose predatory and speculative practices led to unsafe living conditions, harassment, and displacement of tenants, and you can learn more about ANHD’s long-standing criticisms and efforts to hold banks accountable, as well as the need to strengthen the Community Reinvestment Act, by reading our full blog post.

Signature Bank’s collapse comes as no surprise to the Association for Neighborhood & Housing Development (ANHD), who has long called out their faulty business model, which relied on predatory and speculative activities in New York City. Signature paved the way for thousands of tenants to suffer living in unsafe conditions, the victims of harassment, or displaced from their homes and communities. ANHD applauds the New York Department of Financial Services (DFS) for taking the significant and necessary steps of closing Signature Bank — marking the third largest bank failure in US History, with nearly $200 billion in assets and deposits in 2022.


ANHD and our Equitable Reinvestment Committee (ERC) have raised the alarm on Signature Bank’s practices for years, especially their long-standing core business practice of making multifamily loans to bad acting landlords. Year after year, building after building, Signature consistently made multifamily loans that were speculative and underwritten to practices of displacement, harassment, or building neglect. 


After a two-year campaign led by tenant organizers and tenants living in buildings financed by Signature Bank, the bank formally and publicly adopted ANHD’s multifamily lending best practices in July 2018. NY State’s Department of Financial Services issued similar guidance to all state-chartered banks, including Signature, just a few months later. Unfortunately, in the more than four years since that pledge, Signature Bank had yet to fully live up to its commitments and often fought back against doing so. 
 

The flags were there. ANHD and the ERC submitted detailed comments with data and testimony about Signature’s lending to landlords with public records of tenant harassment and poor conditions. We called on the regulators to downgrade Signature for their behavior and urged the bank to better address their systemic issues.  Yet, just four out of 344 loans were submitted, with no consequences for financing any of the bad acting landlords they recognize as problematic. ANHD highlighted that  Signature Bank failed two of their four Community Reinvestment Act (CRA) assessment areas, failed three of 12 sub-tests, and barely passed in most other subtests with a “low-satisfactory.”  Despite this, Signature was rated “Satisfactory” overall and passed their March 2022 CRA exam. 
 

ANHD is pleased to see that state and federal regulators transferred all the deposits and substantially all of the assets of Signature Bank to Signature Bridge Bank, N.A. We look forward to working with State and Federal regulators to ensure that tenants’ homes are protected and affordability is preserved - especially in the midst of a housing crisis, and on the edge of an eviction tsunami.  We can not allow another financial institution to take control of loans and continue Signature’s practice of predatory lending.  


Signature Bank’s closure is an opportunity for financial institutions and regulators alike to revisit and reexamine their existing practices. Signature shows us how and why predatory, risky, and destabilizing practices must end! The cost of these harmful practices falls on our low-income tenants that are priced out of their homes and our neighborhoods that are destabilized by neglected buildings, rapidly rising rents, and high tenant turnover. Our low-income communities of color should not bear the price of financial institutions' misguided, ill-informed, profit-only practices. We must hold banks accountable. 


The CRA is being updated for the first time in over 20 years. Signature Bank reminds us that we have an opportunity to Strengthen the CRA. We need a CRA that is race-conscious, downgrades banks for lending to landlords that harm and displace tenants, & strengthens community input.

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