Torres warns of potential housing crisis in the wake of NYC Signature Bank flop last month

Ritchie Torres
Rep. Ritchie Torres introduced three pieces of legislation on March 17, 2023 following the failures of Silicon Valley Bank in California and Signature Bank in New York.
Photo courtesy Jacob Long

In a Monday press conference, U.S. Rep. Ritchie Torres warned New Yorkers of the potential negative housing implications they could face in the wake of Signature Bank’s failure last month — cautioning that 479 Bronx properties and 19,750 units could be affected.  

Signature Bank is one of the latest in a string of big bank collapses across the country that has caused ripple effects in the economy. The New York City bank that championed cryptocurrency lending closed its doors on March 12 after California-based institutions Silicon Valley Bank and Silvergate Bank — also big digital and crypto dealers — fell earlier last month due to instability with crypto deposits, customer withdrawals and plummeting stock prices. 

Torres, a member of the House Financial Services Committee, said on Monday he’s particularly concerned with now-failed Signature Bank’s loan portfolio — part of the institution’s assets at the time of its collapse — since it served as a major residential real estate lender in the city. The Federal Deposit Insurance Corporation (FDIC), an independent agency created by Congress to maintain stability and public trust in the country’s financial system, is now responsible for selling the bank’s residential New York City loans. 

“The improper sale of Signature Bank’s residential real estate portfolio could have a detrimental impact on the affordability and quality of up to 80,000 units of housing, and it could endanger the stability of the tenants who live in those units,” said Torres, who represents the 15th Congressional District, including the South Bronx, which is one of the most poverty stricken areas in the U.S.

That’s 80,000 housing units across New York City (including 19,750 in the Bronx) encompassing 3,000 multi-family properties — 4% of which are already considered “distressed,” according to Torres’ office.  

He outlined two potential risk factors: that the loans could be sold to a buyer who “brings greater disinvestment and displacement,” or that the properties will be refinanced at higher interest rates — which he said “could mean less money for the maintenance of these properties.” 

“We have to ensure that the FDIC sells the debt on these units to a responsible buyer who is committed to preserving affordable housing,” the congressmember said. 

Rachel Fee, the executive director of the New York Housing Conference, and Jim Buckley, the executive director of the University Neighborhood Housing Program, joined Torres on Monday to advocate for tenants.

We saw in the aftermath of the last banking crisis how failing to proactively address distressed housing loans has a material impact on people’s homes – and with more than 80,000 units, the vast majority of which are rent-stabilized, hanging in the balance, we cannot afford to repeat the mistakes of the past,” Fee said at the press conference.  

In a letter to FDIC Chair Martin Gruenberg, Torres requested that the agency engage with New York housing officials to ensure tenants’ needs are met in Signature Bank’s loan sale. 

A spokesperson from Torres’ office told the Bronx Times on Monday that the congressmember is confident Gruenberg will work with local housing leaders.

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