Barney Frank, former U.S. Representative from Massachusetts and a key co-sponsor of the 2010 Dodd-Frank Act, shared his views on the recent collapse of Signature Bank. In an interview, Frank said he believes regulators aimed to “send a very strong anti-crypto message. “Frank, who also serves on Signature’s board of directors, explained that he was surprised by the institution’s failure, because he believes the bank’s failure was a “very strong message that the regulators were trying to send.
the third largest bank failure in U.S. history. Company executives
puzzled by Signature Bank’s failure.
New York’s Department of Financial Services (DFS) regulators announced Sunday evening that Signature Bank (SBNY) has been closed and the Federal Deposit Insurance Corporation (FDIC) has been placed in receivership of the bank. The seizure is intended to “protect depositors,” said DFS Superintendent Adrienne Harris. Unlike Silvergate Bank and Silicon Valley Bank (SVB), Signature’s failure was somewhat confusing to some market participants, making it the third largest bank failure in the United States.
On Sunday evening, Supervisor Harris said that as of December 31, 2022, Signature had assets of approximately $11.36 billion and total deposits of approximately $88.59 billion. According to Barney Frank, a Signature board member and former U.S. Representative from Massachusetts, the bank’s collapse came as a surprise to executives; in aphone interview with CNBC, Frank said, “There was no indication of a problem until we experienced the deposit outflow late Friday night but it was solely due to contagion from SVB.”
Frank explained that concerns began to spread last week as Signature’s customers began moving their deposits from New York banks to major financial institutions such as JPMorgan and Citigroup. The former politician sees “no real objective reason” for Signature to be foreclosed and closed, but he suspects that U.S. regulators may be sending a message.
“I think that the regulators wanted to send a very strong anti-crypto message, and I think that’s part of what happened,” Frank said.”
Frank also noted that withdrawals slowed on Sunday, and Signature executives believe the situation has been resolved. He further asserted that the bank’s executives tried to explore “every avenue” to resolve the financial institution’s liquidity problems. Frank was a co-sponsor of the 2010 Dodd-Frank Act, which brought about significant changes to the current state of the U.S. banking and financial regulatory system. However, the policy framework has been partially repealed and some U.S. banks are exempt from the Dodd-Frank rule set.
What are your thoughts on Barney Frank’s suspicion that regulators wanted to send an anti-crypto message by closing Signature Bank? Do you believe this suspicion?
