Barney Frank, a former member of the US House of Representatives from Massachusetts and a primary co-sponsor of the Dodd-Frank Act of 2010, spoke about his views on the recent Signature Bank bankruptcy. In an interview, Frank stated that he believes that the regulators were aiming to “send a very strong message against cryptocurrencies.” Frank, who also serves as a Signature board member, explained that he was surprised by the financial institution’s demise.
Third largest bank failure in US history: Signature Bank’s disappearance confused company executives
New York regulators at the Department of Financial Services (DFS) announced Sunday night that Signature Bank (SBNY) has been closed and the Federal Deposit Insurance Corporation (FDIC) has taken over as receiver of the bank. The seizure was 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 observers and was the third largest bank failure in the United States.
On Sunday night, Superintendent Harris stated that as of December 31, 2022, Signature had about $110.36 billion in assets and total deposits of about $88.59 billion. According to Barney Frank, a Signature board member and former US Representative from Massachusetts, the bank’s failure surprised its executives. in a telephone interview With CNBC, Frank stated: “We had no indication of trouble until we experienced a depot run on Friday night, which was solely due to the SVB contagion.”
Frank explained that concern began to spread last week when Signature’s clients began transferring deposits from the New York bank to larger financial institutions such as JPMorgan and Citigroup. Although the former politician saw “no real objective reason” for Signature to be seized and shut down, he suspected US regulators may have been sending a message.
“I think part of what happened was that the regulators wanted to send a very strong message against cryptocurrencies,” Frank stated. “We became the poster boy because there was no fundamentals-based insolvency.”
Frank also mentioned that withdrawals slowed on Sunday and that Signature executives believed the situation was resolved. In addition, he affirmed that the bank’s management personnel tried to explore “all avenues” to solve the liquidity problems of the financial institution. Frank was a co-sponsor of the Dodd-Frank Act of 2010, which introduced significant changes to the way America’s banking and financial regulatory system is currently conducted. However, the policy framework has been partially repealed and some US banks are exempt from the Dodd-Frank set of rules.
What do you make of Barney Frank’s suspicion that regulators wanted to send an anti-crypto message by shutting down Signature Bank? Do you think this is a fair assessment or is there more to the story? Share your thoughts in the comments section below.
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