Barney Frank, a former member of the U.S. House of Representatives from Massachusetts and the leading co-sponsor of the 2010 Dodd-Frank Act, discussed his thoughts on the recent failure of Signature Bank. In an interview, Frank suggested that regulators may have been trying to send a “strong anti-crypto message” by shutting down the financial institution.
The Third-Largest Bank Failure in U.S. History: Executives Surprised by Signature Bank’s Demise
New York regulators from the Department of Financial Services (DFS) declared on Sunday evening that Signature Bank (SBNY) was shut down and the Federal Deposit Insurance Corporation (FDIC) took over as the bank’s receiver. 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, making it the third-largest bank failure in the United States.
On Sunday evening, Harris said that Signature had around $110.36 billion in assets and total deposits of approximately $88.59 billion as of December 31, 2022. Barney Frank, a Signature board member and former U.S. representative from Massachusetts, noted that the bank’s collapse was unexpected to its executives. In a phone call interview with CNBC, Frank stated, “We had no indication of problems until we experienced a deposit run late Friday, which was solely due to contagion from SVB.”
Frank mentioned that withdrawals slowed on Sunday, and Signature executives believed the situation was resolved. Additionally, he alleged that the bank’s senior staff sought out “all avenues” to deal with the liquidity issues. Frank was a co-sponsor of the 2010 Dodd-Frank Act, which changed 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 However, the policy framework has been partially repealed, and some U.S. banks are exempt from the Dodd-Frank ruleset.
“I think part of what happened was that regulators wanted to send a very strong anti-crypto message,” Frank proposed. “We became the poster boy because there was no insolvency based on the fundamentals.”
What do you think about Barney Frank’s suspicion that regulators wanted to send an anti-crypto message by shutting down Signature Bank? Do you believe this is a fair assessment or is there more to the story? Share your thoughts in the comments section below.
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