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| Barney Frank Discusses the Unexpected Closure of Signature Bank |
The closure of Signature Bank, a New York-based financial institution, caused significant surprise among investors and regulators. The bank's clientele included several notable figures, including players in the cryptocurrency industry, and the closure was interpreted by many as a political statement. Barney Frank, a former Congressman and designer of the Dodd-Frank banking laws, sat on Signature Bank's board of directors and was vocal in his criticism of the closure.
Frank suggested that the bank's closure was part of a political attack aimed at the cryptocurrency industry. The New York Department of Financial Services denied these claims, arguing that the closure was due to a "crisis of confidence in the bank's leadership." However, Frank maintains that the regulators unreasonably closed Signature Bank and unfairly targeted the cryptocurrency industry.
In an interview with New York, Frank explained that regulators were responsible for the bank's closure. Signature Bank was a facilitator, allowing two businesses to conduct transactions in cryptocurrency. However, the bank was not a significant player in the high-tech or cryptocurrency industries. Frank argued that regulators overreacted and used the bank as a "poster child" to discourage involvement in cryptocurrency.
Frank also discussed the circumstances that led to the bank's closure. He claimed that the bank's customer base included major property owners, resulting in large deposits beyond $250,000. Frank suggested that years ago, he advocated for the extension of deposit guarantees to cover businesses that held significant cash on hand. This proposal failed due to political reasons, leaving Signature Bank with a large number of uninsured deposits. When rumors circulated that Silicon Valley Bank, another financial institution that catered to the cryptocurrency industry, was failing, the large depositors panicked and withdrew their funds from Signature Bank. This withdrawal triggered a run on the bank, leading to its closure.
The closure of Signature Bank came as a surprise to many, as the bank did not initially seem affected by the run earlier this year at Silvergate, a California-based bank that primarily served the cryptocurrency industry. Frank expressed disappointment that the Department of Financial Services had not argued that the bank was insolvent. He argued that if the Federal Deposit Insurance Corporation and the Federal Reserve had taken action on Friday, the bank would not have been in trouble. He suggested that if the bank had been allowed to open on Monday, it would have been operational.
Finally, Frank expressed concern over the legality of the bank's closure. He questioned whether the government had the right to seize any bank, even if it was not insolvent. He suggested that regulators should answer this question and explain why they closed Signature Bank when it was not insolvent. Frank maintained that he did not want to comment personally, as a director of Signature Bank, but believed that regulators should address these concerns.
Barney Frank discussed the closure of Signature Bank and suggested that regulators unfairly targeted the cryptocurrency industry. He argued that regulators overreacted and used Signature Bank as an example to discourage involvement in cryptocurrency. Frank expressed concern over the legality of the bank's closure and questioned whether the government had the right to seize any bank, even if it was not insolvent. Finally, he suggested that regulators should address these concerns and explain why they closed Signature Bank.
