Barney Frank, the previous congressman from Massachusetts who helped write the Dodd-Frank Act — the laws handed within the wake of the 2008 monetary disaster with the intention of defending the economic system from an analogous disaster — mentioned on Monday he was disillusioned within the resolution of regulators to close down Signature Financial institution on Sunday, the place he had been a board member since 2015.
Mr. Frank mentioned in an interview on Monday that the financial institution’s failure had come as a shock to him, as a result of its state of affairs appeared to have stabilized by Sunday. Regulators, he believed, took management of Signature to ship a message to different banks to avoid cryptocurrencies.
“They shoot one man to encourage the others,” Mr. Frank mentioned, referring to an adage about utilizing a single navy execution as an incentive for the topic’s friends to behave in a different way that he thought utilized to the regulators’ dealing with of Signature. “I believe we had been shot to encourage the others to avoid crypto.”
Signature, which took deposits from digital asset corporations, was generally known as a crypto-friendly financial institution, although it didn’t straight take care of cryptocurrency belongings.
However Mr. Frank’s curiosity within the financial institution associated to its concentrate on making loans to builders constructing reasonably priced housing and accessing the federal low earnings housing tax credit score, a system that Mr. Frank championed throughout his time in Congress.
“What had attracted me to it, and nonetheless does, is its function as a multifamily housing lender,” he mentioned.
In the course of the 2008 monetary disaster, Mr. Frank helped set up the short-term rescue plan, and later co-wrote the Dodd-Frank Act, which toughened the regulatory rulesput in place to forestall the nation’s greatest banks from partaking in dangerous habits.
