Former Rep. Barney Frank (D-MA), who famously co-authored the 2010 Dodd-Frank financial reform law in response to the 2008 financial crisis, served as a director of Signature Bank, which failed Sunday.
The former Democratic chairman of the House Financial Services Committee during the financial crisis helped draft the regulatory legislation, which aimed to prevent bank failures and bailouts such as those that happened in 2008.
SVB COLLAPSE: HERE’S EVERYTHING YOU NEED TO KNOW
The Dodd-Frank financial reform law imposed new rules on banks along with creating new regulatory entities within the government for overseeing financial institutions.
Despite the bank he served on the board of being seized by regulators, Frank defended the 2010 legislation as preventing widespread issues in the market.
“The vindication of the bill is that nobody is talking about anything like 2008,” Frank told Bloomberg. “If the bill hadn’t been passed, we’d be seeing a lot more damage these days. We got a lot of the vulnerability out of the system.”
Congress reformed the Dodd-Frank law in 2018 by removing regulations from smaller banks and for larger regional banks. The reforms moved the threshold at which banks are subject to certain additional rules from $50 billion to $250 billion.
The collapse of New York-based Signature Bank came only two days after California-based Silicon Valley Bank was shut down by state regulators. Both banks were large regional banks in the size range that were exempted from some rules in the 2018 law.
Many on the Left are blaming the 2018 reforms on the current bank failures, but Frank spoke favorably of the changes at the time and said they are not to blame for current troubles with large regional banks.
At the time when Congress was debating the 2018 reforms, Frank praised the new bill as being “mostly” reasonable to CNBC. One of his concerns was moving the threshold of considering a bank risky and needing more oversight up to $250 billion. Speaking with Bloomberg on Monday, he said the adjustments to the law in 2018 were not the reason for the failure.
CLICK HERE TO READ MORE FROM THE WASHINGTON EXAMINER
“I don’t think that had any effect,” Frank told the outlet. “I don’t think there was any laxity on the part of regulators in regulating the banks in that category, from $50 billion to $250 billion.”
The collapse of Silicon Valley Bank, along with other institutions such as Signature Bank, has caused shares of several regional banks to tank Monday morning as the fallout from the collapse continues. First Republic Bank, which is also based in California, opened down 73% Monday morning.