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Speaker 1: I want to bring it back to one of the

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Speaker 1: main stories today, which of course is a Signature bank

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Speaker 1: getting shut down from the fallout of Silicon Valley Brank.

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Speaker 1: I want to bring back our former guests that we

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Speaker 1: were just talking about, Barney Frank, the co sponsor of

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Speaker 1: the Dodd Frank Act as well as a board member

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Speaker 1: of Signature Bank. Barney think he was always for joining

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Speaker 1: us on the radio today. Let's start with a simple question.

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Speaker 1: What happened? Well, one former board member that board was

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Speaker 1: dissolved by the FDIC. What happened was the fallout? How

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Speaker 1: would you say? I think from Silicon Valley Bank, we

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Speaker 1: got hit although we Signature were in good shape. In fact,

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Speaker 1: given what the FED and the FDIC announced today, if

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Speaker 1: that been announced on Friday, we would have had no

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Speaker 1: problem at all. We began to lose deposits on Friday

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Speaker 1: out of reaction to what happened to Silicon Valley. What

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Speaker 1: you also had was it wasn't because Silicon Valley. It

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Speaker 1: was a punishment for anybody involved with clipped. This is

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Speaker 1: a and I think in fact what happened was we

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Speaker 1: had gotten into crypto allow in a way that no

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Speaker 1: way put us to risk We facilitated our customers who

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Speaker 1: wanted to deal with each other crypto, but we would

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Speaker 1: not it as someone that was doing crypto, as I said,

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Speaker 1: not in a way that was risky to us. And

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Speaker 1: there was this fleeing of banks that we're seeing to

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Speaker 1: a crypto now. It was a liquidity issue, not a

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Speaker 1: soaleignty issue, and we had by Sunday actually gotten back

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Speaker 1: to a point where we had to liquidity what I

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Speaker 1: believe the regulators wanted to send a message that crypto

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Speaker 1: is toxic, frankly, and they wanted to tell everybody to

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Speaker 1: get as far away from crypto as they could. When

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Speaker 1: we were signaled out to be the poster child for

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Speaker 1: that message, we Burney, your CEO, Joe to Paolo has

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Speaker 1: actually said the same thing you just said, which is

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Speaker 1: the exposure was responsibly handled. It was limited exposure. We're

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Speaker 1: Silicon Valley Bank, for example, had a lot more exposure

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Speaker 1: to tech start up to be So, how did crypto

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Speaker 1: lead to the shutdown of signature exactly? Walk us through

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Speaker 1: the details? So two ways. First of all, depositors and

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Speaker 1: like other banks, uh they cater to businesses as we do.

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Speaker 1: We didn't care to high tech. We catered to largely

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Speaker 1: commercial lenders. Were a big housing developer, which is one

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Speaker 1: of the things I liked about our role. Um what so,

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Speaker 1: we had a lot of large depositors who were uninsured,

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Speaker 1: and they panicked knowing that we were involved with crypto,

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Speaker 1: and we explained to them, but it was crypto in

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Speaker 1: a very responsible way that didn't expose us. They didn't

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Speaker 1: want to hear it. They just wanted to go to

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Speaker 1: JP Morgan, a Bank of America, just in case. So

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Speaker 1: what the way Crypto heard us was the fact that

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Speaker 1: we are involved with crypto, although as I said, in

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Speaker 1: a way different than s web uh and have large

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Speaker 1: uninsured depositors. They panicked and fled. What the FED did

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Speaker 1: now by announcing they would back up or what I

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Speaker 1: see that they'd back up on each other depositors and

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Speaker 1: make a liquidity facility open at the FED. That would

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Speaker 1: have kept us from having a pop. And as I said,

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Speaker 1: I think the regulators, knowing that we were involved with crypto,

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Speaker 1: even though in a totally different way, wanted to send

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Speaker 1: a message to get people away from crypto. I think

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Speaker 1: some of the regulators, Uh, we're a little nervous that

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Speaker 1: they've been a little to accommodating the crypto and particularly

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Speaker 1: after FTX, which which is at Parney. You're talking about

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Speaker 1: let me just let me just hop in here. You're

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Speaker 1: talking about mostly uninsured deposits. Roughly nine deposits for signature

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Speaker 1: were uninsured. Look, you're a co sponsor of a of

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Speaker 1: the DoD FRAMEK Act, which is known for regulation. Why

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Speaker 1: didn't why wasn't this addressed earlier? Because we were defeated.

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Speaker 1: I it's a good point. I wanted to extend deposit

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Speaker 1: insurance for larger businesses. We have a payroll issue. There

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Speaker 1: had been a temporary extension of that two thousand and eight,

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Speaker 1: and I pushed for it in a House version of

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Speaker 1: the bill. We extended it, but we ran into political opposition,

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Speaker 1: first from the large banks, which frankly don't want people

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Speaker 1: to have that reassurance because that makes it likely for people,

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Speaker 1: as happened now, to pull out of smaller banks to

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Speaker 1: go to be of A or J people of the chase.

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Speaker 1: We had Republican opposition who thought, well, this is interference

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Speaker 1: with the economy. We had some people on the left

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Speaker 1: who said, oh, don't insure the very rich. Although extending

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Speaker 1: to business accounts that guarantee protects working people because it

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Speaker 1: protects payroll. So the answer is, that's a good question.

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Speaker 1: I tried to get it extended, and I hope that

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Speaker 1: what will happen now is people having learned the backing

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Speaker 1: of the uninsured, raising the insurance level will not be

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Speaker 1: a one off for this crisis, but that former colleagues

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Speaker 1: will take steps to extend it, particularly for payroll accounts. Well,

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Speaker 1: should there be any limit? I mean shouldn't we? The

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Speaker 1: FED has essentially come out now with its statement and

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Speaker 1: UM assured depositors across the country that there's no more limit,

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Speaker 1: that every every is that okay necessary, that's a necessary

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Speaker 1: temporary America until they work out. And what I think

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Speaker 1: you need to do is to raise the limit. First

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Speaker 1: of all, a business account. We're not talking about rich

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Speaker 1: individual's pocket money. We're talking about because what do you

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Speaker 1: do if you're a business and you have to have

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Speaker 1: me to payroll that's in the in the hundreds of

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Speaker 1: thousands of millions. I would say, this is all the

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Speaker 1: top of my head. I'm not there to do the

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Speaker 1: research now that you would want to say that an

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Speaker 1: amount that would get you through at least one payroll

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Speaker 1: period and maybe two so you could then make other arrangements.

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Speaker 1: But why why should there be any limit? Nan? Why

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Speaker 1: should Why does America have the thousands of banks? So

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Speaker 1: why not just have you know, like five or ten

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Speaker 1: big institutions so that we don't have to have these

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Speaker 1: problems all the time. Here's the reason. If you're talking

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Speaker 1: about a personal account of a million dollars, five banks

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Speaker 1: would do it. What if you're a business that has

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Speaker 1: a payroll in the tens of millions, how many banks

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Speaker 1: do you have to do? It would be very inefficient

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Speaker 1: to have them have to have fifty banks. And why

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Speaker 1: do it? It's to protect not the banks, but to

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Speaker 1: protect working people. That's why there was a lot of

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Speaker 1: pressure from I get that. I just don't understand why

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Speaker 1: there should be a limit any I guess you could

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Speaker 1: vilify rich people. Oh he has a million dollars in

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Speaker 1: that bank account, but who cares? Like, why why should

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Speaker 1: there be any limit? Why not ensure all deposits because

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Speaker 1: there is a potential cost to the federal government, There

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Speaker 1: is a potential moral that there's some too safety to

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Speaker 1: having people check with that bank. You don't want banks

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Speaker 1: that are irresponsible to have a restricted limit. I would

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Speaker 1: make it pretty high. And I think the need again

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Speaker 1: is and I'm not vilifying rich people. What I'm saying

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Speaker 1: is that no policy need to protect millions of dollars

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Speaker 1: in individual pocketation. There is a policy need to protect

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Speaker 1: an institution that has payroll and not make them go

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Speaker 1: to ten or twenty or forty banks, and to let

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Speaker 1: them put the bank to have a bank which is

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Speaker 1: sufficient to be stepping through a month's payroll. And that's

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Speaker 1: the specifics I would work for. So what we tried

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Speaker 1: to do in the House in two thousand and eight,

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Speaker 1: we didn't have the votes to do it in the Senate.

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Speaker 1: But I hope now people have learned frankly that we

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Speaker 1: were writing and they will do that. Barney and New

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Speaker 1: York Governor Kathy Hokell said the takeover of Signature Bank

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Speaker 1: by federal regulators on Sunday, quote was not a bailout.

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Speaker 1: Do you agree who said it wasn't? New York Governor

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Speaker 1: Kathy Hukel, Yeah, Well, I don't see how it's a bailout.

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Speaker 1: What's going to happen is, in fact, I don't think

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Speaker 1: bailed out the depositor Earth. Yeah, but not just a

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Speaker 1: Signature bank. Every depositive was Yeah, I'm sorry, Can I

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Speaker 1: finish a sentence? Please? Please? The fact is nothing was

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Speaker 1: done with regard to depositors at Signature Bank different than

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Speaker 1: any other bank in America. So no, if it was

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Speaker 1: a bare office signor it was a badhoff for everybody. Secondly,

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Speaker 1: and I think for good policy reasons, you don't want

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Speaker 1: to have people's payrolls going on man and hurting innocent

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Speaker 1: people and the economy. Beyond that, what's going to happen

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Speaker 1: is that the FDIC is going to sell the bank.

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Speaker 1: I predict that they're going to get a pretty good

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Speaker 1: place for it. Confirming that there was no reason endemic

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Speaker 1: to the bank or intrinsic to the bank to shut

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Speaker 1: it down, I think they were just trying to send

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Speaker 1: an anti crypto message. But they as far as your

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Speaker 1: shareholders are concern, nobody's going to get any money other

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Speaker 1: than what's put in by a say we tax pay

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Speaker 1: of money, and anyway we'll be repaying shareholders. Congressman, I

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Speaker 1: want to ask you a couple questions about what's left

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Speaker 1: of Signature Bank as well. Let's start with their digital payments.

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Speaker 1: On one second, I'm going to hang on one second,

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Speaker 1: so the train announcement stop station. Of course we are

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Speaker 1: happy to wait for that, but of course there's going

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Speaker 1: to be a lot of more headlines as well. And

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Speaker 1: then the time we have left with you, Congressman, I

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Speaker 1: want to ask you about the digital payments platform is Signette?

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Speaker 1: Is it still online? Yes? I said, go ahead. Is

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Speaker 1: Signette still online? The digital payments platform associated with Signature Bank?

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Speaker 1: What platform Signette? I'm sorry I didn't hear the question.

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Speaker 1: No worries. Let's move on to the next one. You're

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Speaker 1: talking about the big banks and simply the regulation required

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Speaker 1: for them. Who benefits from what you're seeing on the

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Speaker 1: FDIC front and the FED front. Who benefits? Oh, who

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Speaker 1: benefits from the FDIC Our work people who have to

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Speaker 1: have have to be paid. Sure, but in terms of

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Speaker 1: the shutdown of Signature Bank, where did those funds go?

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Speaker 1: I'm sorry you actually meet different questions you asked me.

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Speaker 1: I thought about who benefits in the first place, where

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Speaker 1: the gudget depositors. Nothing is being done at Signature that

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Speaker 1: isn't being done everywhere else, and the purposes so that

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Speaker 1: people can meet pay rolls. And I'm along in favor

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Speaker 1: of that. I know that's been out of the demand.

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Speaker 1: As far as funds are concerned, other than yeah, there'll

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Speaker 1: be funds that will bail out the deposits. The FDIC

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Speaker 1: has announced, and again not differently for signature than any

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Speaker 1: other bank, that there will necessarily be an assessment on

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Speaker 1: other banks to build up the FDIC funds, as those

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Speaker 1: payments come out of not general tax revenues, but FDIC

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Speaker 1: funds that are generated by fees paid by banks. As

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Speaker 1: far as shareholders are concerned, any recompanies, any conversation to

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Speaker 1: shareholders will come from the postseeds when the FDIC sell

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Speaker 1: signature to some other entity and where those gos. That'll

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Speaker 1: be enough. Hey, Barney Crity and I were initially discussing

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Speaker 1: your legislation this morning because it turns out that m

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Speaker 1: SVB would have been under the scrutiny of regulators had

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Speaker 1: it not been for the twenty eighteen partial repeal or

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Speaker 1: exemption of banks holding less than one hundred billion dollars

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Speaker 1: in assets from scrutiny right away and then one two

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Speaker 1: hundred and fifty billion from scrutiny over the next year

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Speaker 1: and a half exemption from Dodd Frank. Do you think

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Speaker 1: that that's going to be turned back around. Are these

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Speaker 1: banks Probably not. Here's a response to that. It was

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Speaker 1: not an exemption from regulation. It was an exemption from

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Speaker 1: a particularly stricter regulation, which still applies to the larger banks.

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Speaker 1: I will tell you that signature was in that category

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Speaker 1: of banks that got not the strictest regulation, but there

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Speaker 1: was still serious regulation. And I will tell you that

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Speaker 1: during that period, since two thousand eighteen, the regulators were

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Speaker 1: very involved with signature. So no, I don't think. I

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Speaker 1: think the problem was Frankly, digital as a new element

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Speaker 1: in the system, and there was regulation or got in digital.

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Speaker 1: I think what happened, Frankie was with ft apps that

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Speaker 1: you scared people so much in digital that you got

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Speaker 1: this deposit runs that weren't anticipated. But it wasn't a

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Speaker 1: lack of regulation. The regulators had the power. They did

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Speaker 1: not have the same strictness that they had, say with

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Speaker 1: the Wells Fargo a city, But it was not a

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Speaker 1: case of removing regulation. The banks were still subject to regulation.

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Speaker 1: And I can tell you it was a Rodger signature.

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Speaker 1: It was pretty it was pretty serious regulation even after

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Speaker 1: that bill pass. The reason I ask is just that

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Speaker 1: President Biden held a press conference this morning in which

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Speaker 1: He said that he would ask Congress and banking regulators

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Speaker 1: to strengthen the rules for banks to make it less

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Speaker 1: likely that this kind of failure would happen. Do you

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Speaker 1: see that as necessary with your experience? And yes, I

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Speaker 1: don't see it as necessary. Remember, this is not a

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Speaker 1: widespread set of failures, in part becards to the rules

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Speaker 1: we did put in place so that even banks that

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Speaker 1: were getting hit with deposit bungee still solvent because they

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Speaker 1: were better capitalized thanks to the legislation, and because they

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Speaker 1: were not allowed to get involved thanks to the vocal

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Speaker 1: rule and extensively whisky underplunded delivatives. I think there were

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Speaker 1: ways of regulations should be tightened. Yes, So I don't

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Speaker 1: think it's you know, I wouldn't say necessary, but I

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Speaker 1: think it would be very beneficial to tighten them in

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Speaker 1: some ways. Congressmen at signature banks specifically, when did the

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Speaker 1: bank know that the federal government was very concerned about

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Speaker 1: it and would in fact take it over today? We

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Speaker 1: heard about it on over the weekend. What happened was

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Speaker 1: on Friday things were okay, and then on Friday afternoon

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Speaker 1: we got hit with a billions and billions of dollars

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Speaker 1: in with all the deposits. Because we are business oriented

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Speaker 1: and a lot to developers, property owners, housing people, we

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Speaker 1: have large depositors disproportionally to say the average bank, and

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Speaker 1: we began to get these deposit outflows on Friday, began

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Speaker 1: dealing with them. I believe by Sunday we had resolved

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Speaker 1: that finding what capital and the deposit out we stopped.

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Speaker 1: I believe that the regulators stepped in even after we

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Speaker 1: had managed to stabilize that because of the determination to

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Speaker 1: get people to move away from from crypto, and we

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Speaker 1: were a post a child for that decision. Barney, was

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Speaker 1: there any wrongdoing a Signature break, any fraud anyone? Any

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Speaker 1: fraud any I'm sorry I say any wrongdoing. Did anything

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Speaker 1: wrong happen at Signature Bank? In your opinion? Anything wrong?

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Speaker 1: Did you say? Yes? I know, I don't think if

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Speaker 1: there hadn't been that run on deposits, um you wouldn't

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Speaker 1: have had the publem And by the way, I just

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Speaker 1: learned this morning the FDIC has removed the Chamans out

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Speaker 1: the board and removed the CEO and advice chair, but

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Speaker 1: as otherwise kept all the people in place, including the

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Speaker 1: people who run the bank. And I think you'll see

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Speaker 1: when they when the sale comes and it's a fundamentally

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Speaker 1: sound bank. And no, they have not pointed to any

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Speaker 1: specific pattern of longdoing or incompetence. It was, as I said,

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Speaker 1: the run spurred by the combination fd X s BB,

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Speaker 1: and that's wept us. All right. Congressman, thank you so

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Speaker 1: much for your time. We really appreciate. We're gonna let

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Speaker 1: you go and let you get your train. Congressman Barney Frank,

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Speaker 1: former representative for the US House of Representatives for the

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Speaker 1: state of Massachusetts,