Speaker 1: I want to bring it back to one of the
Speaker 1: main stories today, which of course is a Signature bank
Speaker 1: getting shut down from the fallout of Silicon Valley Brank.
Speaker 1: I want to bring back our former guests that we
Speaker 1: were just talking about, Barney Frank, the co sponsor of
Speaker 1: the Dodd Frank Act as well as a board member
Speaker 1: of Signature Bank. Barney think he was always for joining
Speaker 1: us on the radio today. Let's start with a simple question.
Speaker 1: What happened? Well, one former board member that board was
Speaker 1: dissolved by the FDIC. What happened was the fallout? How
Speaker 1: would you say? I think from Silicon Valley Bank, we
Speaker 1: got hit although we Signature were in good shape. In fact,
Speaker 1: given what the FED and the FDIC announced today, if
Speaker 1: that been announced on Friday, we would have had no
Speaker 1: problem at all. We began to lose deposits on Friday
Speaker 1: out of reaction to what happened to Silicon Valley. What
Speaker 1: you also had was it wasn't because Silicon Valley. It
Speaker 1: was a punishment for anybody involved with clipped. This is
Speaker 1: a and I think in fact what happened was we
Speaker 1: had gotten into crypto allow in a way that no
Speaker 1: way put us to risk We facilitated our customers who
Speaker 1: wanted to deal with each other crypto, but we would
Speaker 1: not it as someone that was doing crypto, as I said,
Speaker 1: not in a way that was risky to us. And
Speaker 1: there was this fleeing of banks that we're seeing to
Speaker 1: a crypto now. It was a liquidity issue, not a
Speaker 1: soaleignty issue, and we had by Sunday actually gotten back
Speaker 1: to a point where we had to liquidity what I
Speaker 1: believe the regulators wanted to send a message that crypto
Speaker 1: is toxic, frankly, and they wanted to tell everybody to
Speaker 1: get as far away from crypto as they could. When
Speaker 1: we were signaled out to be the poster child for
Speaker 1: that message, we Burney, your CEO, Joe to Paolo has
Speaker 1: actually said the same thing you just said, which is
Speaker 1: the exposure was responsibly handled. It was limited exposure. We're
Speaker 1: Silicon Valley Bank, for example, had a lot more exposure
Speaker 1: to tech start up to be So, how did crypto
Speaker 1: lead to the shutdown of signature exactly? Walk us through
Speaker 1: the details? So two ways. First of all, depositors and
Speaker 1: like other banks, uh they cater to businesses as we do.
Speaker 1: We didn't care to high tech. We catered to largely
Speaker 1: commercial lenders. Were a big housing developer, which is one
Speaker 1: of the things I liked about our role. Um what so,
Speaker 1: we had a lot of large depositors who were uninsured,
Speaker 1: and they panicked knowing that we were involved with crypto,
Speaker 1: and we explained to them, but it was crypto in
Speaker 1: a very responsible way that didn't expose us. They didn't
Speaker 1: want to hear it. They just wanted to go to
Speaker 1: JP Morgan, a Bank of America, just in case. So
Speaker 1: what the way Crypto heard us was the fact that
Speaker 1: we are involved with crypto, although as I said, in
Speaker 1: a way different than s web uh and have large
Speaker 1: uninsured depositors. They panicked and fled. What the FED did
Speaker 1: now by announcing they would back up or what I
Speaker 1: see that they'd back up on each other depositors and
Speaker 1: make a liquidity facility open at the FED. That would
Speaker 1: have kept us from having a pop. And as I said,
Speaker 1: I think the regulators, knowing that we were involved with crypto,
Speaker 1: even though in a totally different way, wanted to send
Speaker 1: a message to get people away from crypto. I think
Speaker 1: some of the regulators, Uh, we're a little nervous that
Speaker 1: they've been a little to accommodating the crypto and particularly
Speaker 1: after FTX, which which is at Parney. You're talking about
Speaker 1: let me just let me just hop in here. You're
Speaker 1: talking about mostly uninsured deposits. Roughly nine deposits for signature
Speaker 1: were uninsured. Look, you're a co sponsor of a of
Speaker 1: the DoD FRAMEK Act, which is known for regulation. Why
Speaker 1: didn't why wasn't this addressed earlier? Because we were defeated.
Speaker 1: I it's a good point. I wanted to extend deposit
Speaker 1: insurance for larger businesses. We have a payroll issue. There
Speaker 1: had been a temporary extension of that two thousand and eight,
Speaker 1: and I pushed for it in a House version of
Speaker 1: the bill. We extended it, but we ran into political opposition,
Speaker 1: first from the large banks, which frankly don't want people
Speaker 1: to have that reassurance because that makes it likely for people,
Speaker 1: as happened now, to pull out of smaller banks to
Speaker 1: go to be of A or J people of the chase.
Speaker 1: We had Republican opposition who thought, well, this is interference
Speaker 1: with the economy. We had some people on the left
Speaker 1: who said, oh, don't insure the very rich. Although extending
Speaker 1: to business accounts that guarantee protects working people because it
Speaker 1: protects payroll. So the answer is, that's a good question.
Speaker 1: I tried to get it extended, and I hope that
Speaker 1: what will happen now is people having learned the backing
Speaker 1: of the uninsured, raising the insurance level will not be
Speaker 1: a one off for this crisis, but that former colleagues
Speaker 1: will take steps to extend it, particularly for payroll accounts. Well,
Speaker 1: should there be any limit? I mean shouldn't we? The
Speaker 1: FED has essentially come out now with its statement and
Speaker 1: UM assured depositors across the country that there's no more limit,
Speaker 1: that every every is that okay necessary, that's a necessary
Speaker 1: temporary America until they work out. And what I think
Speaker 1: you need to do is to raise the limit. First
Speaker 1: of all, a business account. We're not talking about rich
Speaker 1: individual's pocket money. We're talking about because what do you
Speaker 1: do if you're a business and you have to have
Speaker 1: me to payroll that's in the in the hundreds of
Speaker 1: thousands of millions. I would say, this is all the
Speaker 1: top of my head. I'm not there to do the
Speaker 1: research now that you would want to say that an
Speaker 1: amount that would get you through at least one payroll
Speaker 1: period and maybe two so you could then make other arrangements.
Speaker 1: But why why should there be any limit? Nan? Why
Speaker 1: should Why does America have the thousands of banks? So
Speaker 1: why not just have you know, like five or ten
Speaker 1: big institutions so that we don't have to have these
Speaker 1: problems all the time. Here's the reason. If you're talking
Speaker 1: about a personal account of a million dollars, five banks
Speaker 1: would do it. What if you're a business that has
Speaker 1: a payroll in the tens of millions, how many banks
Speaker 1: do you have to do? It would be very inefficient
Speaker 1: to have them have to have fifty banks. And why
Speaker 1: do it? It's to protect not the banks, but to
Speaker 1: protect working people. That's why there was a lot of
Speaker 1: pressure from I get that. I just don't understand why
Speaker 1: there should be a limit any I guess you could
Speaker 1: vilify rich people. Oh he has a million dollars in
Speaker 1: that bank account, but who cares? Like, why why should
Speaker 1: there be any limit? Why not ensure all deposits because
Speaker 1: there is a potential cost to the federal government, There
Speaker 1: is a potential moral that there's some too safety to
Speaker 1: having people check with that bank. You don't want banks
Speaker 1: that are irresponsible to have a restricted limit. I would
Speaker 1: make it pretty high. And I think the need again
Speaker 1: is and I'm not vilifying rich people. What I'm saying
Speaker 1: is that no policy need to protect millions of dollars
Speaker 1: in individual pocketation. There is a policy need to protect
Speaker 1: an institution that has payroll and not make them go
Speaker 1: to ten or twenty or forty banks, and to let
Speaker 1: them put the bank to have a bank which is
Speaker 1: sufficient to be stepping through a month's payroll. And that's
Speaker 1: the specifics I would work for. So what we tried
Speaker 1: to do in the House in two thousand and eight,
Speaker 1: we didn't have the votes to do it in the Senate.
Speaker 1: But I hope now people have learned frankly that we
Speaker 1: were writing and they will do that. Barney and New
Speaker 1: York Governor Kathy Hokell said the takeover of Signature Bank
Speaker 1: by federal regulators on Sunday, quote was not a bailout.
Speaker 1: Do you agree who said it wasn't? New York Governor
Speaker 1: Kathy Hukel, Yeah, Well, I don't see how it's a bailout.
Speaker 1: What's going to happen is, in fact, I don't think
Speaker 1: bailed out the depositor Earth. Yeah, but not just a
Speaker 1: Signature bank. Every depositive was Yeah, I'm sorry, Can I
Speaker 1: finish a sentence? Please? Please? The fact is nothing was
Speaker 1: done with regard to depositors at Signature Bank different than
Speaker 1: any other bank in America. So no, if it was
Speaker 1: a bare office signor it was a badhoff for everybody. Secondly,
Speaker 1: and I think for good policy reasons, you don't want
Speaker 1: to have people's payrolls going on man and hurting innocent
Speaker 1: people and the economy. Beyond that, what's going to happen
Speaker 1: is that the FDIC is going to sell the bank.
Speaker 1: I predict that they're going to get a pretty good
Speaker 1: place for it. Confirming that there was no reason endemic
Speaker 1: to the bank or intrinsic to the bank to shut
Speaker 1: it down, I think they were just trying to send
Speaker 1: an anti crypto message. But they as far as your
Speaker 1: shareholders are concern, nobody's going to get any money other
Speaker 1: than what's put in by a say we tax pay
Speaker 1: of money, and anyway we'll be repaying shareholders. Congressman, I
Speaker 1: want to ask you a couple questions about what's left
Speaker 1: of Signature Bank as well. Let's start with their digital payments.
Speaker 1: On one second, I'm going to hang on one second,
Speaker 1: so the train announcement stop station. Of course we are
Speaker 1: happy to wait for that, but of course there's going
Speaker 1: to be a lot of more headlines as well. And
Speaker 1: then the time we have left with you, Congressman, I
Speaker 1: want to ask you about the digital payments platform is Signette?
Speaker 1: Is it still online? Yes? I said, go ahead. Is
Speaker 1: Signette still online? The digital payments platform associated with Signature Bank?
Speaker 1: What platform Signette? I'm sorry I didn't hear the question.
Speaker 1: No worries. Let's move on to the next one. You're
Speaker 1: talking about the big banks and simply the regulation required
Speaker 1: for them. Who benefits from what you're seeing on the
Speaker 1: FDIC front and the FED front. Who benefits? Oh, who
Speaker 1: benefits from the FDIC Our work people who have to
Speaker 1: have have to be paid. Sure, but in terms of
Speaker 1: the shutdown of Signature Bank, where did those funds go?
Speaker 1: I'm sorry you actually meet different questions you asked me.
Speaker 1: I thought about who benefits in the first place, where
Speaker 1: the gudget depositors. Nothing is being done at Signature that
Speaker 1: isn't being done everywhere else, and the purposes so that
Speaker 1: people can meet pay rolls. And I'm along in favor
Speaker 1: of that. I know that's been out of the demand.
Speaker 1: As far as funds are concerned, other than yeah, there'll
Speaker 1: be funds that will bail out the deposits. The FDIC
Speaker 1: has announced, and again not differently for signature than any
Speaker 1: other bank, that there will necessarily be an assessment on
Speaker 1: other banks to build up the FDIC funds, as those
Speaker 1: payments come out of not general tax revenues, but FDIC
Speaker 1: funds that are generated by fees paid by banks. As
Speaker 1: far as shareholders are concerned, any recompanies, any conversation to
Speaker 1: shareholders will come from the postseeds when the FDIC sell
Speaker 1: signature to some other entity and where those gos. That'll
Speaker 1: be enough. Hey, Barney Crity and I were initially discussing
Speaker 1: your legislation this morning because it turns out that m
Speaker 1: SVB would have been under the scrutiny of regulators had
Speaker 1: it not been for the twenty eighteen partial repeal or
Speaker 1: exemption of banks holding less than one hundred billion dollars
Speaker 1: in assets from scrutiny right away and then one two
Speaker 1: hundred and fifty billion from scrutiny over the next year
Speaker 1: and a half exemption from Dodd Frank. Do you think
Speaker 1: that that's going to be turned back around. Are these
Speaker 1: banks Probably not. Here's a response to that. It was
Speaker 1: not an exemption from regulation. It was an exemption from
Speaker 1: a particularly stricter regulation, which still applies to the larger banks.
Speaker 1: I will tell you that signature was in that category
Speaker 1: of banks that got not the strictest regulation, but there
Speaker 1: was still serious regulation. And I will tell you that
Speaker 1: during that period, since two thousand eighteen, the regulators were
Speaker 1: very involved with signature. So no, I don't think. I
Speaker 1: think the problem was Frankly, digital as a new element
Speaker 1: in the system, and there was regulation or got in digital.
Speaker 1: I think what happened, Frankie was with ft apps that
Speaker 1: you scared people so much in digital that you got
Speaker 1: this deposit runs that weren't anticipated. But it wasn't a
Speaker 1: lack of regulation. The regulators had the power. They did
Speaker 1: not have the same strictness that they had, say with
Speaker 1: the Wells Fargo a city, But it was not a
Speaker 1: case of removing regulation. The banks were still subject to regulation.
Speaker 1: And I can tell you it was a Rodger signature.
Speaker 1: It was pretty it was pretty serious regulation even after
Speaker 1: that bill pass. The reason I ask is just that
Speaker 1: President Biden held a press conference this morning in which
Speaker 1: He said that he would ask Congress and banking regulators
Speaker 1: to strengthen the rules for banks to make it less
Speaker 1: likely that this kind of failure would happen. Do you
Speaker 1: see that as necessary with your experience? And yes, I
Speaker 1: don't see it as necessary. Remember, this is not a
Speaker 1: widespread set of failures, in part becards to the rules
Speaker 1: we did put in place so that even banks that
Speaker 1: were getting hit with deposit bungee still solvent because they
Speaker 1: were better capitalized thanks to the legislation, and because they
Speaker 1: were not allowed to get involved thanks to the vocal
Speaker 1: rule and extensively whisky underplunded delivatives. I think there were
Speaker 1: ways of regulations should be tightened. Yes, So I don't
Speaker 1: think it's you know, I wouldn't say necessary, but I
Speaker 1: think it would be very beneficial to tighten them in
Speaker 1: some ways. Congressmen at signature banks specifically, when did the
Speaker 1: bank know that the federal government was very concerned about
Speaker 1: it and would in fact take it over today? We
Speaker 1: heard about it on over the weekend. What happened was
Speaker 1: on Friday things were okay, and then on Friday afternoon
Speaker 1: we got hit with a billions and billions of dollars
Speaker 1: in with all the deposits. Because we are business oriented
Speaker 1: and a lot to developers, property owners, housing people, we
Speaker 1: have large depositors disproportionally to say the average bank, and
Speaker 1: we began to get these deposit outflows on Friday, began
Speaker 1: dealing with them. I believe by Sunday we had resolved
Speaker 1: that finding what capital and the deposit out we stopped.
Speaker 1: I believe that the regulators stepped in even after we
Speaker 1: had managed to stabilize that because of the determination to
Speaker 1: get people to move away from from crypto, and we
Speaker 1: were a post a child for that decision. Barney, was
Speaker 1: there any wrongdoing a Signature break, any fraud anyone? Any
Speaker 1: fraud any I'm sorry I say any wrongdoing. Did anything
Speaker 1: wrong happen at Signature Bank? In your opinion? Anything wrong?
Speaker 1: Did you say? Yes? I know, I don't think if
Speaker 1: there hadn't been that run on deposits, um you wouldn't
Speaker 1: have had the publem And by the way, I just
Speaker 1: learned this morning the FDIC has removed the Chamans out
Speaker 1: the board and removed the CEO and advice chair, but
Speaker 1: as otherwise kept all the people in place, including the
Speaker 1: people who run the bank. And I think you'll see
Speaker 1: when they when the sale comes and it's a fundamentally
Speaker 1: sound bank. And no, they have not pointed to any
Speaker 1: specific pattern of longdoing or incompetence. It was, as I said,
Speaker 1: the run spurred by the combination fd X s BB,
Speaker 1: and that's wept us. All right. Congressman, thank you so
Speaker 1: much for your time. We really appreciate. We're gonna let
Speaker 1: you go and let you get your train. Congressman Barney Frank,
Speaker 1: former representative for the US House of Representatives for the
Speaker 1: state of Massachusetts,