(Bloomberg) -- It was a seemingly unthinkable scene: Barney Frank, co-author of the Dodd-Frank Act, the radical overhaul of the banking system after the 2008 global financial crisis, was having his very own Dick Fuld moment.
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There was none of the Fuld-style shouting and ranting, but Frank, just like the former Lehman Brothers top executive had famously done, was taking to the phones to lament how authorities had unnecessarily shuttered the bank he helped oversee. Frank, to the surprise of some, landed on the board of Signature Bank, a New York-based lender that boomed during the pandemic. It was seized by regulators Sunday, making it the third US bank to collapse in just five days.
“I think that if we’d been allowed to open tomorrow, that we could’ve continued — we have a solid loan book, we’re the biggest lender in New York City under the low-income housing tax credit,” Frank said in an interview late Sunday night. “I think the bank could’ve been a going concern.”
The fact that an institution Frank himself oversaw blew up may trigger schadenfreude among his enemies on Wall Street and in Republican Party circles. More importantly, it underscores how the crisis spreading rapidly through the country’s regional banking sector sneaked up on even the most seasoned financial experts.
Though Signature Bank was put into receivership Sunday by regulators straining to contain the fallout from the collapse of SVB Financial Group’s Silicon Valley Bank, Frank stood by the reforms he shepherded through Congress.
“The vindication of the bill is that nobody is talking about anything like 2008,” Frank said. “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.”
Another potential surprise for anyone not paying close attention to Frank’s career since leaving politics: He’s not blaming changes to banking rules signed into law by President Donald Trump. Those new laws rolled back some of the strictest post-crisis regulations for midsize banks, including Signature, while cutting their compliance costs.
“I don’t think that had any effect,” Frank said. “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.”
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