Barney Frank, a former member of the US House of Representatives and a member of Signature Bank’s board of directors, has pointed the finger at certain members of the public following the bank’s failure.
In an appearance before the New York State Senate on May 30, Frank said that had “no mea culpa” in relation to Signature’s bankruptcy, stating that the bank’s cryptocurrency operations were “safe and sound” before regulators intervened. The former US lawmaker suggested that the bank acted as a cryptocurrency facilitator rather than directly investing in digital assets and that some citizens failed to make this distinction.
“It wasn’t that people who were in the digital business panicked; it was other people who didn’t understand the business but got scared”Frank said of Signature’s collapse. “Unfortunately, many uninsured depositors were hostile to cryptocurrency and incurred the wrong guilt by association of us and Silicon Valley.”
The New York Department of Financial Services (DFS) took control of Signature Bank in March despite many, including Frank, arguing that the firm was not insolvent at the time. The bank’s collapse followed the failure of Silicon Valley Bank and the closure of Silvergate Bank, both related to cryptocurrency companies.
Frank added:
“The day we closed, I think prematurely, our assets were fine, our capital was fine, our loan portfolio was fine. The only issue we had was inaccurate withdrawals due to fear of cryptocurrency.”
At 12pm, the #NYSenate will hold a public hearing to answer questions about bank failures in New York State. Why did Signature Bank fail? What can be done to prevent future bank failures? Watch live. pic.twitter.com/jSqtBF4HFP
— New York State Senate (@NYSenate) May 30, 2023
At 12:00 pm, the NYSenate will hold a public hearing to answer questions about bank failures in New York State. Why did Signature Bank fail? What can be done to prevent future bank failures?
The New York Senate hearing was one of the first at the state level to explore the bankruptcy of the cryptocurrency bank. Lawmakers at the federal level met in March to discuss the events that led to the collapse of Silicon Valley Bank and Signature Bank. Digital assets could emerge as a political issue ahead of the 2024 primaries and elections across the United States.
Financial regulators in New York are often at the forefront of the policies that define the crypto industry due to the capital available and companies establishing themselves in the state.. Former FTX CEO Sam Bankman-Fried will face criminal trial of him in New York beginning in October, and the DFS has been behind investigations and enforcement actions of various crypto companies since the implementation of its BitLicense regime. in 2015.
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