New York-based Signature Bank, which was put into receivership last weekend by New York State regulators, was deep into crypto-currency speculation and was also getting involved in the global derivatives bubble. Signature had become a walking time-bomb.
It turns out that one of the members of Signature’s board of directors was none other than former Massachusetts Congressman Barney Frank, the co-author of the 2010 Dodd-Frank legislation which attempted to cover for the massive 2008 bailout of the bankrupt trans-Atlantic financial system with tiny, after-the-fact regulations. Frank joined the Signature board in 2015, and was therefore part of the decisions to dive deep into speculation that led to its demise.
Frank told the Financial Times of London on March 15 that he joined the board because “I need to make some money.” Or to provide the full, unapologetic quote: “I worked as a member of Congress for a certain objective. And then having retired, not having a pension by my choice, not wanting to be a lobbyist for reasons personal, I need to make some money. I do it in part by writing. But I also do it by joining boards. Logically, I’m asked to join boards on subjects with which I was identified.”
The FT estimated that Frank got roughly $2 million for his work at Signature. The Wall Street Journal stated it was $2.4 million, in a March 13 article headlined “Barney Frank Pushed To Ease Financial Regulations after Joining Signature Bank Board.” In that article, which insightfully described Frank as “working the other side of the street” after leaving Congress, the Journal noted that Frank lobbied heavily for his own Dodd-Frank bill to be relaxed so that the trigger level requiring regular oversight of banks be raised from $50 billion.
The article explained: “Part of what then-President Donald Trump signed into law in 2018 raised the asset threshold to $250 billion, meaning Signature and other regional banks no longer needed to comply with the extra regulation set out in Dodd-Frank. After the bill was signed, New York-based Signature more than doubled in size to $110 billion in assets, and $88.6 billion in deposits as of the end of 2022.”
To be fair, Barney Frank is by no means the only example of this “revolving door” phenomenon. In the case of Silicon Valley Bank, which also went belly-up last weekend, Mary Miller, a former Treasury official under President Barack Obama, was on SVB’s board since 2015. And the bank’s president and chief executive officer, Greg Becker, was on the board of directors at the Federal Reserve Bank of San Francisco until Friday March 10, and was one of its three finance executives.
