Barney Frank, signature and crypto
Al Drago/Bloomberg via Getty Images
New York Magazine features a spirited interview with former Representative Barney Frank, the former chairman of the House Financial Services Committee who is also known, of course, for lending his name to the banking law passed in the wake of the 2008 financial crisis.
In the interview, conducted by Fortune Crypto alum Jen Wieczner, Frank makes the startling claim that regulators shut down Signature Bank pour stimulate les autres– The explanation for the expression comes from the French to describe the English navy’s habit of shooting men to set an example for other potential troublemakers in the 18th century.
According to Frank, New York regulators effectively fired Signature on Sunday even though it was not insolvent, adding that the bank could have opened its doors on Monday if it had been allowed to take advantage of the extension of FDIC insurance announced this weekend. The execution, he claims, came about because of Signature’s decision to bank crypto customers—an industry, he notes, that wasn’t even the bank’s primary business.
Meanwhile, Bloomberg published a long and mostly sympathetic requiem for Signature, portraying it as a scrappy outsider bank run by “outer boroughs” who didn’t care about the Wall Street elite’s fixation with the Ivy League and homes in the Hamptons. On this account, Signature would have been fine if it had stuck to its staple — banking in New York City — and not poked its nose into crypto. The Bloomberg story, perhaps reflecting a hometown bias, implicitly paints Signature as more sympathetic to its failed counterparts in California, SVB and Silvergate.
All of this shows how the banking crisis has become, in part, a morality play with crypto—a shadowy and invasive alien species to New York’s financial world—a central villain. That’s certainly the position of Frank, who suggests the regulators’ behavior has been arbitrary and unfair – although we might want to take his position with a grain of salt given he sat on the board of Signature, and is likely keen to protect his legacy as custodian of the financial system. Meanwhile, New York officials have said that Signature’s shutdown had nothing to do with crypto. For now, it is unclear whether crypto is a culprit in the ongoing bankruptcy or just a scapegoat. We’ll likely find out more in the coming weeks.
Jeff John Roberts
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@jeffjohnroberts
DECENTRALIZED NEWS
The Ministry of Justice charged Chinese businessman Guo Wengui, who has ties to Steve Bannon, with defrauding followers of $1 billion using a crypto scam and other scams. (Reuters)
American and European law enforcement shut down and seized $48 million from ChipMixer, a notorious crypto drum popular with ransomware crooks. (The Verge)
SEC Chairman Gary Gensler reiterated its recent position that coins with wagering features, such as Ethereum, are securities. (Bloomberg)
Anchorage Digital, the institution-focused crypto custody service, laid off 20% of its workforce. (Coindesk)
Figure CEO Mike Cagney, who co-founded SoFi, says a blockchain-based rival to the NYSE and NASDAQ will emerge in the next few years. (Fortune)
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