New York magazine has a lively interview with former Rep. Barney Frank, the former chair of the House Financial Services Committee who is also famous, 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 encourager les autres—explaining the expression comes from the French to describe the English Navy’s habit of shooting men to set an example for other would-be troublemakers in the 18th century.
According to Frank, New York regulators effectively shot Signature on Sunday even though it was not insolvent, adding the bank could have opened its doors on Monday if it had been allowed to benefit from the expansion of FDIC insurance announced this weekend. The execution, he claims, came about because of Signature’s decision to bank crypto clients—a line of business, he notes, that was not even the bank’s primary activity.
Meanwhile, Bloomberg News published a long and mostly sympathetic requiem for Signature, portraying it as a scrappy outsider bank run by “outer-borough” types who didn’t care about the Wall Street elite’s fixation on the Ivy League and homes in the Hamptons. In this account, Signature would have been fine had it stuck to its knitting—banking New York City merchants—and not stuck its nose into crypto. The Bloomberg News story, perhaps reflecting a hometown bias, implicitly paints Signature as more worthy of sympathy than 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 shady and invasive foreign species to the world of New York finance—a central villain. That certainly is the position of Frank, who suggests the regulators’ behavior has been arbitrary and unfair—though we may want to take his stance with a grain of salt given he sat on the board of Signature, and is likely anxious to protect his legacy as a guardian of the financial system. Meanwhile, New York officials have said shutting down Signature had nothing to do with crypto. For now, it’s unclear if crypto is a culprit in the ongoing bank mess or simply a scapegoat. We’re likely to find out more in the coming weeks.
Jeff John Roberts
The Justice Department charged Chinese businessman Guo Wengui, who has ties to Steve Bannon, with defrauding followers of $1 billion by means of a crypto scam and other swindles. (Reuters)
U.S. and European law enforcement shut down and seized $48 million from ChipMixer, a notorious crypto tumbler popular with ransomware crooks. (The Verge)
SEC Chair Gary Gensler repeated his recent position that coins with staking 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 cofounded SoFi, says a blockchain-based rival to NYSE and Nasdaq will emerge in the next few years. (Fortune)
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