Frank tells Herald you won’t see a crash …
... Others not so confident
A defiant Barney Frank told the Herald anyone fearing a repeat of past Wall Street crashes should hold onto their stocks and bonds.
“We will not see a crash,” the former Bay State congressman said Tuesday, adding you can credit his eponymous banking bill.
But when pushed about the Dodd-Frank act he reportedly tried to soften as a board member of now-collapsed Signature Bank, he blamed the press. When asked about crossing over to the other side to be a financial player, he said he’s “too old for that. I want to take it easy. I need to go now,” he added.
He returned the Herald’s call but remained as elusive as he was prone to be when he was in Congress.
Frank — who has earned more than $2.4 million in compensation from Signature Bank since 2015, according to the Wall Street Journal — said Signature Bank will sell after the FDIC puts it up for bid.
Signature Bank was seized by the government Sunday after regulators lost faith in management and depositors fled, according to Bloomberg News.
Frank has blamed the slumping cryptocurrency sector for the New York-based bank’s closing by the feds. It also came soon after Silicon Valley Bank, with branches in Massachusetts, was also seized by the FDIC.
The banking failures, however, have many fretting about the stability of regional banks.
Steve Cortes, a former Trump economic adviser, said Frank could be dead wrong.
“The risk could be a lot bigger than just SVB,” he said. “None of us know, but the signs are not encouraging for regional banks.”
He said the real culprit is the “explosion in inflation” and the Biden administration’s policies and what it has done to bonds.
U.S. consumer price increases eased slightly from January to February but still pointed to an elevated inflation rate, the Associated Press reported Tuesday.
Prices increased 0.4% last month, just below January’s 0.5% rise. Yet excluding volatile food and energy costs, so-called core prices rose 0.5% in February, slightly above January’s 0.4% gain, AP added.
Creditors of SVB’s parent company have formed a group in anticipation of a potential bankruptcy filing, the Wall Street Journal reported.
Frank’s legislation — the Dodd-Frank act boosting government oversight of banks following the 2008 financial crisis — is also being blamed for softening bank regulations.
Pushed by the Trump administration with bipartisan support in Congress, the law exempted banks with $100 billion to $250 billion in assets — Silicon Valley’s size — from requirements that included regular examinations of how they would fare in tough economic times, known as “stress tests.”
Herald wire services contributed.