Dodd-Frank co-author sat on Signature Bank’s board — and fought to ease regulations from his own bill

Former Rep. Barney Frank (D-MA), who co-sponsored the Dodd-Frank Act with former Sen. Chris Dodd (D-CT), pushed for an easing of regulations on smaller banks as a board member of Signature Bank, the Wall Street Journal reports. Regulators shut down Signature Bank on Sunday following the government takeover of Silicon Valley Bank last week.

The Dodd-Frank act, signed by former President Barack Obama in 2010, created the Consumer Financial Protection Bureau (CFPB) and “set tougher regulatory safeguards on banks with more than $50 billion in assets,” the Journal reports.

In 2018, former President Donald Trump signed into law a bill that rolled back some of those regulations.

Per the Journal:

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 leaving office and joining Signature’s board, Mr. Frank publicly advocated for easing those new standards for smaller banks,” the Journal reports.

Signature Bank and Silicon Valley Bank were both “interwoven into fabric of the technology industry,” the Washington Post reports, and were “deeply embedded” in the cryptocurrency industry.

Frank sits on the board of Signature Bank, earning “more than $2.4 million in compensation” from the financial institution since 2015, the Journal reports. As Semafor reporter Joseph Zeballos-Roig notes, Frank “endorsed changes to his own Dodd-Frank law in 2018 that freed mid-sized banks from undergoing stress tests.”

Observers, according to the Journal, say “the stricter requirements, had they been in place, might have prompted bank executives and their overseers to move more quickly to place the lender on sounder financial footing.”

Frank disagrees. Speaking on Signature Bank’s collapse, Frank insisted, “Nobody has shown me any evidence of systemic or other kinds of fraud that would have been prevented” had the rollback not occurred in 2018.

Back in 2018, Frank denied his role at Signature influenced his about-face on banking regulations.

“My being on the board has not changed my position on this at all,” Frank told the Post. “These efforts began well before I began at Signature Bank.”

Still, he argued for a higher limit to the asset threshold, suggesting in a 2018 op-ed that a $100 billion threshold “could in fact provide a more competitive environment, lessening, even marginally, the foundation of the mega banks.”

Despite Frank’s issue with the asset threshold passed under his namesake bill, the former congressman insists the Dodd-Frank Act limited damage to the rest of the financial system — even as the bank he serves was being seized by regulators.

"The vindication of the bill is that nobody is talking about anything like 2008,” he told Bloomberg. “If the bill hadn’t been passed, we’d be seeing a lot more damage these days. We got a lot of the vulnerability out of the system.”