“What’s the matter with you? You really believe that nobody who has regulatory experience should be on a bank board?” IChotiner speaks with the former congressman Barney Frank.
, with Dodd, that said, “This bill is not a big hand out to Wall Street.” By the time Signature collapsed, it was over the old threshold but under the new one; this has led some—including Senator Elizabeth Warren—to blame the 2018 law.
It’s not about who eventually shut down the bank. I’m curious about the weakened regulations because I want to know how the bank got to the place that it needed to be shut down. Two of those I agree with: less frequent stress tests and the living will. The living will is your plan for what you do when you have to be got rid of. Their power to require liquidity and check liquidity was very strong, and not diminished in any significant way by the bill., “Had Congress and the Federal Reserve not rolled back the stricter oversight, S.V.B. and Signature would have been subject to stronger liquidity and capital requirements to withstand financial shocks.
Wait, aren’t you talking about two separate things: insuring that the bank doesn’t get to a point where it’s in trouble, versus shutting it down when it’s already in trouble?That’s exactly the point I tried to make to you. Nothing affected or diminished the ability of the regulators to say, Stop doing this. Get more liquid.
It seems to me that we don’t necessarily want to count on the banks or the regulators always being perfect, so having these requirements might be useful. But isn’t the point of stress tests to see how a bank will do under different scenarios, like the one we saw? Let me answer by quoting Sheila Bair, who was one of the toughest regulators ever. She was head of the F.D.I.C., and, when she went to the board of a Spanish bank, people said, “How can you, having been a regulator, go on a bank board?” She said, “Oh, are you saying that no one that believes in strong regulation should be on a bank board?” [
What a terrible argument. This whole approach, of course, is why we have cynicism—people making arguments like the one you’re making, which is, Well, let’s validate the cynics even when they’re wrong. There’s no logic to it. Look at my whole career. I refused to lobby, for example. I’ve made much less money than I could have since retiring because I didn’t lobby. What you seem to be saying is, Look, the cynicism is out there and we have to acknowledge it and bow down to it and not do anything.
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