Barney Frank Blames Crypto, Elizabeth Warren Blames Trump
Here’s my Hoot of the Day: Barney Frank Blames Crypto, Elizabeth Warren Blames Trump
Former Rep. Barney Frank and Sen. Elizabeth Warren — two key architects of the post-2008 system of Wall Street regulation — are at odds over what’s dragging down banks once again.
Frank, who chaired the House Financial Services Committee in the wake of the global financial crisis and wrote sweeping new rules enacted in 2010, most recently served on the board of New York’s Signature Bank, which regulators shut down Sunday.
From his front-row seat, he blames Signature’s failure on a panic that began with last year’s cryptocurrency collapse — his bank was one of few that served the industry — compounded by a run triggered by the failure of tech-focused Silicon Valley Bank late last week. Frank disputes that a bipartisan regulatory rollback signed into law by former President Donald Trump in 2018 had anything to do with it, even if it was driven by a desire to ease regulation of mid-size and regional banks like his own.
But Warren, a fellow Massachusetts Democrat who designed landmark consumer safeguards that ended up in Frank’s 2010 banking law, is placing the blame firmly on the Trump-era changes that relaxed oversight of some banks and says Signature is a prime example of the fallout.
Cluelessness From Barney
No, you clueless [#@&%$!] fill in your own words, crypto had nothing to do with this. But if it did, then why on the board of Signature Bank didn’t you act stop it or at least speak out?
The irony in blaming crypto is that Barney Frank just pointed a finger at himself!
Cluelessness From Warren
Warren blames Trump, which I rebut below.
Neither point to the real problems and they are many, starting with the Fed, FDIC, and politicians.
Fed-Induced Mania
The Fed started a speculation mania. Fed rules state long-term treasuries are risk-free.
Nothing Trump did had anything to do with either of those facts.
Neither the San Francisco Fed, which oversees Silicon Valley Bank, nor the FDIC sounded any alarms over the obvious risky behaviors at either bank.
Political Blame
Warren herself is partially to blame and so is President Biden for seeking the biggest inflationary free-money handouts in history.
If you want to blame Trump for something, two of the three free-money handouts were sponsored by him although the second came in Biden’s term.
But the biggest and most reckless free-money handout was 100% sponsored by Democrats including President Biden and Elizabeth Warren.
Back to the Fed
Ultimately, it is the Fed’s responsibility to understand how fiscal policy plays into inflation.
The Fed not only sponsored the biggest asset bubble in history, it failed to understand how free money, student debt cancellations, and zero percent interest rates might cause inflation.
If the Fed cannot see the obvious, why is there a Fed?
Musical Tribute
Blame Game, Let’s Do Barney
Barney! Barney, Barney Bo-Barney Bo-na-na fanna Fo-Farney Fee-fi-mo-Marney Barney!
Warren! Warren, Warren Bo-Bernen Bo-na-na fanna Fo-Fernen Fee-fi-mo-Morren Warren!
Never Again
“Never again should large companies with billions in unsecured deposits expect, or receive, free support from the government,” said Elizabeth Warren in a New York Times op-ed bashing Trump while never looking at her own culpability.
Of course, all these people saying ” Never again”, always want one more bailout (just this once).
Yellen Said “No Bailout”
Treasury Secretary Janet Yellen Said “No Bailout” on Sunday but facts show It’s a Huge Bailout of the Banking System
The Fed bailed out depositors which is how they are playing this up.
But the Fed also guaranteed no losses on long-term assets of banks that engaged in leveraged speculation. Banks will not have to mark unrealized losses to market.
Banks held about $600 billion in unrealized losses.
That’s a bank bailout folks, period, even if the bank executives are forced out.
Getting to the Point
“This is not a bailout “
So lending one dollar against 80 cents of collateral is the normal course of business?
Stop pissing down my back and telling me it’s raining!!!
— Michael Lebowitz, CFA (@michaellebowitz) March 13, 2023
Trying to Be Polite
I am trying to be my best self on twitter & not mock people.
Sometimes I can’t help myself. This is important information on the competence of a senior Treasury official: https://t.co/eUEwHruLsy
— Gary Haubold (@GaryHaubold) March 13, 2023
Danielle DiMartino Booth Chimes In
“‘Is the risk of industry-wide credit deterioration greater or less than it was in the middle of last week?’ said Martin Fridson, CIO of Lehmann Livian Fridson Advisors LLC. ‘It’s definitely got to be greater.’”
Will credit risk come out of its dormancy @JackFarley96 ? pic.twitter.com/XiSJvIRgqm
— Danielle DiMartino Booth (@DiMartinoBooth) March 13, 2023
Banks Suffer another Big Decline Despite the Fed’s Bailout Magic
Earlier today I noted Banks Suffer another Big Decline Despite the Fed’s Bailout Magic
Here’s the question I asked, and it’s worth repeating:
What’s the Message?
Could it be that the banking sector is so feeble and has so much risk of contagion that the Fed felt forced to do a bailout?
If that’s not the message, then someone please tell me what it is.
If bond risk is rising, expect stocks to fall. And by the way, I expect this is just round one of the Blame Game for this set of Fed actions.
This post originated at MishTalk.Com.
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Mr Becker was only one in a legion of executives from smaller and mid-sized banks, collectively known as regional lenders, who made a similar case that ultimately succeeded.
“One size fits all — those rules just don’t work,” Mr Trump said at the White House in 2018, as he celebrated the removal of “crippling” rules.
“They would have been pushed to buy short-term instruments and we wouldn’t be having this conversation.”
Bloomberg contributed to this report
failed to understand how free money, student debt cancellations, and
zero percent interest rates might cause inflation.”
a stress test failure to the public you guarantee a run on that bank
and if you keep it quiet you will only anger anyone caught when it
finally does fail or when the results inevitably leak out.”
To borrow Money on the credit of the United States;
To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes;
To establish an uniform Rule of Naturalization, and uniform Laws on the subject of Bankruptcies throughout the United States;
To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures;”
When credit creation slows after an asset bubble driven by credit for asset transactions, the ensuing fall in asset prices, capital losses and non-performing loans can easily trigger a Banking crisis.