The collapses of Silicon Valley Bank and Signature Bank are "not even close" to what happened in 2008 and in other situations in years past, former Rep. Barney Frank, one of the co-sponsors of the landmark Dodd-Frank banking bill, said on Newsmax Wednesday.
"I am not worried about getting out of control," the Massachusetts Democrat said on Newsmax's "Wake Up America." "We've strengthened the systems. Banks are better capitalized. You don't have a lot of these housing loans that shouldn't have been made [through] bad mortgage derivatives, which are underfunded."
The law, he added, wasn't done because "we never thought we would prevent any bad event. We thought we could contain diminishing contagion, and that's being done right now."
The government has announced it will back all of the deposits for the two banks to allow for liquidity, he further pointed out.
"What we said was the Fed should be willing to lend their money as collateral," if banks temporarily lose capital but are not insolvent, said Frank.
He added when Dodd-Frank was being discussed before its passage in 2010, he wanted to expand the FDIC's deposit guarantee to at least $1 million for businesses to add further protection while keeping the $250,000 for individual depositors.
"If you've got a million bucks personally, you can put it in a couple of banks," Frank said. "Businesses need tens of millions to pay your payroll. You should be able to put that in a secure [account]."
Meanwhile, Frank, who is on the board for Signature Bank, told Newsmax that there was no indication the bank was about to fail before it did.
He said he attended the board of directors meeting in February, where state regulators did not give the "slightest indication that there was a crisis coming."
"We began to get hit [last] Friday afternoon with the serious outflow of deposits, not for any objective reason, but because people were worried after Silicon Valley," said Frank.
Meanwhile, banking now is far different than it was when Dodd-Frank was passed 13 years ago, including with the immediate nature of online transactions, he agreed, because now, "people can make withdrawals in the blink of an eye" on their phones and computers.
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Sandy Fitzgerald ✉
Sandy Fitzgerald has more than three decades in journalism and serves as a general assignment writer for Newsmax covering news, media, and politics.
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