[music]

Arun Venogopal: It's The Brian Lehrer Show on WNYC. I'm Arun Venogopal from the WNYC newsroom's Race and Justice unit filling in for Brian who is off today.

On today's show, a young activist who was tired of all the doom and gloom of climate-related news shares how she shifted her focus to actual solutions. Plus, why is it so expensive, more than almost anywhere else in the world, to build new subways here in New York City? We'll dig into a new NYU study that found some surprising reasons.

Did you know 311 just turned 20? We'll look back at two decades of the information and helpline which has fielded millions of calls. Most of the calls are serious or routine, but there have been at least a few that are also pretty funny. WNYC reporter Gwynne Hogan will be here later in the show with the 411 on 311.

First, we turn to the collapse of Silicon Valley Bank and Signature Bank as you've been hearing in the news. On Friday, Silicon Valley Bank, a commercial bank headquartered in California, collapsed and became the second largest bank failure in the US. Then on Sunday, regulators took control of another bank, Signature Bank, here in New York after a surge of panicked withdrawals in an effort to ease the fears of depositors. That became the third largest bank failure in the country. Yesterday, President Biden spoke at the White House to assure the public that things were under control.

President Biden: Americans can have confidence that the banking system is safe. Your deposits will be there when you need them. Small businesses across the country that deposit accounts at these banks can breathe easier knowing they'll be able to pay their workers and pay their bills.

Arun Venogopal: Even as the government attempts to calm depositors from pulling their money out of smaller banks, the market felt the impact. Stocks of small banks like First Republic, Zions Bank Corp and Western Alliance tumbled in response, as did some bigger banks like Charles Schwab. Joining me now to break down the latest news and how the financial stability crisis over the weekend just might impact inflation is Nick Timiraos, chief economics correspondent for The Wall Street Journal and also the author of the book Trillion Dollar Triage which came out last year. Welcome back to WNYC, Nick.

Nick Timiraos: Arun, thanks for having me.

Arun Venogopal: Listeners, we can take your comments as well or maybe your questions for our guest, Nick Timiraos, who again is the chief economics correspondent for The Wall Street Journal. Tweet us @BrianLehrer or just give us a call at 212-433-WNYC. That's 433-9692. Nick, before we get into the bigger impact, let's start with a little refresher. What do we know about why SVB failed?

Nick Timiraos: Well, the simplest answer is that SVB faced a bank run last week. Even though a lot of the things about SVB are new, technology, venture capital, this was a classic bank run, something you would have seen 100 years ago. You think of the movie It's a Wonderful Life where everybody wants to get their money out of the bank. That's what happened here. It just happened very fast.

Arun Venogopal: Does it happen in a newer way like people just going on to their banking apps and withdrawing all their money or transferring it?

Nick Timiraos: That's exactly right. You could say maybe this was the first 21st century-style bank run in the sense that there were a number of things about Silicon Valley Bank that were unusual. One is that their customer base was not diversified. It was concentrated in venture capital, and the companies that are funded by venture capital are often startups. These were technology companies.

When word went out on Thursday that this bank was having some problems, venture capital companies, some of them started telling all of the firms that they sponsor, that they've loaned money to. They said, "Get your money out of Silicon Valley Bank." People went and just pulled their cash. $42 billion of deposits went out the door on Thursday, which is just a staggering sum. This was a quite unusual situation in that we're not talking about lots of mom-and-pop account holders taking their money out. These were large companies, large amounts of money.

The concern really was that the government insures deposits in the bank. When you go to your bank and you see that FDIC seal of approval, that covers $250,000 in deposits. This was for companies or individuals that had more than $250,000 in their accounts. They realized that if the bank went down, that FDIC insurance might not cover the money they had in the bank, and so they wanted to get it out of the bank.

Arun Venogopal: You mentioned It's a Wonderful Life, that this is an ongoing problem of mass psychology, isn't it, whether it was in the early 1900s or today?

Nick Timiraos: That's exactly right. I think what surprised people- well, a number of things. One was that if you go back a week ago to last Tuesday, there were some people that had talked about certain longer-term problems that Silicon Valley Bank had, and I can get to that in a minute, but they were seen as a relatively strong banking franchise. If you had an account at that bank, and you were in the tech sector in San Francisco, the Bay Area, this was a status symbol.

It was cooler to have your money at Silicon Valley Bank than at stodgy JP Morgan, Citibank, Bank of America, but all banking panics are similar. As you said, it is psychology. Once people realized that there might be a problem here, they wanted to get their money out.

Even at the end of last week, there was a view that, well, Silicon Valley Bank's problems were so unique. Like I said, they didn't have a diversified customer base. They had made some very poor decisions in hindsight in 2021. They grew very quickly during the pandemic because these tech companies were flushed with cash, and so they put their money in the bank. The bank had their deposits double in a very short period of time, and what do you do with all that money? Banks make loans, but you can't go make a huge amount of loans all at once. They invested the money in treasury bonds, government treasury securities, which are seen as relatively safe assets because they are backed by the government.

What the bank didn't calculate properly was that interest rates were going to go up a lot. If you have interest rates rising, and the value of those securities that you bought when rates were lower, the value of them go down. A number of banks have this problem, but Silicon Valley had a different issue, which was that their customers wanted to get their money all at the same time. Their customers were really the same group of people, and so Silicon Valley Bank wasn't able to meet those demands.

Normally, these things play out over a longer period of time. If you think back to 2007 and '08 with the subprime mortgage crisis, it brought down a lot of banks, but the problems became well known over time. The FDIC was usually able to arrange mergers, or they would take the failed bank on a Friday afternoon and announce it was being closed, and here's who we're selling it to. On Monday morning, all your money will be in the bank. It will just be owned by a different bank now.

Well, that didn't happen here. This bank failed around 8:50 AM local time on Friday. That also, I think, added to the sense of panic was, "Whoa, this bank that on Wednesday disclosed they were going to have to raise money because they were facing some capital issues, wanted to get ahead of that, all of a sudden now the bank has closed and I can't get my money out." That's really where the broader concerns begin to multiply.

Arun Venogopal: Nick, we know it's mostly companies that bank with SVB. Do we know at this point which ones have been the most impacted?

Nick Timiraos: Well, the companies really haven't been impacted because of what happened on Sunday. What happened on Sunday was, as you noted, with the President's announcement there, bank regulators got together and said, "We're going to invoke some emergency powers that allow us to backstop all of the deposits of the bank, not just the deposits that have $250,000 or less. All of the uninsured deposits of Silicon Valley Bank will be protected."

If that hadn't happened, the concern would have been that on Monday anybody who had their money in a smaller bank like Silicon Valley Bank might have said, "Gee, I have more than $200,000 in this bank, Bank X. Maybe I should get that money out and go open up different accounts somewhere."

The concern really was that other regional banks that seemed fine last week, you would've said, "Silicon Valley Bank looked fine, but it wasn't. Maybe I should get my money out of there." They invoked these emergency authorities on Sunday night to try to convince everybody that, "Look, your uninsured deposits are going to be safe," even though they only guaranteed the uninsured deposits at Silicon Valley and this other bank that was taken over on Sunday night that was in trouble, Signature Bank in New York.

The companies certainly would've had problems and we were already starting to hear about it over the weekend. "I can't access my funds, I can't make payroll, I can't pay my employees." You had these tech startups that were emailing their customers saying, "Come online and buy our products right now because we need to raise money and put it into a different bank account because we can't access the money in our bank."

What we realized is that banking stability is something people don't think about until they do. Once they do think about it, it's bad. You don't want people to walk around thinking, "Is my money safe in the bank?" That's why the government reacted so quickly and rather dramatically on Sunday night.

Arun Venugopal: Let's talk about who's on the hook for these failures. Federal regulators say that US taxpayers aren't going to have to bear any of these losses. Can you explain that further? How was it different from the response to what happened with the 2008 financial crisis?

Nick Timiraos: Sure. The reasons that the government is acting are similar, which is that in a banking panic, you have to act to stop the panic first. If you don't, then it spreads and it's only going to get more expensive and more costly to taxpayers, to the economy. After the collapse of Lehman Brothers in 2008, we saw unemployment go up a lot. Millions of people lost their jobs. Credit is the lifeblood of our economy and when businesses and individuals can't get credit, they stop spending, they stop hiring, they stop investing, and it really can ruin the economy. It can seize up economic activity. It's similar in that regard.

Who pays for this? That's a great question. There were two steps announced on Sunday. The first, as we've discussed, is that uninsured depositors of the bank will be protected. Now that will potentially cause losses for the FDIC. They have an insurance fund, but if they face losses on backing these deposits that weren't previously insured, then they will assess all of the banks that are members of the FDIC to cover any losses at these two banks, SVB and Signature. Who pays for it? The banking system will pay for it, and anybody who used banks will ultimately pay for it, but the government and taxpayers won't.

The second step that was announced was the Federal Reserve, which is the US Central Bank, announced they would create a new facility that would facilitate lending to banks that were having increases in withdrawals. If banks were finding that their customers also wanted to get their money, this was an insurance policy that you take out. You tell people your money's going to be fine. The banks will have all the money that they need to satisfy withdrawal demands in the hope that people see that and they don't withdraw their money.

Even though taxpayers aren't on the hook for that, it does provide some a subsidy to the banking system because it's covering potential losses that the banks otherwise would've had to face on their own. You could say it's socializing potential losses. Even though that doesn't show up as taxpayers having to pay for it, it is a benefit to the banking industry as a result of failures. We can talk about whose failures those are, of the bank management at Silicon Valley Bank, of the bank regulatory or supervisory system, because really you shouldn't have seen a bank fail like this. There will be postmortems and audits to determine who was responsible for all that.

Arun Venugopal: I'm talking to Nick Timiraos, the chief economics correspondent for the Wall Street Journal. Nick, it looks like we've got some callers with questions, maybe some insights or statements about what's happening. Let's take our first caller here. Hugh calling in from Sussex, New Jersey. Hi, Hugh.

Hugh: Hi, good morning. My question pertains to the online savings accounts, the ones that are paying at least 3.5% to 4% annual interest. I was wondering if depositors like us have to be concerned at this time.

Arun Venugopal: Nick.

Nick Timiraos: That's a good question. I don't see why you would have to be concerned. You want to pay attention to what the fine print, of course, is on your investments. I don't want to speak specifically to any particular account, but deposit rates are rising right now because the Fed is raising interest rates. This is causing some of the challenges for banks. When the Fed raises interest rates, which the Fed is doing right now to try to defeat this inflation problem, you can earn more money in a short-term treasury bill. You could earn close to 4% or 5% right now.

As banks see that and as banks get concerned about maybe people won't want to keep their money in a bank if we only provide a 1% interest right now on those savings accounts, so you are seeing competition for customer deposits. That means higher rates for people who are saving money. That is going to be an extra source of potential stress on banks as they have to pay people more to keep the money in the bank or they're going to lose their customers.

That's a medium-term or long-run challenge ahead when you could say facing the banking system if interest rates stay at higher levels. People won't want to keep their money in the bank if the bank is only offering zero. For years, it was 0% or 1% interest. We were barely earning any interest if we kept our money in a savings account at the bank. It's not unnatural to see competition in the form of higher savings rates being offered to depositors.

Arun Venugopal: Nick, as confident as you are in someone who's simply trying to keep their investment in, say, a CD or something like that whole and not worry about that, are there areas where you're a little less confident in terms of this particular situation that's playing out and what the gray areas are?

Nick Timiraos: I think the reason you're seeing stress continue for regional banks right now, you saw shares yesterday of banks like First Republic Western Alliance, banks that maybe are seen as being similar customers, similar geographies, similar demographics to Silicon Valley Bank, there's again a mid-range concern here, which is if companies now see that maybe their deposits might not be as safe as they thought, we're talking about companies with $1 million to $10 million, and if they decide, "All right, we want to diversify, we want to put our money in different places, maybe we don't want to be in regional banks, maybe we want to be in the "too big to fail" money center banks," even though some of the steps that were taken on Sunday night provide ways for banks to access cash to meet withdrawal demands ,over the long run, it would create a problem if you're seeing deposits leading those banks because the banking franchise becomes less valuable.

If regional banks all across the country come under stress, then you could have more of these sorts of episodes where banks run into challenges. That's what we saw in the 1980s. After the Federal Reserve raised interest rates a lot to get a grip on inflation, we had the savings and loan crisis. That took 10 to 15 years to resolve. There were thousands of small banks that failed.

I don't think anybody's talking about thousands of small banks right now. It really depends on what happens to interest rates and inflation here and how quickly inflation comes down could determine -- If this is a long, drawn-out slog where interest rates stay higher, then certain banks that haven't been as well-run or that took maybe more risks in the last couple of years, they will face challenges. What you're seeing is the marketplace now coming to realize this and being much more discerning about which banks are in better position than others.

Arun Venugopal: Let's take another call. This is from Brandon calling from Manhattan. Hi, Brandon. [silence] Brandon, are you there?

Brandon: Brandon, you looking for Brandon?

Arun Venugopal: I am. Are you Brandon?

Brandon: I am.

Arun Venugopal: Brandon, do you have a question for our guest, Nick?

Brandon: Yes. My question is, has anybody taken out a pencil and paper and done the arithmetic to see whether or not had the regulations not been relaxed by the Trump administration in 2018, this wouldn't have happened? Would the banks have been properly capitalized so that it couldn't happen?

Nick Timiraos: Brandon, that's a great question. That is a very high focus of a number of people right now. For other readers who may not be familiar, in 2018, there was a law passed. It was a bipartisan law. Almost all Republicans and some Democrats approved relaxing some of the regulations that had been imposed on banks by the 2010 Dodd-Frank Act.

The concern after the Dodd-Frank Act had been the problems in 2008 were really the big giant banks, not the little banks, so maybe we've over-corrected and we have too many burdens that we're placing on these community banks. Community banks are in every congressional district and so a lot of lawmakers heard from their local community bankers saying, “Gee, you really stepped on my toes here and we weren't the problem. Why did you regular at us?” There was broad agreement that community banks should be treated perhaps differently.

I think the issue that Brandon's getting at is that certain larger regional banks, including Silicon Valley Bank, lobbied to also the extended regulatory relief. Yes, you have a number of lawmakers, especially the Democrats, who opposed that deregulatory effort saying if you had not done this, Silicon Valley Bank would've faced tougher oversight over their day-to-day cash management, over the risks they were taking. The problems that resulted in the bank run last week might have been detected earlier and you would've given the bank management more time to fix those problems rather than have them just unravel on your doorstep on Friday morning.

I think that will be a very significant focus. Already you're hearing the president and Democrats talking about reinstating that some of those regulations that were relaxed. There are some other people who will argue that even if those measures had been in place, the problems at Silicon Valley might not have been addressed by those regulations and that this was really a failure of bank management and/or bank supervision. There are also questions about where were the bank supervisors on this. Why didn't they realize what the capital issues were?

The last point I'll make is there's still a lot we don't know. We don't know what the regulators were actually telling the bank. Banks can be under certain regulatory decrees or orders saying you need to fix this or you need to fix that. It's not clear yet just how on top of this the bank supervisors were. It doesn't look great right now.

Arun Venugopal: Nick, one of the striking points about these banks is that they actually got in a fairly recent audit from KPMG a clean bill of health, I guess, and news came out yesterday. How significant is this to you?

Nick Timiraos: I think it raises some questions. First of all, what actually led to that clean bill of health? I think the other point I'd make is there are a number of people saying uninsured depositors should take losses when a bank fails. The whole point is for these larger customers to provide some discipline. People should pay attention to where they put their money in. They should make sure the bank isn't taking crazy risks with the money and if they are, they should have their money there.

As was the case with Signature Bank, Signature Bank, which was about half the size of Silicon Valley and it also failed on Sunday, it had a buyer rating- their stock had a buyer rating from, I believe it was 15 of 19 analysts on Wall Street as of Friday.

One of the points some people could make is, wait a minute, if analysts who cover the bank or the accounting firm that supposed can actually see under the bank's hood is saying that this is a strong franchise, then how would uninsured depositors have any chance of doing this credit analysis to come to a different conclusion? Under those circumstances, shouldn't you backstop the uninsured depositors? The risk of not doing that would be, again, on Monday morning, everybody with uninsured deposits in a regional bank might say, “You know what? I'm taking my money out,” and then you have a full-scale financial panic.

The Federal Reserve was created in 1913 because of a similar banking panic in 1907 where people thought their money wasn't safe. The way that the panic ended was when a group of bankers got together at JP Morgan's home in Midtown Manhattan and agreed to put up money to stop the bank run. After that, everybody got together and said maybe this isn't the best way to run a banking system. Maybe we should have some kind of other institution to do that. That's why the Fed actually was created.

Arun Venugopal: Let's take another caller, Paul calling from Washington Heights. Hi, Paul.

Paul: Hi. Thank you for taking my call. I have a question that your guest may have already answered. The question was, is there a rating agency that consumers can go to to get a sense of whether they're small regional bank is a safe place to keep their money?

I'd like to add a second question and that is, is the panic however mild it was that we have observed at the collapse of these two banks a foreshadowing of what might happen if the Congress doesn't raise the debt ceiling?

Arun Venugopal: Thank you, Paul.

Nick Timiraos: On your second question about the debt ceiling, I think even though these two issues are not really related, it shows-- Economists have this term they use called when something doesn't go in up in a straight line kind of at a stairstep, it's non-linear. You can hit some point and then everything breaks. The analogy I like to use is that you're hitting a ketchup bottle and nothing comes out and then everything comes out all at once.

These sorts of crises, whether it's a banking crisis or a financial crisis because somebody doesn't raise the debt limit and there's a concern, a freakout in the markets that the government is going to default on its debt, and then the government holds regular auctions of its debt.

Let's say that during this period where the debt limit was people thought it was really going to bind on the government's ability to borrow, and you just had a terrible, maybe a failed government auction, that could unleash all sorts of panic. The idea here is in financial markets, you want things to be predictable, orderly. Volatility, things swinging wildly in one direction or the other can break other things that are bigger and now the problems that you thought were fairly small, this is just the 16th largest bank in the country, all of a sudden, now you're dealing with really much bigger problems.

You think about maybe dominoes. The little domino doesn't seem that big but it can hit all these other dominoes and pretty soon you're knocking down whole slabs of stone.

Arun Venugopal: I guess on the other question that Paul asked, any thoughts, Nick?

Nick Timiraos: There are ratings agencies. They really provide more analysis for people who are buying data banks. Moody's Investors Service, or S&P, they analyze the creditworthiness of the bank itself. By and large, if you have less than $250,000 in the bank, the whole point of FDIC insurance is that you don't have to worry, and if you are worried you can always put money in different banks.

It seems at this point like the government has basically said a bank of a certain size is too big to fail. It is very rare for uninsured depositors in this country to lose money even if the government hadn't stepped in. If we think about what would've happened if the government hadn't stepped in on Sunday night, uninsured deposits would not have lost everything.

There are a lot of assets in this bank. Those assets would've been sold off. They will be sold off still to raise money that would've covered probably the vast majority of the uninsured deposits. What we're talking about is really just the uncertainty of not knowing when you would have access to 100% of your money. It's very likely that some portion of the uninsured deposits would've been made available this week, and that uninsured depositors would've eventually been made whole over some period of time but government regulators didn't want to risk the consequences of having that uncertainty because of the domino effect, the ripple effect it could have had.

Arun Venugopal: Let's take a call from LA. Sachin calling from California, you are on Brian Lehrer.

Sachin: Hey, good morning. I had two questions. The gentleman just mentioned that, hey, there's not a bailout, but it's going to affect higher taxes of fees from bank customers. Essentially, isn't that a tax itself given that most people have banks and are members of bank? That's question number one.

The second question he mentioned, he said that, after this gets all sorted out, the regulators and the management will be looked into, penalized. It's been 15 years since 2008. Not one person has gone to jail, or even has- face a jury of any kind.

Lastly, to that second point, the guy, I don't know, whatever the CEO was, give himself a $5 million bonus on Friday before you head out and some employees got to money, too. How does one expect to trust that this is going to happen and this is not a bailout? It just seems like a different lipstick but it's the same issue. It's a bailout.

Arun Venugopal: Got it. Thank you, Sachin. Nick, a couple of questions there, both about whether this is or is not a bailout, as well as repercussions or lack thereof from 15 years ago with the recession.

Nick Timiraos: I'm going to sound like I'm splitting hairs but I think the details do matter here. Is this a bailout? Yes, it is a bailout of the uninsured depositors of the bank. Is it a bailout of the shareholders? No. The stock got wiped out. Is it a bailout of the bondholders? No. The bondholders were not protected here. In fact, you saw the effect of that yesterday, where prices of bonds for other banks went down. The cost of insuring against the default on those bonds went up because of concerns that bondholders might not be protected here and uninsured depositors might actually move ahead of them in the line if the bank fails.

This was a bailout of the uninsured depositors but when people go around saying, "Well, they bailed everybody out," that's just not true. The shareholders, talk to them, they don't feel like they got a bailout. In this country, you pay for the things you use. If you use a banking service, we all pay one way or another for the FDIC insurance. The bank is paying for it and they're passing the charge on to us somehow in the form of goods and services that they offer, whether it's ATM fees, or whatever you have to-- nothing's free.

My point is that taxpayers who do not use banks are not paying for it. Of course, because many people use banks, many taxpayers will pay for, but I do think it's different to say that if the government does in fact raise the deposit insurance fees, then taxpayers themselves are not paying for it. The government is not paying for it. The people who use the service are paying for it.

Yes, there is a lot to be unhappy about with what happened in 2008. People did not go to jail. There were some cases brought. It was very difficult to secure convictions. What happened was, in many cases, hard to prove that it was illegal. What we ended up doing after 2008 was we passed a lot of regulation, instead of banning certain individuals from the banking system. Those were the decisions that prosecutors and government officials made 15 years ago, and that's what happened.

Arun Venugopal: Nick, a little earlier, we heard President Biden trying to reassure the public about his confidence in the system, but he also I guess, struck this tough love note. Let's just hear a clip of what else he said.

President Biden: Investors in the banks will not be protected. They knowingly took a risk, and when the risk didn't pay off, investors lose their money. That's how capitalism works.

Arun Venugopal: What I'm curious about is this just a pro forma statement about just the nature of the world, or did you hear something that he's signaling here?

Nick Timiraos: Well, the administration is obviously very sensitive to the political risks here being seen as bailing out banks again, especially after having said that the banks are safe. I think everything that the President said there is accurate technically speaking, but there's also this issue where banks have taken certain risks. In this case, they're facing losses potentially on securities they bought when interest rates were low, and now interest rates are higher.

Now there were not too many people who expected interest rates to have to rise as high as quickly, a couple of years ago when those investments were made, but now, that is going to create complications. Any time the government takes steps to try to minimize potential losses from difficult economic decisions that were made, you could argue that this is a subsidy. Some of these things are certainly subsidies to the banking system.

The question now for the President and Congress and the regulators is going to be what do you do about that? Do you increase regulation? Do you increase deposit insurance fees? Do you say, "Well, this was a onetime thing, and we'll just pretend it didn't happen?" That's going to be a question for the elected officials and regulators of this country.

Arun Venugopal: We're going to take another caller here. Let's go to Mitchell in Stuyvesant Town.

Mitchell: Hello, there. Thanks for the discussion. I think it's so important. So many things to really say about this thorny subject because at the end of the day, we're dealing with the crossroads of humans and greed. It's unadulterated. It's been going on for millennia, and it seems like a river that we can't stop. Glass Steagall, put the brakes on that kind of unadulterated greed in many ways. I don't hear any reference to that at all.

Dodd-Frank, look at what- Barney Frank ends up on the board of the Silicon Valley Bank with a few million dollars in his pocket after he left Congress. What kind of role model is this? What can we do about this? How do we get to, really, the root of the problem?

Arun Venugopal: Thank you, Mitchell.

Nick Timiraos: Those are good questions. Glass Steagall was something that was imposed after the Great Depression. The economy changed a lot over the next 60 years, Congress revoked many of those provisions in the late 1990s, and banking regulation has been very difficult. It's been difficult to get this right. I think what happened last week is going to raise new questions about whether we got the balance right after Dodd-Frank. I think what we learned last week, is that you can still have risks outside of the, "Too big to fail banks."

The view after Dodd-Frank had been, as long as you fortified the largest banks, you probably had done enough. What we've seen since then, not just last week, but when the pandemic hit, there were lots of things that went wrong in non-bank corners of the financial system. Money market funds, for example, have been bailed out twice in the last 15 years.

The economy and the financial system evolve, and the regulations probably need to evolve with them. There's always an element of fighting the last war in the legislation that we have on banks, and then something else happens and everybody realizes, "Oh, well, we were so focused on making sure that we didn't have a repeat of 2008, but now we have a whole new set of problems we have to confront."

Arun Venugopal: Just a point about Barney Frank, to quote from an article by one of your colleagues, Julie Boyko, it's in the Wall Street Journal, who wrote “the 2010 Dodd Frank legislation set tougher regulatory safeguards on banks with more than $50 billion in assets. After leaving office and joining signatures board, not SBBs, Mr. Frank of Massachusetts Democrat publicly advocated for easing those new standards for smaller banks.” What do you say, Nick?

Nick Timiraos: Well, I think everybody should go read Julie's story. I think the story speaks for itself. This doesn't look great for Congressman Frank. He's upset about the bank having been taken over. He says that the government wanted to make an example of the banks that had gotten into crypto signature, had some crypto issues that they were dealing with, losses in the cryptocurrency digital asset world.

I think the facts are fairly plain there. Barney Frank was the coauthor of the legislation that bears his name. He argued for easing it. A few years later, he was on the board of a bank that benefited from those rollbacks. The bank was closed by the government on Sunday after the run at Silicon Valley Bank clearly spread to Signature Bank.

Arun Venugopal: We're going to have to leave it there for today. My guest has been Nick Timiraos, the chief economics correspondent for The Wall Street Journal, and the author of the book, Trillion Dollar Triage, which came out just last year. Nick, thanks so much for coming on today.

Nick Timiraos: Arun, thanks for having me.

 

 

Copyright © 2023 New York Public Radio. All rights reserved. Visit our website terms of use at www.wnyc.org for further information.

New York Public Radio transcripts are created on a rush deadline, often by contractors. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of New York Public Radio’s programming is the audio record.