In the spring of 2018, President Donald J. Trump signed a law that watered down the landmark regulatory reform act that his predecessor had enacted following the global financial crisis. The changes won a surprising supporter: the liberal former congressman Barney Frank.
Mr. Frank was a primary architect of the Wall Street Reform and Consumer Protection Act, better known as Dodd-Frank. But since his retirement in 2013, he had repeatedly voiced support for softening one of the law’s key planks: that any bank with more than $50 billion in assets should face especially intensive federal supervision.
The ensuing tweak — lifting the threshold to $250 billion — had big consequences. Among other things, scores of very large banks would escape, at least initially, the Federal Reserve’s annual “stress tests” and enjoy easier financial-safety requirements.
One beneficiary of the change was Signature Bank, a New York lender whose board of directors included Mr. Frank.
Now Signature is dead — a victim of a fast-moving crisis that has revealed the extent to which the banking industry and other opponents of government oversight have chipped away at the robust regulatory protections that were erected after the 2008 financial meltdown. [Continue reading…]