Barney Frank, Now a Banker, Sounds Like a Champion for Private LendingSeptember 16, 2016 | By: Sean Murray
Barney Frank, the infamous former Congressman whose name still haunts the financial industry through the Dodd-Frank Act, has taken on a surprising role in his retirement from public service. These days he’s on the board of directors of Signature Bank, a Wall Street staple with $33 billion in assets that is ironically becoming known as one of the nation’s fastest growing lenders to private businesses. In fact, it’s the preferred bank of Murder Inc. record label founder Irv Gotti, according to a WSJ story that explained how the bank stood by him even as he was facing federal money-laundering charges. Frank was mentioned alongside Gotti and is reported to have said that he likes the bank’s focus on lending.
I got to interview Frank personally very briefly two years ago in New York City and got a quick sense of his views on business-to-business transactions; That is that he doesn’t believe small businesses should get the same protection as consumers. In addition to restating his opposition to the Durbin Amendment in his own law, which regulated debit card interchange fees, he was also surprised by my suggestion that some people had floated the concept of federal interest rate caps on business loans. He offered a hard no when I asked him if he would be in favor of that idea. Above all however, he was in favor of transparency.
Frank more recently shared additional thoughts on finance in an interview with the Commercial Observer. “From the standpoint of the economy, the goal is to make sure enough loans are being made and that they’re not too risky. Who makes them is less important,” Frank said. These comments were offered in response to a question about capital constraints interfering with bank lending, to which he explained didn’t matter because the private sector was picking up the slack.
“First of all, the government is not in the business of favoring one sector over another. From the standpoint of public policy, is the demand for loans necessary to fuel economic activity being accommodated? I think it is. […] Although [Dodd-Frank] does give [the nonbank sector] power, there may be some further looking into them. Some people worry about peer-to-peer lending, for example, but this is helping one sector versus another.”
A lot of the complaints people have about his famous law, according to Frank, weren’t even written into the law. They are instead rules created by regulators all on their own. “There’s nothing in the statute that cracks down on commercial regulation,” he said.
Frank, sometimes viewed as one of the most liberal anti-Wall Street politicians of his time says his own bank has been criticized for too much lending, but that he is not deterred because he believe it’s not the irresponsible kind that got wrapped up in the financial crisis that necessitated Dodd-Frank to begin with.
Barney Frank, the man, the myth, the director of the bank. Read the full interview with the Commercial Observer HERE.Last modified: September 16, 2016
Sean Murray is the founder of deBanked, an 11-year veteran of the merchant cash advance industry, a casual Lending Club and Prosper note investor, the co-founder of Daily Funder, an alternative lending speaker, consultant, writer, and enthusiast. Connect with me on LinkedIn or follow me on twitter.