J.W. Verret, a professor of corporate and securities law, has disagreed with U.S. Senator Elizabeth Warren over the role of cryptocurrency in the recent collapse of Signature Bank. Verret said Warren’s submission on the issue was inaccurate and held her to more accountability, knowing her capacity as a former financial regulation law professor.
According to Verret, a New York regulator has already clarified that cryptocurrency played no role in the collapse of Signature Bank. He believes Warren may be making things up to indict the crypto industry.
Senator Warren reportedly wrote a letter to the CEO of Signature Bank demanding answers to what she described as “excessive risk-taking” when it ventured into crypto by leaning on a “get-rich-quick narrative”. According to her, the bank failed due to “weak rules and overreliance on crypto.”
Warren accused the bank of creating economically disastrous outcomes and worked hard to “weaken the rules”. She also accused Signature Bank’s CEO, Joseph DePaolo of destroying the institution by making poor decisions and taking excessive risks.
The lawmaker demanded the CEO explain to the public so that others could learn from the bank’s failure.
Other accusations labeled on the bank and its CEO by Warren include fighting to support efforts to curtail capital requirements embedded in the Dodd-Frank Wall Street Reform law and lobbying leaders through campaign donations in an attempt to loosen bank regulation in Congress.
Warren’s letter supports the opinions of other Democrats and herself, blaming the recent bank failures on a 2018 law approved by Congress and Donald Trump’s administration. They believe the law loosened capital requirements and liquidity tests, subjecting smaller regional banks to less onerous oversight.
Despite Warren’s argument, Verret believes that her indictment of crypto as a reason for Signature Bank’s failure is faulty. He noted that the Fed models for the stress tests Signature got exempt from favoring Treasury holdings. Hence, even that wouldn’t have helped.
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Source: Cryptocurrency - investing.com
