“Silicon Valley Bank collapse, bank-run contagion not like 2008 crisis”
Kevin O’Leary argues
O’Leary Ventures Chairman and “Shark Tank” investor Kevin O’Leary has discouraged regulators’ response to the Silicon Valley Bank (SVB) bailout and taken market action.
“There’s going to be problems ahead here because, frankly, I don’t think just guaranteeing deposits is enough to keep everybody with all of their money in just the regional bank. There’s going to be diversification,” O’Leary told FOX Business host Neil Cavuto on “Cavuto: Coast to Coast” Tuesday.
“Even in our own portfolio, we have now moved our assets across five different financial institutions,” O’Leary continued. “I don’t care anymore to take risk and concentrated risk, and I think others will do the same.”
O’Leary’s statements came soon after the U.S. Department of Justice and Securities Exchange Commission announced a formal investigation into Silicon Valley Bank’s collapse, which became the second-largest bank to close since the Great Recession.
The “Shark Tank” star predicted “all kinds of new regulations” would be created for the regional bank system after banking regulators held an auction and ensured protection.
Regulators took an “isolated incident” and applied it as an overall banking concern, ultimately putting up a “moral hazard” in front of the industry, O’Leary argued.
The bailout policy has “unintended consequences” including giving the implication to banks that the Federal Reserve will always come to the rescue, O’Leary added.
But at the same time, the “Shark Tank” deemed “Mr. Wonderful” noted, when one bank fails, it doesn’t mean “every one of them fails.”