'Shark Tank' star trashes Silicon Valley Bank: 'Poster boy for doing stupid things'

Kevin O'Leary 'Shark Tank' star trashes Silicon Valley Bank: 'Poster boy for doing stupid things'
O'Leary Ventures Chairman Kevin O'Leary raises moral hazards and 'unintended consequences' from regulators' bailout of Silicon Valley Bank.

Kevin O’Leary of Shark Tank appeared on FOX News this week and was asked his opinion on the Silicon Valley Bank meltdown and the response to it.

He did not hold back.

O’Leary slammed the bank itself, calling the manager an idiot. He also criticized the government response, suggesting that more banks will now make dumb decisions based on the belief that the government will rescue them.

O’Leary explained his critiques on Fox Business’s Cavuto: Coast to Coast with host Neil Cavuto on Tuesday. Silicon Valley Bank (SVB) is one of several banks that collapsed last week. O’Leary accused regulators of taking an “isolated incident” and creating a “moral hazard” by applying it as an overall banking concern, guaranteeing deposits above the $250,000 Federal Deposit Insurance Corp. limit. He said when the next bank fails, the federal government should just “let it fail.” O’Leary would later state during a segment hours later on the Fox News Channel’s Hannity that SVB was “run by idiots.”

O’Leary told Cavuto he predicted “unintended consequences” from the bailout policy, such as signaling to banks that the Federal Reserve will rescue them no matter what.

“Going forward, I think a lot of bank managers are going to say, ‘Wait a second, I have no risk. I’m going to go crazy like those guys did at the Silicon Valley Bank and do stupid leverage things,” O’Leary insisted. “Because if anything goes wrong, as long as I stay within the baseball rules of banking, nothing can happen to me because the Fed covers all my depositors. I don’t have to worry if I’m crazy.’ That’s the problem we’ve got.”

“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,” O’Leary said. “Even in our own portfolio, we have now moved our assets across five different financial institutions.” He predicted “all kinds of new regulations” for the regional bank system.

https://youtu.be/IuYwSA-cKPI