Kevin O’Leary blamed Silicon Valley Bank management for the bank’s implosion. O’Leary denounced the bank’s “negligent board” and “idiot management”. Silicon Valley Bank collapsed after a bank run, and opinions differ on why it happened. Something is loading.
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‘Shark Tank’ star Kevin O’Leary wonders why Silicon Valley Bank imploded.
“The combination of a negligent @SVB board with dumb management is the potent cocktail that led to a disastrous outcome. Why should taxpayers bail them out?” O’Leary tweeted on Sunday.
“The lesson is simple, never put more than 20% of your cash in one financial institution,” he added.
The Federal Deposit Insurance Corporation took control of Silicon Valley Bank on Friday after a catastrophic bank run. Depositors raced for exits after Silicon Valley Bank tried and failed to raise capital.
The Silicon Valley Bank collapse is the biggest bank failure in the United States since the 2008 financial crisis. The bank is now looking for a new buyer but has yet to find one.
O’Leary, also known as “Mr. Wonderful”, is the chairman of O’Leary Ventures. He separately told CNN on Monday that he believed President Joe Biden had, by helping to make depositors at Silicon Valley Bank and Signature Bank whole, effectively “nationalized” the banking industry.
“You have no risk and it has consequences,” O’Leary said. “There’s no free lunch. And that’s going to cost bank shareholders dearly in the long run. I’m never going to put my money in bank stocks again.”
O’Leary isn’t the only person to blame Silicon Valley Bank executives for the crisis. CNN spoke to a Silicon Valley Bank employee, who said the bank’s CEO, Greg Becker, and other members of the bank’s management were naïve and mishandled the crisis.
“It was absolutely silly,” the employee, who works in the bank’s management, told CNN. “They were very transparent. It’s the exact opposite of what you would normally see in a scandal. But their transparency and candor got them in.”
Jeff Sonnenfeld, CEO of Yale’s Chief Executive Leadership Institute, also told CNN that Silicon Valley Bank executives should be criticized for their “dull and sloppy execution.”
There has been slander in all directions about the factors that may have contributed to the failure of Silicon Valley Bank.
Senator Bernie Sanders said the bank went bankrupt due to a Trump-era banking regulatory policy. Former President Donald Trump signed a bill in May 2018 that significantly reversed the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act. This 2018 law raised the asset threshold for systematically significant financial institutions from $50 billion to $250 billion and eased restrictions on banks like Silicon Valley Bank.
Meanwhile, Gov. Ron DeSantis and Kentucky Rep. James Comer have — without evidence or justification — blamed “woke” politics for the bank’s meltdown.
Representatives for Silicon Valley Bank did not immediately respond to Insider’s request for comment outside of normal business hours.