In addition to being one of the investors in the Shark Tank program, billionaire name Kevin O’Leary, who has also attracted attention in the crypto money field in recent years, shared his comments about the Silicon Valley Bank (SVB) collapse and the general market. Here are the details…
Cryptocurrency investor shared his comments on SVB collapse
“Shark Tank” investor Kevin O’Leary, known to have investments such as BTC, Ethereum (ETH), Solana (SOL), Avalanche (AVAX), Helium (HNT), HBAR, to the startup CEOs he worked with after the explosion of Silicon Valley Bank. He recommended that they limit bank deposits and that firms should prepare for other possible bankruptcies. O’Leary used the following statements in a recent interview:
We told our CEOs: don’t put more than 20 percent of liquid assets in any institution. I don’t care who you know, how big the companies are – there’s always a manager who will lead to a black swan thing. So we don’t know who they are.
His comments came shortly after the failure of Silicon Valley Bank last Friday. The collapse of the bank, as we’ve reported on Cryptokoin.com, led to a surge in bank stocks and fears of a 1980s-style banking crisis. But according to O’Leary, the problems arose more from “stupid management” and “incompetent board of directors who knew nothing about banking” at the SVB rather than “systemic”.
O’Leary: Don’t buy bank stock
He added that the assets of some of his own companies are tied to the bank, but did not disclose the total amount. O’Leary pointed specifically to the SVB’s high exposure to long-term bonds. Bond prices fell last year due to the Fed’s rate hikes to contain inflation, causing unrealized losses to all US banks, according to the FDIC’s estimates.
Other commentators have said the contagion risk of Silicon Valley Bank’s collapse is low, but O’Leary remains concerned about the impact of regulators’ response to the crisis. This brings all the depositors of SVB and Signature Bank together, even above the typical $250,000 deposit threshold of the insurance agency FDIC. O’Leary noted that this subverts the FDIC’s usual standards for deposit insurance and makes bank stocks inherently riskier. That’s because bank executives can now feel free to take more risks to raise stock prices, even if it jeopardizes the safety of deposits, he said.
Earlier in the week, O’Leary urged investors to never buy bank shares again because the precedent set by the collapse of the SVB means the government has “nationalized” the industry. On Thursday, a group of major banks stepped in by injecting $30 billion in deposits to stabilize First Republic Bank, another regional bank under pressure.
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