Shark Tanks Kevin OLeary has made a career of calling out businesses on their weaknesses and now bosses at the collapsed Silicon Valley Bank have unsurprisingly caught the self-proclaimed Mr. Wonderfuls attention.
SVB imploded and was taken over by the Federal Deposit Insurance Corporation on Friday after a bank run saw investors and depositors trying to extract $42 billion when VCs advised businesses to begin withdrawing funds.
On Sunday night the U.S. Federal Reserve said it would ensure that depositors at Silicon Valley Bank and Signature Bank, which also failed over the weekend, were protected in full, even beyond the $250,000 normally covered under federal deposit insurance.
OLeary, reportedly worth $400m, was in doubt over who was to blame, tweeting: The combination of a negligent board of directors @SVB with idiot management is the potent cocktail that led to a disastrous outcome.
Similar sentiments have been echoed by Ken Griffin, the founder and CEO of Citadel, who said the government should not have stepped in as the banks collapse would have been a great lesson in moral hazard.
Speaking to the Financial Times on Monday, he added: It would have driven home the point that risk management is essential.
Staff at SVB have also labeled its CEO Greg Becker as idiotic.
Speaking to CNN, one anonymous staffer said that Beckers transparency around the institutions finances is what did them in.
Canadian mogul OLeary, chairman of OLeary ventures, went on to question why taxpayers should bail out the bank.
However, Treasury officials have confirmed no taxpayer money will be used to return cash to investors and businesses.
A senior Treasury spokesperson told CNBC on Sunday: For the banks that were put into receivership, the FDIC will use funds from the Deposit Insurance Fund to ensure that all of its depositors are made whole. The Deposit Insurance Fund is bearing the risk. This is not funds from the taxpayer.
Indeed OLearys remarks about a bail-out are also at odds with his fellow shark, Mark Cuban.
Over the weekend Cuban explained he didnt see government support for depositors as a bailout, saying: I dont call it a bailout and some people gave me a hard time for that, simply because I think theres good assets and if youre buying good assets and that solves a liquidity problem thats not a bailout. Thats taking care of the liquidity side of the problem and your risk is the interest rate delta.
The lesson is simple, never put more than 20% of your liquid assets in any one financial institution! OLeary finished.
Biden has nationalized the American banking system
In a separate interview with CNN, OLeary claimed President Biden had nationalized the American banking system.
He added: Its no longer a risk. Its no longer private in any sense. Its now backstopped by the government, ultimately the taxpayer.
So it doesnt matter how bad you are as a bank manager, and a good example is what happened at Silicon Valley Bank. That was a combination of a negligent board of directors and idiot management.
It completely wiped out that bank and thats what should have happened.
Speaking on the level of insurance being upped from the previous threshold of $250,000 to an unknown amount under the new government support, OLeary added: Now you have no risk in any bank any time, and you as the taxpayer bear that going forward.
This quick move was to try and stop a run on small banks and mid-sized banks. I dont think long term thats going to work because why would you take even 1% of risk keeping your money, or at least all of it, in a small regional bank?
He added the lesson is to diversify assets between financial institutions as you never know where the black swan is swimming.
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