Shark Tank hosts and billionaires Mark Cuban and Kevin O'Leary discussed the Silicon Valley Bank (SVB) collapse, the second worst bank failure in American history.
Several companies, investors, and lenders were impacted by the SVB Collapse on March 10, including the portfolio of enterprises owned by billionaire Mark Cuban.
Cuban tweeted a long thread detailing his opinions on the bank's failure and the remedy he believed should be implemented-the Federal Reserve taking control, per Entrepreneur.
"The Fed should IMMEDIATELY buy all the securities/debt the bank owns at near par, which should be enough to cover most deposits," he said.
Mark Cuban said that the Fed "should own it" as they were aware of the danger.
2. Where were regulators ? They are supposed to watch and warn. 3. Can't wait to see how many people yanked their money, told others to, and shorted the stock. 4. Will the number of emps that aren't paid this week lead to a multiple of that number not being paid in 2 weeks ?
— Mark Cuban (@mcuban) March 11, 2023
Cuban said that SVB's problem was not that it acquired failed assets, and that the agency would supply cash to terminate the run, and in exchange receive "long-dated assets that will pay at maturity, and for the risk assets, should offer some positive return as well."
Mark Cuban stated he has the potential to "assist them" and that he has invested $8 million to $10 million in SVB enterprises, but that he does not have any of his own money handled by SVB.
In a subsequent Twitter post, Cuban elaborated on the topic even further, saying that his pharmaceutical firm, CostPlusDrugs.com, had around $3.1 million processed via SVB. He said the firm was "scrambling" to meet its commitments including making payroll.
SVB Collapse Was a Result of Incompetency and Negligence
Meanwhile, Kevin O'Leary, chairman of O'Leary Ventures, discussed SVB collapse and its impact in an interview with CNN.
O'Leary remarked that US President Joe Biden's measure had nationalized the banks, which took away the risk. The system is longer exclusive as the government and, by extension, taxpayers, guarantee its stability. "So it doesn't matter how bad you are as a bank manager."
The Shark Tank host pointed out that the "powerful cocktail" of a reckless board of directors and inept management led to the bank's demise.
He also suggested that Americans should look at banking going forward as "nothing more than highly regulated utilities."
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President Joseph Biden reassured the public that taxpayers wouldn't pay for Silicon Valley Bank's collapse.
All deposits at Silicon Valley Bank would be accessible to their owners on Monday, as guaranteed by the Treasury Department, the Federal Reserve, and the FDIC, per an earlier HNGN report.
The president stated that "every citizen should feel secure that their deposits would be there "if and when they need them" in his address.
US Gov't To Conduct Full Accounting
Additionally, Biden lambasted SVB and other failing banks' CEOs, saying those responsible for the current situation "will be fired." He also noted that the federal government will seek a "full accounting" of the SVB collapse and why it happened.
While Joe Biden acknowledged that depositors' assets would be safe, he noted that "investors in the banks would not be protected" since they "knowingly" assumed a risk by putting their money in SVB.
The Federal Reserve's string of rate hikes had a devastating effect on Silicon Valley Bank. This is the most recent effect of rising interest rates on the IT industry, per a report from The Hill.
Many businesses, especially startups, operate with high amounts of debt, making them and the environment in which they are generated very vulnerable to spikes in interest rates.
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