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The federal government’s weekend decision to protect Silicon Valley Bank depositors with accounts over the FDIC’s $250,000 threshold has become a hot topic of debate. Those who support the move believe the depositors would have lost money through no fault of their own while others argue they should have diversified their capital across many banks and done a little due diligence while they were at it.
Regardless of which side one takes, the government’s intervention didn’t take place in a vacuum and it will have massive ripple effects and unintended consequences for years to come.
Ahead of President Joe Biden’s comments to reassure Americans on the soundness of the U.S. banking system on Monday, Kevin O’Leary, a judge on ABC’s “Shark Tank” and the chairman of O’Leary Ventures, weighed in on the debate with CNN.
O’Leary vehemently opposes the decision and claimed it triggered a paradigm shift in the market. He said it ensures that things “will never go back to normal.”
“What effectively happened over the weekend is that he [Biden] nationalized the American banking system,” O’Leary told CNN. “It’s no longer a risk. It’s no longer private in any sense. It is now backstopped by the government. Ultimately the taxpayer.”
He blamed the collapse of Silicon Valley Bank on its “negligent board of directors and idiot management” and called it a “very powerful cocktail” that “completely wiped out that bank.”
He emphasized, “And that’s what should have happened.”
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