Regional banks “no longer have a reason to exist” in the US financial system, says Kevin O’Leary.
Following the latest series of negative market impacts caused by the collapse of the Silicon Valley bank, Shark Tank investor and O’Leary Ventures chairman Kevin O’Leary, aka “Mr. Wonderful”, explained why regional banks shouldn’t exist and he shouldn’t invest anymore. capital into anti-business democracies.
“I think everyone should ask themselves this question. I live here in Florida, we stand for business. “Varney & Co.” appearance. “These are forbidden states because of bad politics, high taxes, just places where you don’t want to invest your money… California, in my opinion, is not even open for business, so I would never put money there. “
The main question Americans should be asking, he continued, is: “Why am I being asked to maintain an account in California at a regional bank called First Federal or Silicon Valley, names of banks that no one had heard of two weeks ago?”
On Thursday, a group of the nation’s largest banks rushed to bail out First Republic Bank with a $30 billion deposit, meant to bail out a beleaguered San Francisco lender amid fears of a wider financial crisis following Silicon Valley Bank’s unprecedented insolvency over the weekend.
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JPMorgan Chase, Citigroup, Bank of America, and Wells Fargo will contribute $5 billion each, while Goldman Sachs and Morgan Stanley will each contribute about $2.5 billion. news release from banks. Truist, PNC, US Bancorp, State Street, and Bank of New York Mellon will provide about $1 billion each.
O’Leary developed the idea that regional banks make no functional sense in today’s era of digital commerce.
“Why should I support it? You have very bad politics in California. Why don’t you eat it?” the investor suggested. “Why don’t you take care of your own bank? Why should I do this?
O’Leary’s particular focus was on the economic model of one state: North Dakota. Earlier this year, the millionaire entrepreneur announced that his firm would manage $45 million in economic stimulus funds across the state.
“They established their own sovereign bank in 1919. It has the fourth fastest growing GDP per capita, so their economy is working,” he explained. “Their sovereign bank, if you want to call it that, backs their regional bank, which backs [the] buying real estate and farming and everything else. And they don’t reset because they are well managed. That’s my whole point.”
Federal regulators can’t continue to “support banks run by idiots,” O’Leary went on to say, while noting that any future bank failures should be left to collapse.
“These are poorly managed banks,” O’Leary said. “Let them go broke. Take the hit. Of course, there will be some instability, but today most countries went through this decades ago – Australia, Switzerland, England, Canada. The whole economy of these countries is controlled by four or five giants. banks are highly regulated. We don’t need hundreds and thousands of tiny little banks that no longer have a reason to exist because 99% of transactions today are done online.”
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O’Leary recalled how his 26-year-old son had recently asked him why physical bank branches and offices even existed.
“He said, ‘Why would anyone go there? Why would you sit there in line?”, — said the star of “Shark Tank”. “So that’s my whole point: the next generation doesn’t need it. It’s an old model that doesn’t work.”
Megan Henny of FOX Business contributed to this report.
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