Kevin O'Leary LASHES OUT on Banking Crisis

Evan O'Leary has some pretty tough words

to say for those involved in the banking

crisis going as far as calling people

idiots and you gotta listen to whom

exactly he's calling out let's take a

listen to Kevin O'Leary's perspectives

on the banking crisis

done today on Capitol Hill treasury

secretary Janet Yellen is in the hot

seat facing tough questions about the

Integrity of America's Banks meanwhile

America's Stock Market opens let's see

in 50 minutes from right now as Wall

Street braces for another chaotic day in

the wake of the Silicon Valley Bank

collapse our next guest has invested in

many Tech startups and has had a Fortune

of a Fortune of company money tied up in

the failed Silicon Valley Bank Shark

Tank star Kevin O'Leary joins us now Hey

Kevin first off there's so many

questions I'm pretty I'm pretty

astounded by all the so-called experts

who have different views of what we're

going through right now Larry Fink of

BlackRock says this is a slow rolling

crisis how do you label it

I think it's a transition that's going

to be occurring and how our banking

system works because fundamentally what

occurred here let's just call it for

what it is you had a a very weak

management team I I've described them as

idiots because that's what they are and

they were unsupervised by negligent

board they were running the bank like a

hedge fund yeah keep that in mind for a

moment technically the board of

directors is voted in by shareholders

because shareholders say hey make sure

this company does the right thing

shareholders just want stonk to go up

though

board members

I haven't seen have two terribly much

strong control over companies the way

they should it's usually

see us and clearly the goal at Silicon

Valley Bank was profit and that's why we

led to this sort of collapse but let's

keep listening to what Kevin O'Leary

says here but yes I I think the board

here was definitely sleep asleep at the

wheel but I hate to say it I think a lot

of boards are asleep at the wheel let's

keep going

a very badly run hedge fund and it blew

up and so now we have this dilemma this

moral crisis and we'll certainly see it

highlighted on the hill today because

Yellen is going to propose and has

implicitly over the last 48 hours that

every single bank account in America

regardless of the size or whose money it

is it could be Chinese money or foreign

money in that account the taxpayer is

going to guarantee that now why that's a

problem and here's the long-term policy

issue and what she's going to get

absolutely grilled on today it's going

to be very tough to watch

if I'm a bank manager and I'm running a

bank and you guarantee every deposit

what stops me from taking that money and

putting it on black in Las Vegas the

answer is yeah yeah exactly exactly

nothing now people like to say oh well

the managers might lose their job

then they'll get another job they'll

have on their resume they worked for a

bank and they'll get another job and

then you might think oh but like

wouldn't that be a bad thing to put into

your resume well wasn't saying you were

an executive at Lehman Brothers a Bad

Thing potentially to put on your resume

since they went bust apparently not

because the CFO at Silicon Valley Bank

was just that an executive at Lehman

Brothers

so this this idea that Banks would

somehow not be Reckless and like I mean

if I think if if smaller Banks had zero

regulation

they'd be giving out loans willy-nilly

because you're better off yoloing it to

try to become big

than staying small and safe

because you stay small and safe you end

up dying anyway

we'll keep going here

nothing nothing because I'm guaranteed

no matter how risky I want to work

within the bank's confines the only way

I've compensated is with stock so I'm

going to do everything in my power to

run that stock price up even if it blows

the bank up and that will happen over

and over and over again that's the

debate we're having in America today

because they changed the rules Kevin how

does this affect the small Banks because

we were told this morning that Bank of

America was raking in 15 billion dollars

because so many panicked customers at

small Banks pull their money out and

went to some of the bigger Banks

let me ask a very difficult question

that we're going to have to face very

shortly does America need Regional Banks

anymore in an internet age when all this

is actually probably the best point I

hate to say it but I've said it before

why do we need four to five thousand

Banks

am I saying we should only have four no

but maybe we just need a hundred that's

still plenty of choice but do we really

need

four thousand five hundred Regional

Banks and Credit Unions no you go

the banking is done online the only

thing you care about is the stability of

your accounts and do they operate

successfully and are you able to

transfer money and do payroll the truth

is and this is tough love I'm sorry we

don't need Regional Banks we're going to

move to a model that other countries

have done very successfully like Canada

like Australia where you have four or

five or six banks that are behemoths

highly regulated still public you can

buy the stocks in them but they work

successfully the most successful country

in 08 was the Canadian banking system

there's no Regional banks in Canada

there's just giant behemoths we don't

need I want to be clear I don't think

it's a good idea to only have the big

four so to speak I'm just going to give

you an example from Real Estate so in

real estate at the big four Banks you're

only allowed to get

4. Fannie Freddie backed mortgages

that's because of Dodd-Frank rules and

stress tests that require the banks to

limit you to four mortgages

that's lame because Fannie and Freddie

actually allow you to have up to 10

and there are ways you can actually

double that with your spouse to get up

to 20.

but

the only way you can get that up to 10

is not at the big four it's at direct

lenders or smaller Banks

so I disagree that we only need big four

I definitely disagree with that but do I

think we need thousands hell no I mean

quite frankly

you know what's the difference between

four and a hundred competition right

that's what we want where's that

threshold though at what point do you

not get more competition as you add

another bank

maybe you only need 30 Banks right like

does the 31st Bank really create that

much more competition and Innovation

than the 30th Bank does to the entire

system right so big four definitely too

small

thousands definitely too much the answer

is somewhere in the middle and it's

probably closer to plus or minus 20

somewhere around 50.

let's keep going

Regional banks in America either this is

Royal look I'm sorry don't shoot the

messenger this is a fact we have to

debate and we're not going to have

Regional Banks and even if you guarantee

the accounts right because people I

don't want to take the one percent

chance if something goes wrong yeah but

Kevin like I'm from South Carolina and

they're small Regional Banks and in our

state that have been run by families for

generations and some people trust those

Regional Banks better than a big Bank

like svb because they have such a woke

board they know when they go to this

mom-and-pop Regional Bank okay I I don't

know what it is with with Fox News

but any chance they can get

to say

well that's woke is what they do like

okay all right maybe maybe we can make

the argument about One bank or two Banks

is that true of all of the other Banks

no does does awoke board mean we need 4

500 Banks

no

silly argument

South Carolina that the board's not like

that

well apparently not enough people trust

small Regional Banks because as you just

said billions are moving out what we've

done with our companies over the last 48

hours is we've told all our CEOs two

things number one you have to distribute

our cash across five institutions no

more than 20 percent in any Bank they've

done that it's actually not a bad idea I

I think it's potentially a little

extreme I do think even having all of

your money at one big Bank like I don't

think you need to if you have all your

money at JP Morgan right now do I think

you need to like get up and run outside

and go to a Bank of America right now

and open an account and then go to City

and open account no

do I think it's useful to have Accounts

at these other institutions yes because

think about it at least if you have the

bank account number and routing number

out of Wells Fargo at a city or whatever

even if you have a you know 500 bucks or

whatever at least you could go online

and transfer money or call in and go I

want to wire money from here to there

and you can move that money around

pretty relatively painlessly when

they're back and forth to your own

accounts so I don't know that you have

to be that extreme having a second

probably not a terrible idea having a

third maybe but like at what point do

the benefits go away right especially

when you're talking big Banks so I know

some of the commenters are saying hey

well

you know you get better deals with

smaller Banks you do that's also the

point though they take on more risk so

they take on more risk to give you

better deals to attract depositors and

customers see like this person smaller

banks have unique lending products that

service growing markets in the area I

agree and much like Steve said earlier I

agree that with the absence of smaller

Banks you're going to crimp the economy

I completely agree with that that's why

I think you should probably have

somewhere around 50 Banks plus or minus

20. so call it you know 30 to 70 Banks

where you still get the element of

competitiveness like the 50th biggest

bank that has three branches in your

city could give you those competitive

products

uh in the face of the big four so to

speak right yeah let's keep going

number two you have to go to the

government and get your employee

retention credit which everybody's

forgotten about 250 billion dollars

there every company can get it up to 26

000 per per employee and so we've done

both of those things that's effectively

a guarantee against payroll remember

this whole dialogue started around

payroll yesterday's payroll at the

Silicon Valley Bank was in Jeopardy for

all the companies that banked out of

there but in the end this bigger Yellen

situation today will discuss should we

or morally should we guarantee every

account when bank managers are not held

accountable for them anymore and yep and

the answer to that was yes but it's a

very interesting argument about this

idea of why have the small banks anyway

let's just get rid of them

fascinating argument uh and again I

think it's terrible for those smaller

banks for the people who work at them

for the owners of them I feel bad for

those folks but that doesn't mean we

need that many banks so it's a good

argument that Kevin O'Leary makes I

think his diversification argument is a

little bit extreme uh but it is better

than being 100 concentrated so that's

the take here from

Kevin O'Leary