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.