By Bitcoin.com - 8 months ago - Reading Time: 3 minutes
Shark Tank Star Kevin O’Leary Warns More US Banks Will Fail
Shark Tank star Kevin O’Leary, aka Mr. Wonderful, has warned that more banks in the U.S. will fail as the Federal Reserve continues to hike interest rates. He stressed: “It will break down in the regional banks, which support 60% of the economy … We’ve started to see the cracks.”
Kevin O’Leary Foresees More Bank Failures
Shark Tank star Kevin O’Leary, chairman of O’Shares Investments and O’Leary Ventures, has predicted that more banks in the U.S. will fail as the Federal Reserve continues to raise interest rates.
Sharing his prediction in an interview with CNBC on Thursday after the Fed announced its latest interest rate hike, O’Leary stressed: “You keep squeezing the toothpaste tube, you keep rolling it up, you keep raising rates, and you know things are going to break, you just don’t know when and where.” Mr. Wonderful opined:
I am just predicting — and I am very cautious on this — it will break down in the regional banks, which supports 60% of the economy.
The Shark Tank star cautioned that the rapid rise in the cost of capital is “killing” regional banks “on their real estate loans.”
Federal Reserve Chairman Jerome Powell said on Wednesday that prevailing economic conditions suggest that monetary policy will likely need to be restrictive for longer. “I would say that what our eyes are telling us is that policy has not been restrictive enough for long enough to have its full desired effects,” the Fed chair said. “We intend to keep policy restrictive until we’re confident inflation is coming down sustainably to our 2% target, and we’re prepared to further tighten if that’s appropriate.”
O’Leary shared: “I am telling investors that I work with and I advise … let’s wait 90 days to see what happens in the small banking arena in the United States.”
Mr. Wonderful further predicted that the Federal Reserve could raise interest rates beyond its current projections. “Terminal rate, where the Fed stops, could be 6.25, could be 6.50 … So you’ve really got to think about this if you think about the long term and the short-term effect,” he warned, emphasizing:
We’ve started to see the cracks, the Titanic has not sunk.
A number of banks in the U.S. have failed this year. Last week, Heartland Tri-State Bank collapsed. On March 10, Silicon Valley Bank was closed by the California Department of Financial Protection and Innovation. On March 12, Signature Bank was closed by the New York State Department of Financial Services. On May 1, First Republic Bank was closed by the California Department of Financial Protection and Innovation. Moreover, Silvergate Bank announced voluntary liquidation.
Several individuals have predicted a surge in regional bank failures due to the Federal Reserve’s ongoing interest rate hikes. Back in April, Robert Kiyosaki, the author of Rich Dad Poor Dad, warned that regional banks are being wiped out because of Fed policies. Economist Peter Schiff echoed these concerns earlier this month, stating that all banks will fail and people will suffer massive losses as the banking crisis unfolds.
Do you agree with Kevin O’Leary that more banks will fail as the Fed continues to raise interest rates? Let us know in the comments section below.
Original source: Bitcoin.com