Mark Cuban Urges Fed To Take Action Following Silicon Valley Bank Collapse
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| Photo: Instagram/Mark Cuban |
Mark Cuban, the owner of Dallas Mavericks and an entrepreneur, has called on the Federal Reserve to act swiftly following the collapse of Silicon Valley Bank (SVB).
He proposed that the Fed should purchase all the securities and debt owned by SVB at near par to cover most deposits.
Any losses would be paid for in equity and new debt from the new bank or whoever buys it.
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| Photo: Instagram/Mark Cuban |
Cuban argued that if the Fed does not take ownership, trust in the banking system would be at risk, considering that many banks have more than 50% uninsured deposits.
SVB was closed by the Federal Deposit Insurance Corporation (FDIC) on Friday, marking the worst financial institution failure in the US since the Great Recession 15 years ago.
SVB was a go-to bank for many Silicon Valley industries and start-ups.
Some industry analysts were hopeful that the bank was still a good investment hours before its closure.
The collapse of SVB may serve as an "extinction-level event for start-ups," according to Y Combinator CEO Garry Tan.
Cuban raised a number of questions about the bank and its oversight, finding it baffling that the bank operated as it did and perhaps unsurprising that it failed.
He also pointed out that regulators were supposed to watch and warn, and it is unclear where they were.
Cuban insisted that his suggested actions for the Fed were not a bailout, but rather "providing cash to end the run" and in turn acquiring "long-dated assets that will pay at maturity."
While he has no money in the bank personally, Cuban acknowledged that some of his portfolio companies have.
The closure of SVB has affected other banks, both in the US and abroad, with $100 billion lost in stock revenue domestically and $50 billion in value shed by European banks over the past two days, according to a Reuters calculation.
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Source: Yahoo finance
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