The federal government's decision to backstop all the deposits in failed banks Silicon Valley and Signature Bank -- even deposits above the FDIC's federally insured threshold of $250,000 -- marked a fundamental change in the U.S. banking system, according to Kevin O'Leary.
"It is no longer a risk. It's no longer private in any sense. It is backstopped by the government, ultimately the taxpayer. So it doesn't matter how bad you are as a bank manager," O'Leary told CNN.
The banking system will "never go back to normal" after the Treasury Department, Federal Reserve, and Federal Deposit Insurance Corp. said that it would insure all deposits at SVB and Signature, according to O'Leary.
According to the Shark Tank host, accounts with more than $250,000 are either business accounts or sophisticated investors. So if a bank gets "wiped out" like SVB did those deposits knew the risks involved.
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"Now you have no risk in any bank at any time. And you as the taxpayer have to bear that going forward," O'Leary said.
He says that the banking system has now been "nationalized" and that you should consider the banking system and financial services as "nothing more than highly regulated utilities... and if you thought putting your money into bank stocks was a good idea, you should change your mind forever. And should you own bank bonds? Never."
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