Shark Tank star Kevin O’Leary, aka Mr. Wonderful, has sounded the alarm about an impending financial crisis. “We have a crisis emerging,” he warned, emphasizing that small business owners will be “cut off at the regional bank level.” He stressed: “You’re going to hear a lot of people crying about this in the next few months.”
Kevin O’Leary Warns About Emerging Financial Crisis
Shark Tank star and O’Leary Ventures chairman Kevin O’Leary, aka Mr. Wonderful, warned about an impending financial crisis in an interview with Fox News, published Saturday. He said:
We have a crisis emerging … I’m talking about companies with five to 500 employees, which represent over 60% of our economy.
“If you’re in the S&P 500, you have no trouble financing your business. You can’t say that about small business anymore. The cost of capital has gone through the roof,” the Shark Tank star stressed. He explained small business owners will be “cut off at the regional bank level.” He emphasized: “They’re not lending. The loan books closed down … you’re going to hear a lot of people crying about this in the next few months.”
The Federal Reserve has raised interest rates from near-zero to around 5.5%, the highest level since 2001, to combat inflation. Fed officials have indicated that more rate hikes are coming. Fed Chair Jerome Powell said in August: “We’re prepared to further tighten if that’s appropriate.”
O’Leary warned that the current count of around 4,100 regional banks is expected to decrease to 2,000 over the next three years, raising concerns among people about depositing their money in banks. He cautioned:
During that period, people are very nervous about putting their money in the bank. Because if another one fails, and you have your cash in there right now, you’re only guaranteed for $250,000.
Several regional banks have failed in the U.S. this year. Heartland Tri-State Bank collapsed in July, Silicon Valley Bank and Signature Bank in March, and First Republic Bank in May. Moreover, Silvergate Bank announced voluntary liquidation earlier this year. In July, Mr. Wonderful similarly warned that more regional banks in the U.S. will fail as the Federal Reserve continues to hike interest rates.
O’Leary is particularly concerned about government policies of giving money to large corporations and not small businesses. “We’ve got the CHIPS and Science Act. Where’s that money going? Behemoth giant companies in the S&P 500. The Inflation Reduction Act, another trillion not even printed yet. All going to big guys. Now, that’s great. They represent 40% of the jobs in America, the S&P 500. Everybody knows the S&P 500 is the biggest index in the world. But 60% of America is small business. That’s where 60% of the jobs come from. We’ve given nothing to them. And so they’re struggling because the Fed is raising rates up to 5.5% in a matter of months,” he shared with Fox News.
Moreover, the Shark Tank star opined: “Meanwhile, we’re going to write $2 trillion to the big guys. That in itself is inflation. But it seems unfair to me to support a behemoth company that has a lot of its employees outside of America and not my company’s small business.” O’Leary stressed:
I’m in the real world talking to CEOs of small companies that are family-owned in America, in almost every state, every day. They’re not happy either.
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