Barstool Sports founder Dave Portnoy has criticized the bailout of SVB, which he called a “bad business” and said was operating with a poor business model. While acknowledging the importance of protecting the money of average depositors, in an interview for Fox Business he said that banks should not be rescued simply because they decide to take high risks and fail in the process.
Federal Agencies Rescue SVB But Bank-Run Fears Spark Market Decline
The rescue of SVB was carried out by the Federal Deposit Insurance Corporation, the Federal Reserve, and the Securities and Exchange Commission, and the White House has stated that there will be no cost to taxpayers. However, the closure of the bank has sparked fears of a bank-run contagion, with several regional banks seeing their shares decline and the market indexes taking a hit.
Barstool Sports founder Dave Portnoy’s comments were made after the bailout was confirmed by US president Joe Biden. Biden insisted that taxpayers would not be paying for the bailout and that the deposits of people who had invested in SVB would be protected. However, this did little to assuage fears that other banks could also be in trouble.
SVB mainly invested in US Treasuries and its clients were primarily tech companies from Silicon Valley. However, it also attracted risky startups and crypto companies. Portnoy feels that people invested in the bank without being fully aware of the risks, saying that it was more like investing in the stock market than in a bank.
While Portnoy acknowledged the impact that the bank’s failure has had on the technology community and the economy, he insisted that the bank’s failure was because, in essence, someone did not perform their duties adequately. He believes that businesses should not be allowed to run poorly and then be rescued, even if this means risking the economy as a whole.
Silicon Valley Bank Failure Forces Signature Bank to Cease Cryptocurrency Lending Operations
Signature Bank, one of the largest lenders in the cryptocurrency industry, has recently announced that it is shutting down its operations due to the failure of its primary financial institution, SVB. The sudden closure of Signature Bank has taken many by surprise, as it was seen as a major player in the cryptocurrency lending market.
The closure of Signature Bank has left its customers without access to their funds and has prompted many to seek alternative lending solutions. The decision to shut down the bank is a stark reminder of the risks associated with relying on financial institutions that are not regulated by traditional banking authorities.
The closure of Signature Bank is likely to have a significant impact on the cryptocurrency lending market, as the bank was one of the few that provided borrowers with access to significant amounts of capital. As a result, many borrowers may find it difficult to secure the financing they need to grow their businesses.