'It's Not the Wealthy Taking the Hit': Mark Cuban's 'Baby' Among Companies With Millions In Silicon Valley BankThe billionaire took to Twitter late Friday to sound off amid the collapse of SVP.
ByEmily Rella•
Billionaire Mark Cuban's portfolio of businesses was among the multitude of businesses (specifically those in the tech sector), investors, and lenders affected by the shutdown of Silicon Valley Bank on March 10.
Cuban took to Twitter in a lengthy thread to express his thoughts on the bank's collapse and what he felt should be enforced as a solution, namely the Federal Reserve stepping in.
5. The Fed should IMMEDIATELY buy all the securities/debt the bank owns at near par, which should be enough to cover most deposits. Any losses paid for in equity and new debt from the new bank or whoever buys it. The Fed knew this was a risk. They should own it
— Mark Cuban (@mcuban)March 11, 2023
"The Fed should IMMEDIATELY buy all the securities/debt the bank owns at near par, which should be enough to cover most deposits," he said. "Any losses paid for in equity and new debt from the new bank or whoever buys it. The Fed knew this was a risk. They should own it."
Cuban clarified that this would not be the same as a "bailout," and that this action would have the agency "providing cash to end the run, and in return getting long-dated assets that will pay at maturity, and for the risk assets, should offer some positive return as well" noting that SVB's issue was not that it purchased failing assets.
The "Shark Tank" star estimated that he has around $8-$10 million in SVB among the companies in his portfolio and said that he had the ability to "help them" while also noting that none of his personal funds are managed through the bank.
The tragedy of SVB is that its not the wealthy taking the hit. It's the thousands of companies who borrowed from SVB and were required to keep their cash in SVB. Those entrepreneurs and their employees and vendors are feeling the pain. And they are who the Fed should protect
— Mark Cuban (@mcuban)March 11, 2023
Cuban later took to aTwitter spaceto continue discussing the issue, revealing that his pharmaceutical company CostPlusDrugs.com had about $3.1 million run through SVB.
"We're scrambling and opening up accounts and staying up late talking to bankers to get accounts opened up at other banks," he said. "And you know, I'm writing checks on Monday morning first thing, to make sure that payroll is payable and, you know, because this CostPlus Drugs.com is my baby."
Late Sunday, the U.S. Treasury Department, the U.S. Federal Reserve, and the Federal Deposit Insurance Corporation released a joint statement that they would collectively give all depositors of SVB access to their funds, despite Friday's collapse.
"Today we are taking decisive actions to protect the U.S. economy by strengthening public confidence in our banking system," thejoint statementread. "This step will ensure that the U.S. banking system continues to perform its vital roles of protecting deposits and providing access to credit to households and businesses in a manner that promotes strong and sustainable economic growth."
This follows the FDIC's decision on Friday to take over SVB which only covered depositors in funds up to $250,000 in insured funds which were significantly less than what most had deposited, let alone those who were uninsured.
Access to funds became effective Monday morning, and it was noted that American taxpayers would not be helping fund the situation. Shareholders and unsecured debt holders were not protected, however.
