Commenting on the collapse of the Silicon Valley Bank (SVB), Vivek Ramaswamy, a highly successful asset management chairman, best selling author, and GOP presidential candidate, said the bank should not be bailed out by the government but should be allowed to fail, "if needed."
Bailing out SVB is nothing more than "crony capitalism," he added, noting that we saw all this happen before with the bank bailouts in 2008.
Ramaswamy, who has an estimated net worth of $600 million and holds degrees from Harvard (BA) and Yale (JD), is a strong supporter of limited, constitutional government. He made his remarks on CNN's State of the Union, March 12.
When asked about SVB and the billions of dollars it owes its many high-tech business clients, Ramaswamy said, "I would not bail out either SVB or even the depositors, because here's what's actually going on."
"SVB made some -- Silicon Valley Bank made some uniquely bad management decisions," said Ramaswamy. "One of them is, first of all, they have a depositor base that's really concentrated of tech start-ups in Silicon Valley. A staggering nearly 90 percent of their deposits are uninsured."
"That's an anomaly compared to most banks in this country," he continued. "So what's happening right now is a lot of Silicon Valley executives and V.C.s this weekend, many of them have even reached out to me to push this narrative that that's going to create a bank run in America if Silicon Valley Bank isn't actually bailed out."
"But what they're doing is actually trying to create the fear of one," he said. "I think that can actually become a self-fulfilling prophecy, which is dangerous. But the reality is, Silicon Valley Bank also had exposure to interest rate-tethered securities that they could have hedged. A normal bank would have done that."
"Silicon Valley Bank did not," he added. "So I do not think we should reward that kind of bad behavior, that kind of bad mismanagement."
Ramaswamy continued, "we should let the market work here, let Silicon Valley Bank fail, if needed, but the government needs to do one thing. Here's what I will say. It's get out of the way if another bank actually wants to acquire Silicon Valley Bank."
The anti-woke money manager also criticized the ESG (Environmental, Social, and Governance) agenda followed by SVB.
"Silicon Valley Bank just last year made a $5 billion commitment to sustainable finance to ensure a better and more sustainable planet," noted Ramaswamy. "If they had actually sought for a more sustainable balance sheet, they would have better done their job."
"But it's even deeper than that," he continued. "I think that, if they do get bailed out, part of their bet is that they wanted to signal that they're one of the good guys by influence amongst influential people in Silicon Valley, even in Washington, D.C., by gesturing towards even committing $5 billion, which I don't think is responsible, towards something outside of what their core mission should have been focused on."
"It's not that different than what companies like Goldman Sachs did back in the 2008 financial crisis," he said. "You play the right games, you influence the right people, you send the right virtue signals, you're the one that gets bailed out, if you're Goldman, instead of Lehman Brothers, who didn't do those things."
"This is crony capitalism," he said. "We saw the movie in 2008. I had a front-row seat to it. I was working in finance in New York City back then. It was my first job out of college. It would be a sad thing to see that story repeat itself."
Ramaswamy, 37, is married and has two children. He announced his run for the GOP presidential nomination on Feb. 21. He is the author of two New York Times best-selling books, Woke, Inc. and Nation of Victims.