- CNBC’s Jim Cramer reflected on how his prediction of recommending Silicon Valley Bank just before it collapsed was wrong.
- SVB’s sudden collapse surprised many as the bank collapsed due to an inability to raise funds after customers withdrew their funds en masse.
CNBC’s Jim Cramer admitted he made mistakes, including recommending buying Silicon Valley Bank stock in early 2023, just before Silicon Valley Bank collapsed.
SVB’s sudden collapse surprised many. The bank collapsed after capital and start-up customers withdrew their funds en masse, forcing it to sell bonds at huge losses. When SVB was unable to raise enough capital, regulators seized and shut down SVB, wiping out the bank’s stock.
Kramer pointed out that SVB is not fully transparent about the risks it is taking. He added that regulators are not monitoring as closely as they should and are being too lenient with banks. Kramer said it was later discovered that SVB had been managing its investment portfolio recklessly, leaving it highly vulnerable to losses in the face of large withdrawals.
Kramer admitted he should have done more research.
“Many of us got Silicon Valley banks wrong because we relied on regulators, and regulators were wrong too. Bank examiners were completely wrong before the mini-financial crisis. “He was drowsy driving, but since the crisis started he has become much more aggressive. He has already left the barn. Still, that’s no excuse,” he said. “We have to be better than the regulators and that wasn’t the case with SVB. I wish we had more foresight in this case, but we always try to make amends when we fail. .”
