Wilbur Ross, the former Commerce Department secretary during the Trump administration, believes it's possible for the Biden administration to implement "irresponsible" fiscal and monetary policies and the U.S. banking sector still be on solid footing — even after the recent collapses of Silicon Valley Bank and Signature Bank.
"I think the banking sector, overall, is quite safe," Ross told Newsmax on Thursday evening on "Rob Schmitt Tonight."
From his research, Ross said he doesn't believe that banks have encountered any "systemic problems."
The only caveat, according to Ross, involves enough people "getting panic-stricken. [That] could be a problem, because there isn't a bank in the world that can sustain a 'run' on the bank without outside assistance."
In the case of SVB, Ross said a "crisis among depositors" fueled the run on that financial institution's monetary obligations.
However, SVB's downfall could have been even worse, said Ross, had billionaire Peter Thiel taken a short-term approach to SVB showing signs of trouble.
According to Ross, prior to the SVB collapse, Thiel advised his people to lessen the amount of cash holdings at that bank. Other venture capitalists "apparently" followed suit.
"It's a good testament" to Thiel that he left $50 million of his own personal deposits in that bank, said Ross. Otherwise, it might have fueled a larger run on SVB and perhaps on similarly structured banks nationwide.
In Thiel's case, "it was a very interesting demonstration of fiduciary responsibility." He was preserving the long-term needs of other investors, instead of focusing on individual wealth, added Ross.
Ross then said, "The real purpose of banks is to take in deposits and make loans. I don't think the real purpose of banks should be to speculate the long-term bond market."
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