The now defunct Silicon Valley financial institution was a “hedge fund in drag,” in response to banking marketing consultant Chris Whalen, chairman of Whalen World Advisors.

“Why did they go lengthy mortgage backs,” Whalen stated in an interview on CNBC on Thursday. “As a result of they knew that the warrants and the stuff that they actually trusted for his or her earnings, which was tech corporations, was going to have a foul yr. In order that they figured, effectively the Fed’s going to pivot, so let’s load up on mortgage backs and hit one out of the park.”

“That is not the way in which you are alleged to run a financial institution,” Whalen continued. “They deserve what they acquired.”

Most banks did the precise factor, Whalen stated.

“They bough danger free securities after which the Fed buried them,” Whalen added. “I believe Elizabeth Warren, by the way in which, is completely proper to slam Powell.”

Whalen’s feedback got here earlier than a Bloomberg report on Sunday that the Federal Deposit Insurance coverage Corp. is transferring towards a breakup of Silicon Valley Financial institution after it was unable to discover a suitor for your complete firm. The company is now trying to promote the failed lender in at the least two components, Bloomberg report, citing folks acquainted.

Bloomberg reported on Saturday that First Residents BancShares (FCNCA) was stated to be contemplating a suggestion for Silicon Valley Financial institution.