'Shark Tank' investor Kevin O'Leary warns of more regional bank failures as the Fed presses ahead with interest-rate increases

• "Shark Tank" investor Kevin O'Leary has warned of more regional bank failures as the Fed keeps raising interest rates.
• "You keep squeezing the toothpaste tube, you keep rolling it up, you keep raising rates, and you know things are going to break," he said.
• The Fed announced a quarter-point rate rise on Wednesday in a bid to cool inflation down to 2%.

"Shark Tank" investor Kevin O'Leary sliced into the Federal Reserve after it hiked interest rates once again this week - warning the aggressively tight monetary policy will lead to more regional bank failures.

"You keep squeezing the toothpaste tube, you keep rolling it up, you keep raising rates, and you know things are going to break, you just don't know when and where," the market veteran said in a CNBC interview on Thursday.

"I am just predicting — and I am very cautious on this — it will break down in the regional banks, which supports 60% of the economy," he continued, adding that rising borrowing costs are "killing them on their real estate loans."

The Fed increased its benchmark rate this week by 25 basis points following a pause in June, boosting the effective fed funds rate to its highest level in 22 years. The decision came despite the latest official data showing consumer-price inflation cooled to 3% in June, from as high as 9.1% a year earlier.

While Fed chair Jerome Powell left the door open to more rate increases to meet its 2% inflation target, money-market prices suggest investors are looking at this week's rise as possibly the last in the current policy-tightening cycle.

Since the Fed began pumping the brakes on the economy in March 2022, the banking industry has endured much turmoil. The collapses of Silicon Valley Bank, Signature Bank, and First Republic, have shown the damage higher interest rates have done to smaller US lenders.

"We've started to see the cracks, the Titanic has not [sunk]," O'Leary said of the bank collapses. "I am telling investors that I work with and I advise ... let's wait 90 days to see what happens in the small banking arena in the United States," he added.