Kevin O'Leary on the future of regional banks: 'They're dead, it's over'

The banking sector is due for some major consolidation, says O'Leary Ventures Chairman Kevin O'Leary. The famed investor joined Yahoo Finance's Rachelle Akuffo in studio to offer his take on the outlook for the banking sector in the wake of recent turmoil. Small regional banks "made sense," in an earlier era, where a bank's relationship with the community was more important. But now, O'Leary says, "no one cares about that anymore," thanks to a rise in competitive online banking.

After the government's investigation into the recent banking turmoil, O'Leary predicts new regulations and rules will come through for the banking sector. Those will make regional banks "unprofitable," he says. O'Leary adds that bank stocks themselves are "just a trade" and "not good investments." With an increase in regulation, bank stocks will become utilities, with O'Leary pointing out that banking is the only sector in the S&P 500 (^GSPC) that services the other 10. "Let's get over it," he says, and put regulations on the sector.

"Let's have a moment of silence for these small regional banks. They're dead. It's over."

Key Video Moments:

00:00:15 -- with banks "next idiot management"

00:00:37 -- "Nobody cares" about regional, community based banks now

00:01:08 -- Bank stocks are "not good investments"

00:02:00 -- "Everybody" banks on their phones now, online banking is robust

Rachelle's full conversation with Mr. Wonderful can be found here.