Billionaire Bill Ackman has asked the US government to “guarantee” all deposits held by the Silicon Valley Bank (SVB) within the next “48 hours.”
March 11 Tweet, Bill Ackman, CEO of hedge fund management firm Pershing Square, said that all banks, with the exception of “systemically important banks” (SIBs), would withdraw “substantially all uninsured deposits.” said he would hear a “huge sucking noise” from the The government cannot “guarantee all” of SVB’s deposits before it “opens on Monday.”
Ackman suggested that this was a result of the “world” realizing what uninsured deposits were: “unsecured and illiquid claims on failed banks.”
He said that if the U.S. government fails to protect “all depositors,” these withdrawals will “drain liquidity” from community banks, regional banks, and other banks, and begin to “destroy” these vital institutions. I will,” he warned.
Ackman said the only way to prevent this is if major financial institutions such as JP Morgan, Citibank and Bank of America are “unlikely” to buy SVB by Monday.
Ackman argued that all of this could have been “avoided” if the U.S. government had “intervened on Friday” and guaranteed SVB’s deposits, protecting long-term bank “franchise value” and making it “transferrable.” He added that it was possible. A new owner in exchange for a “stock injection”.
Ackman suggested that senior management at SVB “made a fundamental mistake” and should be fired. he said:
“They invested their short-term deposits in long-term, fixed-rate assets. Then short-term rates rose and bank runs followed. Senior management failed and they should lose their jobs.”
After conducting a “back of the envelope review” of SVB’s balance sheet, Ackman believes depositors should “eventually” get back about 98% of their deposits “even in the event of a liquidation.” .
However, he argued that “eventually” was “too long” if “we have a payroll to meet next week.”
Ackman tweeted shortly afterward, reiterating that the Federal Deposit Insurance Corporation (FDIC), along with the proposed plan, must insure all SVB bank deposits by Sunday night.
What should the FDIC do? @FDICgov Guarantee all bank deposits by Sunday night before Asia opens and call for a timeout.Carry out the recapitalization process @SVB_Finance Reinvest in short-term UST while managing the liquidation of UST and MBS portfolios. Determining Capital Hall… https://t.co/g96k1b7soy
— Bill Ackman (@BillAckman) March 11, 2023
Related: Silicon Valley bank failure could trigger crackdown on US regional banks
This comes after Bob Elliott, CEO of investment firm Unlimited, said that the Federal Reserve and FDIC decisions regarding the future of SVB will affect local banks across the United States, resulting in trillions of dollars in bank rundowns. after saying that it could put them at risk of
Elliott says nearly a third of U.S. deposits are held in small banks, and 50% of those deposits are insured.