Billionaire Bill Ackman on US Banking Crisis: ‘I Fear We Are Heading for a Train Wreck’

0 6

Billionaire Bill Ackman on US Banking Crisis: 'I Fear We Are Heading for a Train Wreck'

knife

Billionaire Bill Ackman has warned that the U.S. economy is “heading for a train wreck” if the government allows the current banking crisis to continue. “Trust and confidence are earned over many years, but can be wiped out in a few days,” he said. “Hopefully, our regulators will get this right.”

Bill Ackman’s Warning

Billionaire Bill Ackman, CEO and portfolio manager of Pershing Square Capital Management, has warned of an incoming train wreck. Pershing Square is a hedge fund management company with approximately $18.5 billion in assets under management. Ackman’s net worth is about $3.4 billion.

Commenting on the current banking crisis following the failures of major banks, including Silicon Valley Bank and Signature Bank, Ackman tweeted Wednesday:

Consider recent events impact on the long-term cost of equity capital for non-systemically important banks where you can wake up one day as a shareholder or bondholder and your investment instantly goes to zero.

Systemically important banks (SIBs) are banks that are considered to be so large or complex that their failure could have a significant impact on the financial system and the wider economy. On the Financial Stability Board’s (FSB) 2022 list, there are 30 systemically important banks, including JPMorgan Chase, Bank of America, Citigroup, HSBC, and the troubled Credit Suisse.

“When combined with the higher cost of debt and deposits due to rising rates, consider what the impact will be on lending rates and our economy,” Ackman continued, warning:

The longer this banking crisis is allowed to continue, the greater the damage to smaller banks and their ability to access low-cost capital. Trust and confidence are earned over many years, but can be wiped out in a few days. I fear we are heading for a train wreck. Hopefully, our regulators will get this right.

The billionaire believes the government should guarantee all bank deposits. On March 22, he tweeted explaining that Treasury Secretary Janet Yellen’s “reassuring comments” the previous day “led the market and depositors to believe that all deposits were now implicitly guaranteed.” He also referenced “a leak” suggesting that Yellen, the Treasury Department, and the Federal Deposit Insurance Corporation (FDIC) “were looking for a way to guarantee all deposits reassured the banking sector and depositors.”

However, Yellen then “walked back yesterday’s implicit support for small banks and depositors, while making it explicit that systemwide deposit guarantees were not being considered,” Ackman’s tweet adds.

“We have gone from implicit support for depositors to Secretary Yellen’s explicit statement today that no guarantee is being considered,” he further opined, noting that the Federal Reserve has raised the federal funds rate to 4.75%-5.00%. “5% is a threshold that makes bank deposits that much less attractive. I would be surprised if deposit outflows don’t accelerate effective immediately,” Ackman cautioned, elaborating:

A temporary systemwide deposit guarantee is needed to stop the bleeding. The longer the uncertainty continues, the more permanent the damage is to the smaller banks, and the more difficult it will be to bring their customers back.

Do you agree with Bill Ackman? Let us know in the comments section below.

Leave A Reply

Your email address will not be published.

bitcoin
Bitcoin (BTC) $ 51,523.80
ethereum
Ethereum (ETH) $ 2,985.25
tether
Tether (USDT) $ 1.00
bnb
BNB (BNB) $ 382.22
solana
Solana (SOL) $ 104.31
xrp
XRP (XRP) $ 0.54457
staked-ether
Lido Staked Ether (STETH) $ 2,985.38
usd-coin
USDC (USDC) $ 1.00
cardano
Cardano (ADA) $ 0.591666
avalanche-2
Avalanche (AVAX) $ 36.64
dogecoin
Dogecoin (DOGE) $ 0.08577
tron
TRON (TRX) $ 0.13748
chainlink
Chainlink (LINK) $ 18.45
polkadot
Polkadot (DOT) $ 7.80
matic-network
Polygon (MATIC) $ 0.99674
uniswap
Uniswap (UNI) $ 11.16
wrapped-bitcoin
Wrapped Bitcoin (WBTC) $ 51,483.79
the-open-network
Toncoin (TON) $ 2.12
internet-computer
Internet Computer (ICP) $ 12.60
shiba-inu
Shiba Inu (SHIB) $ 0.00001
bitcoin-cash
Bitcoin Cash (BCH) $ 266.99
litecoin
Litecoin (LTC) $ 70.30
dai
Dai (DAI) $ 0.999498
immutable-x
Immutable (IMX) $ 3.11
cosmos
Cosmos Hub (ATOM) $ 10.41
filecoin
Filecoin (FIL) $ 7.84
near
NEAR Protocol (NEAR) $ 3.81
leo-token
LEO Token (LEO) $ 4.19
kaspa
Kaspa (KAS) $ 0.169479
ethereum-classic
Ethereum Classic (ETC) $ 26.06
blockstack
Stacks (STX) $ 2.57
hedera-hashgraph
Hedera (HBAR) $ 0.109052
bittensor
Bittensor (TAO) $ 581.01
optimism
Optimism (OP) $ 3.69
aptos
Aptos (APT) $ 9.45
stellar
Stellar (XLM) $ 0.116479
first-digital-usd
First Digital USD (FDUSD) $ 1.00
vechain
VeChain (VET) $ 0.044666
okb
OKB (OKB) $ 51.39
injective-protocol
Injective (INJ) $ 34.71
lido-dao
Lido DAO (LDO) $ 3.28
celestia
Celestia (TIA) $ 16.94
render-token
Render (RNDR) $ 7.31
the-graph
The Graph (GRT) $ 0.271222
mantle
Mantle (MNT) $ 0.780852
crypto-com-chain
Cronos (CRO) $ 0.094326
arbitrum
Arbitrum (ARB) $ 1.84
monero
Monero (XMR) $ 122.87
sei-network
Sei (SEI) $ 0.843807
sui
Sui (SUI) $ 1.65
maker
Maker (MKR) $ 2,022.37
rocket-pool-eth
Rocket Pool ETH (RETH) $ 3,289.29
beam-2
Beam (BEAM) $ 0.032959
thorchain
THORChain (RUNE) $ 5.42
algorand
Algorand (ALGO) $ 0.194062
mantle-staked-ether
Mantle Staked Ether (METH) $ 3,048.45
elrond-erd-2
MultiversX (EGLD) $ 58.13
dydx-chain
dYdX (DYDX) $ 3.56
quant-network
Quant (QNT) $ 103.95
flow
Flow (FLOW) $ 1.00
bitcoin-sv
Bitcoin SV (BSV) $ 75.59
aave
Aave (AAVE) $ 99.74
bitget-token
Bitget Token (BGB) $ 1.01
mina-protocol
Mina Protocol (MINA) $ 1.32
flare-networks
Flare (FLR) $ 0.040153
starknet
Starknet (STRK) $ 1.90
ordinals
ORDI (ORDI) $ 63.82
havven
Synthetix Network (SNX) $ 4.07
theta-token
Theta Network (THETA) $ 1.32
helium
Helium (HNT) $ 8.86
true-usd
TrueUSD (TUSD) $ 0.974569
tokenize-xchange
Tokenize Xchange (TKX) $ 15.55
fantom
Fantom (FTM) $ 0.41999
blur
Blur (BLUR) $ 0.816824
the-sandbox
The Sandbox (SAND) $ 0.520104
chiliz
Chiliz (CHZ) $ 0.126977
fetch-ai
Fetch.ai (FET) $ 1.07
worldcoin-wld
Worldcoin (WLD) $ 8.27
axie-infinity
Axie Infinity (AXS) $ 8.08
dydx
dYdX (ETHDYDX) $ 3.57
bittorrent
BitTorrent (BTT) $ 0.000001
apecoin
ApeCoin (APE) $ 1.76
gala
GALA (GALA) $ 0.029892
tezos
Tezos (XTZ) $ 1.13
whitebit
WhiteBIT Coin (WBT) $ 7.06
kucoin-shares
KuCoin (KCS) $ 10.49
sats-ordinals
SATS (Ordinals) (SATS) $ 0.00000048292939
cheelee
Cheelee (CHEEL) $ 18.70
osmosis
Osmosis (OSMO) $ 1.58
woo-network
WOO (WOO) $ 0.524503
conflux-token
Conflux (CFX) $ 0.250501
singularitynet
SingularityNET (AGIX) $ 0.743847
dymension
Dymension (DYM) $ 6.38
akash-network
Akash Network (AKT) $ 4.04
decentraland
Decentraland (MANA) $ 0.499731
eos
EOS (EOS) $ 0.800446
frax-ether
Frax Ether (FRXETH) $ 2,978.20
ronin
Ronin (RON) $ 3.03
arweave
Arweave (AR) $ 13.86
astar
Astar (ASTR) $ 0.162213