‘We don’t have time to fix this problem’ – Bill Ackman’s latest warning to regional banks

Last updated: May 4, 2023 at 6:06 am ET

Originally published: May 4, 2023 at 5:56 am ET

That’s hedge fund billionaire Bill Ackman, back with his two cents on the regional banking system following the collapse of First Republic Bank. Shares of fellow regional lender PacWest Bancorp fell Wednesday night after a report that PACW was considering strategic options.

The CEO of Pershing Square Capital Management said in a lengthy tweet early Thursday that First Republic Bank would not have failed if the Federal Deposit Insurance Corporation had been temporary.

We don’t have time to fix this problem. How many more unnecessary bank failures do we have to see before the FDIC, the US Treasury and our government wake up? We now need a system-wide deposit guarantee regime.

That’s hedge fund billionaire Bill Ackman, back with his two cents on the regional banking system following the collapse of First Republic Bank and its subsequent takeover by JP Morgan & Chase Co.

JPM

Earlier in the week. On Wednesday night, shares of fellow regional lender PacWest Bancorp

PACW

It fell after a statement that it was considering strategic options.

The Pershing Square Capital Management CEO said in a lengthy tweet early Thursday that First Republic Bank would not have failed if the Federal Deposit Insurance Corp. had temporarily guaranteed deposits.

“Instead, we’re seeing the dominoes fall at great systemic and economic cost,” he said.

“At this rate, no regional bank can sustain bad news or bad data, inevitably leading to a stock price crash, a withdrawal of insured and uninsured deposits and a ‘pursuing strategic alternative’ to an FDIC shutdown this coming weekend,” he added. “There is no incentive to bid until Sunday after the defeat.”

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According to: DoubleLine’s Gundlach warns of reverberations of the S&L crisis in banks, ‘Deposits keep coming out.

Ackman, who had previously called for a system-wide deposit guarantee system in the wake of the Silicon Valley bank collapse, said “uninsured depositors of regional banks are more at risk than non-performing globally systemically important banks (GSIBs). Their uninsured depositors are too big to fail because the competitive advantage” is too big to fail. Can sleep peacefully.

In late March, Ackman tweeted about accelerating deposit outflows from banks. Treasury Secretary Janet Yellen has indicated that her department is not considering “blanket” deposit insurance.

According to Fox Business Network Senior Correspondent Charles Casparino, Yellen and the FDIC are considering an “express or implied” guarantee of deposits above the $250k limit.

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