{"id":72243,"date":"2023-03-26T09:00:50","date_gmt":"2023-03-26T09:00:50","guid":{"rendered":"https:\/\/www.cryptocabaret.com\/?p=72243"},"modified":"2023-03-26T09:00:50","modified_gmt":"2023-03-26T09:00:50","slug":"billionaire-bill-ackman-on-us-banking-crisis-i-fear-we-are-heading-for-a-train-wreck","status":"publish","type":"post","link":"https:\/\/www.cryptocabaret.com\/?p=72243","title":{"rendered":"Billionaire Bill Ackman on US Banking Crisis: \u2018I Fear We Are Heading for a Train Wreck\u2019"},"content":{"rendered":"

\"Billionaire<\/p>\n

Billionaire Bill Ackman has warned that the U.S. economy is \u201cheading for a train wreck\u201d if the government allows the current banking crisis to continue.<\/strong> \u201cTrust and confidence are earned over many years, but can be wiped out in a few days,\u201d he said. \u201cHopefully, our regulators will get this right.\u201d<\/strong><\/p>\n

Bill Ackman\u2019s Warning<\/h2>\n

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\u2019s net worth is about $3.4 billion.<\/p>\n

Commenting on the current banking crisis following the failures of major banks, including Silicon Valley Bank<\/a> and Signature Bank<\/a>, Ackman tweeted Wednesday:<\/p>\n

\n

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.<\/p>\n<\/blockquote>\n

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\u2019s (FSB) 2022 list, there are 30 systemically important banks, including JPMorgan Chase, Bank of America, Citigroup, HSBC, and the troubled Credit Suisse.<\/p>\n

\u201cWhen 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,\u201d Ackman continued, warning:<\/p>\n

\n

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.<\/p>\n<\/blockquote>\n

The billionaire believes the government should guarantee all bank deposits<\/a>. On March 22, he tweeted explaining that Treasury Secretary Janet Yellen\u2019s \u201creassuring comments\u201d the previous day \u201cled the market and depositors to believe that all deposits were now implicitly guaranteed.\u201d He also referenced \u201ca leak\u201d suggesting that Yellen, the Treasury Department, and the Federal Deposit Insurance Corporation (FDIC) \u201cwere looking for a way to guarantee all deposits reassured the banking sector and depositors.\u201d<\/p>\n

However, Yellen then \u201cwalked back yesterday\u2019s implicit support for small banks and depositors, while making it explicit that systemwide deposit guarantees were not being considered,\u201d Ackman\u2019s tweet adds.<\/p>\n

\u201cWe have gone from implicit support for depositors to Secretary Yellen\u2019s explicit statement today that no guarantee is being considered,\u201d he further opined, noting that the Federal Reserve has raised the federal funds rate to 4.75%-5.00%. \u201c5% is a threshold that makes bank deposits that much less attractive. I would be surprised if deposit outflows don\u2019t accelerate effective immediately,\u201d Ackman cautioned, elaborating:<\/p>\n

\n

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.<\/p>\n<\/blockquote>\n

Do you agree with Bill Ackman? Let us know in the comments section below.<\/strong><\/em><\/p>\n

Powered by WPeMatico<\/a><\/small><\/p>\n","protected":false},"excerpt":{"rendered":"

Billionaire Bill Ackman has warned that the U.S. economy is \u201cheading for a train wreck\u201d if the government allows the current banking crisis to continue. \u201cTrust and confidence are earned over many years, but can be wiped out in a few days,\u201d he said. \u201cHopefully, our regulators will get this right.\u201d Bill Ackman\u2019s Warning Billionaire […]<\/p>\n","protected":false},"author":2,"featured_media":72244,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[309],"tags":[],"class_list":["post-72243","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-cryptocurrency"],"_links":{"self":[{"href":"https:\/\/www.cryptocabaret.com\/index.php?rest_route=\/wp\/v2\/posts\/72243","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.cryptocabaret.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.cryptocabaret.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.cryptocabaret.com\/index.php?rest_route=\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.cryptocabaret.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=72243"}],"version-history":[{"count":0,"href":"https:\/\/www.cryptocabaret.com\/index.php?rest_route=\/wp\/v2\/posts\/72243\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.cryptocabaret.com\/index.php?rest_route=\/wp\/v2\/media\/72244"}],"wp:attachment":[{"href":"https:\/\/www.cryptocabaret.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=72243"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.cryptocabaret.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=72243"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.cryptocabaret.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=72243"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}