According to the Daily Mail, billionaire hedge fund manager Bill Ackman believes that more banks will fail even if US authorities intervene to restore trust in the banking system following the failure of Silicon Valley Bank last week.
Ackman, whose hedge firm Pershing Square Capital Management manages around $16 billion in assets, slammed the government’s response on Saturday, predicting “economic disaster” within hours of banks opening on Monday.
The Federal Reserve said on Sunday night that all persons who had money in SVB would receive it back, while emphasising that no government money would be required to cover the losses because the body is self-funded.
Ackman, who had pushed the US government to intervene and protect all of the bank’s depositors, hailed the action but warned that it was unlikely to prevent future financial institutions from failing, according to the Daily Mail.
“Had the @FDICgov @USTreasury and @federalreserve not intervened today, we would have had a 1930s bank run continuing first thing Monday causing enormous economic damage and hardship to millions,” he wrote.
“More banks will likely fail despite the intervention, but we now have a clear roadmap for how the gov’t will manage them”, he wrote.
Customers of the collapsed bank will have access to all of their deposits, including those exceeding the $250,000 federally guaranteed limit, beginning Monday morning, according to US regulators.
“Our gov’t did the right thing. This was not a bailout in any form. The people who screwed up will bear the consequences. The investors who didn’t adequately oversee their banks will be zeroed out and the bondholders will suffer a similar fate,” Ackman stated, Daily Mail reported.