Billionaire hedge fund manager Bill Ackman predicts that other banks would likely fail even if American authorities intervened to restore trust in the financial system following the failure of Silicon Valley Bank.
Bill Ackman, whose hedge fund Pershing Square Capital Management is responsible for managing assets worth about USD 16 billion, slammed the Joe Biden government’s response while predicting an “economic disaster” to occur.
The United States Federal Reserve has stressed that no government funds would be required to compensate for the losses because the body is funded by its financial operations when it announced that everyone who had money in Silicon Valley Bank would receive their money back.
According to the Daily Mail, Bill Ackman, who had urged the American government to intervene and protect all of the bank’s depositors, applauded the action but cautioned that it was unlikely to stop the collapse of more financial institutions.
He wrote on Twitter, “We would have had a 1930s bank run continuing first thing Monday, causing substantial economic damage and hardship to millions, had the @FDICgov @USTreasury and @federalreserve not interfered today.”
He also said, “We now have a clear plan for how the government will manage them”, adding that “more banks will probably fail despite the involvement.”
According to US regulators, customers of the defunct bank will have access to all of their deposits beginning on Monday morning, even those that are greater than the USD 250,000 federally guaranteed cap.
“Our government made the right choice. In no way was this a bailout. The blame will fall on those who made a mistake. The bondholders will have a similar fate as the investors who failed to supervise their banks properly,” Bill Ackman said.
Meanwhile, the Silicon Valley Bank’s collapse might increase trouble for other US lenders, and even bring SoftBank Group’s investments under heightened scrutiny from the regulators, reported Bloomberg.
Silicon Valley Bank’s failure has reportedly raised concerns among investors over the exposure to start-up firms in the SoftBank Vision Funds. SoftBank shares plunged by 13% in four sessions to below 5,000 yen. The whole crisis has been dubbed the worst one since the 2008-09 banking rout, and has brought the spotlight to private tech investments.
Image Credits: Pershing Square Foundation