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Hedge Fund Manager Bill Ackman Warns of Bank Meltdown on Monday

By    |   Sunday, 12 March 2023 01:38 PM EDT

Hedge fund billionaire Bill Ackman is warning of a bank and economic meltdown that could hit as early as Monday as the government is not going to bail out the Silicon Valley Bank from its collapse Friday.

"The gov't has about 48 hours to fix a-soon-to-be-irreversible mistake," Ackman, CEO of Pershing Square Capital Management, tweeted Saturday. 

"By allowing @SVB_Financial to fail without protecting all depositors, the world has woken up to what an uninsured deposit is — an unsecured illiquid claim on a failed bank. Absent @jpmorgan @citi or @BankofAmerica acquiring SVB before the open on Monday, a prospect I believe to be unlikely, or the gov't guaranteeing all of SVB's deposits, the giant sucking sound you will hear will be the withdrawal of substantially all uninsured deposits from all but the 'systemically important banks' (SIBs)."

Important: Reagan’s OMB Director first warned of major debt and bank crisis to happen in 2023 in new bestseller, advises 4 ways to protect cash – See Emergency Details Here Now!

Ackman's remarks came one day before Treasury Secretary Janet Yellen on Sunday said she was working closely with banking regulators to protect depositors, but ruled out a government bailout.

"We want to make sure that the troubles that exist at one bank don't create contagion to others that are sound," Yellen told the CBS News.

"Let me be clear that during the financial crisis, there were investors and owners of systemic large banks that were bailed out," she added, "and the reforms that have been put in place means we are not going to do that again."

But inaction will ultimately doom others, according to Ackman.

"The unintended consequences of the gov't's failure to guarantee SVB deposits are vast and profound and need to be considered and addressed before Monday," Ackman concluded in his lengthy tweet urging for government intervention. "Otherwise, watch out below."

Ackman, a self-proclaimed "pretty sophisticated financial analyst," posted an in-depth review of the dangers looming after the SVB collapse and government inaction.

The Federal Reserve's interest rate hikes have triggered the danger in moving money out of regional banks to larger banks.

"These withdrawals will drain liquidity from community, regional and other banks and begin the destruction of these important institutions," Ackman wrote. "The increased demand for short-term UST will drive short rates lower complicating the @federalreserve's efforts to raise rates to slow the economy.

"Already thousands of the fastest growing, most innovative venture-backed companies in the U.S. will begin to fail to make payroll next week. Had the gov't stepped in on Friday to guarantee SVB's deposits (in exchange for penny warrants which would have wiped out the substantial majority of its equity value) this could have been avoided and SVB's 40-year franchise value could have been preserved and transferred to a new owner in exchange for an equity injection."

Ackman said his fund would have "would have been open to participating," but he suspected "it is now unlikely any buyer will emerge to acquire the failed bank."

The government agencies' "failure to do their jobs should not be allowed to cause the destruction of 1,000s of our nation's highest potential and highest growth businesses (and the resulting losses of 10s of 1,000s of jobs for some of our most talented younger generation) while also permanently impairing our community and regional banks' access to low-cost deposits," he added.

"This administration is particularly opposed to concentrations of power. Ironically, its approach to SVB's failure guarantees duopolistic banking risk concentration in a handful of SIBs."

Important: Reagan’s OMB Director first warned of major debt and bank crisis to happen in 2023 in new bestseller, advises 4 ways to protect cash – See Emergency Details Here Now!

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Eric Mack

Eric Mack has been a writer and editor at Newsmax since 2016. He is a 1998 Syracuse University journalism graduate and a New York Press Association award-winning writer.

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Hedge-fund manager Bill Ackman, CEO of Pershing Square Capital Management, is warning of an economic meltdown as the government is not going to bail out the Silicon Valley Bank from its collapse Friday."The gov't has about 48 hours to fix a-soon-to-be-irreversible mistake,"...
hedge fund, bill ackman, silicon valley, svb
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2023-38-12
Sunday, 12 March 2023 01:38 PM
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