Bill Ackman warns US gov't: Fix mistake in ‘48 hours’ or face ‘destruction’

cointelegraph.com:

Billionaire Bill Ackman has urged the United States government to “guarantee” all Silicon Valley Bank's (SVB)'s deposits within the next “48 hours,” or it risks the “destruction” of many financial institutions.

In a Mar. 11 tweet, Bill Ackman, CEO of hedge fund management firm Pershing Square, said a “giant sucking sound" will be heard from the ”withdrawal of substantially all uninsured deposits” from all banks, besides the “systemically important banks (SIBs),” should the government fail to “guarantee all” of SVB’s deposits before the “open on Monday.”

Ackman suggested that this will be the result of "the world" understanding what an uninsured deposit is – “an unsecured illiquid claim on a failed bank.”

He warned that these withdrawals will “drain liquidity,” from community, regional and other banks and “begin the destruction” of these crucial institutions, if the government fails to protect “all depositors.”

Ackman said that the only other way to prevent this from happening, was in the “unlikely” event that major financial institutions such as J.P. Morgan, Citibank or Bank of America, acquire SVB before the open on Monday.

It was argued by Ackman that this all could have been “avoided” if the US government had “stepped in on Friday” to guarantee SVB’s deposits, adding that the long-standing bank’s “franchise value” could have been safeguarded and "transferred" to a new owner in return for an “equity injection.”

Ackman suggested that SVB’s senior management “made a basic mistake” but should be fired. He noted:

After conducting a “back-of-the-envelope review” of SVB’s balance sheet, Ackman believes that even “in a liquidation,” depositors “should eventually” get back approximately “98% of their deposits”.

However, he argued