Billionaire investor Bill Ackman says US banks depositing $30 billion into First Republic creates a ‘false sense of confidence’

Bill Ackman, CEO of Pershing Square Capital, at the Wall Street Journal Digital Conference in California, October 17, 2017.

Bill Ackman said a plan to deposit $30 billion into First Republic Bank creates a “false sense of confidence.”
He said the banking crisis is beyond what the private sector can solve on its own.
He is calling for a temporary systemwide deposit guarantee immediately.

Billionaire investor Bill Ackman has criticized a plan by 11 US banks to deposit $30 billion into First Republic Bank, or FRB, saying it creates a “false sense of confidence” in the San Francisco lender.

Treasury Secretary Janet Yellen, a former Fed chair, has apparently pushed the big Wall Street banks to “recycle” some of the deposits they have received from First Republic, by putting the billions back into the lender, Ackman said in a long tweet on Thursday.

“The result is that FRB default risk is now being spread to our largest banks,” the founder and CEO of hedge fund Pershing Square Capital Management added. 

“Spreading the risk of financial contagion to achieve a false sense of confidence in FRB is bad policy,” he said. 

He is instead calling for a temporary systemwide deposit guarantee immediately. The US has guaranteed access deposits at the collapsed Silicon Valley Bank and Signature Bank, New York, but the Federal Deposit Insurance Corporation only insures up to $250,000 per account owner, per ownership category. 

“We are beyond the point where the private sector can solve the problem and are in the hands of our government and regulators,” he said.


—Bill Ackman (@BillAckman) March 17, 2023

Ackman said he has no investments in the banking sector but was just “extremely concerned about financial contagion risk spiraling out of control and …read more

Source:: Businessinsider

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