Bill Ackman: The gov't has about 48h to fix a-soon-to-be-irreversible mistake

If he gets what he wants, I guess if you are rich you get no risk.<p>What about all the people who lost what to them was a lot of money in 2008, did the Gov protect them ? I do not think so. All this shows is who runs the US, not the voters but the people who has a big stake in Wall Street.<p>What should be done, the execs of SVC pays up for not paying attention to to what the Fed was doing.<p>There was another story about SVC execs selling their stock before the issue became known. Will they get in trouble, I doubt it but you can be sure they will still get their large bonus.<p>EDIT: added <a href="https:&#x2F;&#x2F;news.ycombinator.com&#x2F;item?id=35104396" rel="nofollow">https:&#x2F;&#x2F;news.ycombinator.com&#x2F;item?id=35104396</a>

This is a classic case of rich people taking risk with capital, and when they fail, society shoulders the losses. Over and over again. We are socializing the losses of controllers of capital. If there were real consequences to their wealth they wouldn’t act this way. And I’m not just talking about SVB

Let me sum this up for you, &quot;Privatize the profits and socialize the costs&quot;

Any kind of bailout for this crash has a big optics problem, because the typically sympathetic depositors to a failed bank are in this case big risk taking startups.<p>Two wildly different groups are in trouble with any bank failure: First, the bank equity holders and senior management. Second, the depositors.<p>In general, I&#x27;m sure everyone believes that first group - the risk takers - should be wiped out. Moral hazard etc. etc. etc.<p>But that second group is usually really sympathetic! These are just bank deposits. You don&#x27;t WANT people to have to scrutinize their bank&#x27;s credit risk, that&#x27;s why we have the FDIC!<p>But here the depositors are themselves massive risk takers - tech startups. And so politically, seeing the depositors get a handout is going to be a tough pill to swallow. Even though the risk that blew them up (bank credit) wasn&#x27;t the risk typically associated with their business model.

And here I was thinking that the best thing one can do for the economy is to let the market run freely and without any intervention from that pesky government who&#x27;s always trying to regulate things it doesn&#x27;t comprehend

The FDIC $250,000 insurance is there to protect the depositors.<p>The amount is not a secret.<p>If you keep more than that in cash in a bank account, you take a known risk and must definitely not be bailed out.<p>You did not need to keep that large amount in cash. You could have bought short-term US treasury bills with every cent above $250k, and your deposits would have been perfectly safe. All of it.

Let me get this clear: Is Ackman arguing that there was some sort of implied guarantee, beyond the $250K insurance limit, that the federal government would never let anyone lose money if held in an account at a federally insured bank?<p>Because WTF. <i>This</i> is precisely moral hazard. The rich can&#x27;t lose money... in Silicon Valley of all places.

Wonder what Bill Ackman&#x27;s stance is on student loan forgiveness

If the government is going to guarantee 100% of deposits de facto but not de jure, that seems weird. Perhaps FDIC should guarantee 100% of deposits, but then banking regulations should be designed with that in mind.

Twitter finally has long posts, and they are 100% as incredibly awful &amp; terrible as prophecy has foretold.

With how the system is supposed to work, isn&#x27;t anyone who have uninsured deposits supposed to buy their own insurance? If the risk of bank failure is low, then the insurance premium should be very low. If the premium is high, that&#x27;s an indication that the risk is too high and maybe you should find an alternative.

Let companies fail, but take care of the people that relied on them, if necessary. That should be the principle of a free market, if you insist on keeping it free.

This guy lost all credibility re: this stuff after his meltdown on CNBC

&gt; consider the feasibility of a world where each depositor must do their own credit assessment of the bank they choose to bank with<p>Isn&#x27;t this exactly the problem the FDIC solves? Nobody with less than $250K need worry about who they bank with if they see the FDIC logo.

Matt Levine says essentially the same thing [0]:<p>&gt; <i>There was a run on SVB in part because there hasn’t been a big bank run in a while, and people — venture capitalists, startups — were naturally worried that they might lose their deposits if their bank failed. Then the bank failed. If it turns out to be true that they lose their deposits, there could be more bank runs: Lots of businesses keep uninsured deposits at lots of banks, and if the moral of SVB is “your uninsured transaction-banking deposits can vanish overnight” then those businesses will do a lot more credit analysis, move their money out of weaker banks, and put it at, like, JPMorgan. This could be self-fulfillingly bad for a lot of weaker banks. My assumption is that the FDIC, the Federal Reserve, and the banks who are looking at buying SVB all really don’t want that.</i><p>But what it means is, there isn&#x27;t (or there can&#x27;t be) &quot;uninsured&quot; deposits, because they would cause unacceptable systemic risk.<p>Then the next question is, of course: why should there be insured deposits, why pay the premiums, if in effect all deposits are insured by vertue of the necessity of protecting the system?<p>[0] <a href="https:&#x2F;&#x2F;www.bloomberg.com&#x2F;opinion&#x2F;articles&#x2F;2023-03-10&#x2F;startup-bank-had-a-startup-bank-run" rel="nofollow">https:&#x2F;&#x2F;www.bloomberg.com&#x2F;opinion&#x2F;articles&#x2F;2023-03-10&#x2F;startu...</a>

This would be a radical change in US banking policy.<p>It shouldn&#x27;t be done in haste... and there&#x27;s no need to -- if this does indeed shake confidence in regional and community banks and we want to preserve them, then we can do something to reverse that. (Much better, by the way, to see how it actually goes down so that the solution can be tailored to the problem.)<p>The fake 48h deadline is a dead giveaway this is a scam... that false sense of urgency.

Haven’t been on Twitter in a while. The giant run on paragraph format is definitely a huge step down compared to the tweet thread. Yikes.

For some reason my script for turning twitter links into nitter and putting the tweet on archive.org failed and I wound up getting the twitter web experience, which includes a box of &quot;More Tweets&quot; which are popular tweets from other accounts that are connected to @billackman by some similarity or network algorithm.<p>I don&#x27;t mean to discredit him by association, but the association is entirely stablecoin posters, antivax, federal reserve conspiracies, january 6 &quot;truthers&quot;, &quot;traditional white culture&quot; enthusiasts and a Bed, Bath and Beyond retrospective. So maybe think twice about taking financial advice from somebody who uses the single-tweet essay function twitter now has.

Save the whales! Wonder how many of the companies are in his portfolio.<p>The government is going to save the depositors. FDIC will liquidate SVB’s assets and pay the depositors back. They might take a haircut in the process.

Always wonder what trades people have on when they start talking like this.

I&#x27;m not in favor of this but most of the money lost will be by bondholders.<p>Why would you keep more than a 250K in a single savings account? If it&#x27;s an investment you should invest it. If it&#x27;s for liquidity why not split over multiple banks? Personally I don&#x27;t keep that kind of money in a savings account but what&#x27;s the story for people who do?

I wonder why he thinks it’s unlikely a buyer steps up by Monday. He says that 98% of deposits will be covered in liquidation. The FDIC can backstop any remaining amount. And, all that’s left is a rich client base and the infra of a previously successful top-20 bank. Aren’t the remaining parts an extremely attractive asset for another bank or PE?

My guess: SVB collapse took everyone including the FDIC by surprise. It has unfolded very quickly. Bill Ackman makes the point that the FDIC&#x2F;government should have realized their exposure and been monitoring them much more closely. This is likely a valid point.

Enjoy your weekend.<p>Obvs a prediction, but while the limit is 250k - the FDIC will act to protect depositors with higher amounts - probably a private aquisition of some kind.<p>May be worth upping the (advertised) 250k insurance limit, as the de facto amount is already higher.

generic billionaire logic:<p>- be richer than God<p>- don&#x27;t rescue a venerable, functional institution that is modestly, temporarily impaired, partly due to terrible risk management and partly due to a tsunami of cash flowing in and then starting to flow out. (SVB didn&#x27;t have to buy Treasurys, could have lent overnight, deposited at Fed and taken interest on excess reserves. Instead they stretched for a relatively puny yield pickup and got badly burned.)<p>- don&#x27;t calm the waters. instead, tell people to take money out<p>- short SVB stock and make a killing<p>- say it&#x27;s Biden&#x27;s fault and he has to do something and bail the startup ecosystem out<p>- <a href="https:&#x2F;&#x2F;tenor.com&#x2F;view&#x2F;the-big-lebowski-youre-not-wrong-just-an-asshole-gif-4575092" rel="nofollow">https:&#x2F;&#x2F;tenor.com&#x2F;view&#x2F;the-big-lebowski-youre-not-wrong-just...</a><p>Bill Ackman didn&#x27;t do all these things but as a group that&#x27;s what people like him and Thiel and Musk 100% did. They want to be disruption chaos monkeys and then have the taxpayers bail them out of a mess they created. Remember than when they go bananas about Biden wanting them to pay similar tax rates to middle class folk.

He’s correct. The $250k limit is stupid - Deposits at highly regulated banks should be insured in full. Shareholders should loose everything but not depositors. Bank executives should also be regulated like lawyers and accountants they should be fined heavily and never work in Finance again.<p>If SVB is not saved quickly the consequences are likely to be dire, there will a run on many more banks and many small companies will go bankrupt if they can’t make payroll. It was a massive mistake not to bailout Lehman Brothers unfortunately Janet Yellon is so useless that I expect they’ll probably repeat it.

We had protection against this shit. It was called the Glass-Steagall Act. But rich people weren&#x27;t getting rich enough, so they were yet again allowed to play with other people&#x27;s money.<p>That never, ever turns out well, because it turns out that most capitalists are clever at getting rich and fantastically stupid at understanding how systems work at a macro scale. Which is how we got 2008 and what&#x27;s about to happen, which is gonna be hilarious, for &quot;19th century Russian novel&quot; values of hilarious.

How much of his personal fortune is Bill Ackman putting up to guarantee deposits?

Call daddy to socialize the loses while we pocket the profits.

It seems like people are so focused on class warfare and politics that they completely shut off the problem solving side of their brain. Assuming there’s no buyer found by Monday, the fed should just step in and guarantee deposits via a bridge loan at payday-loan interest rates. The interest will offset defaults and taxpayers will make money, which also means the fed can sell off this debt to the private sector. But, time is of the essence which is why govt assistance is needed. Depositors are mostly businesses that will be able to solve for the long term interest payment impacts. The problem for them is purely short term liquidity.

Why are we bailing out the rich people? Again?

that&#x27;s a lot more than 288 characters

I guess someone lost a lot of money here...<p>Really, though, the Biden admin is going to do a bailout if they can. SVB is the bank for some of their biggest donors (including bill ackman).

can someone explain how a tweet this long is possible?

There are no libertarians in a bank run.