Billionaire Bill Ackman has said that there isn’t much time left to solve the issue that caused many banks to close. He then asked: “how many more destroyed banks do we need to watch before the FDIC, Treasury, and our goverment start taking action?” He also made clear that a plan that protects the deposits of customers across all banking systems should be implemented right away.
Bill Ackman Urges Quick Fixes to Banking System or Risk Economy’s Deterioration
Billionaire Bill Ackman is the CEO and manager of Pershing Square Capital Management and he said in a tweet that we don’t have much time left to fix the banking system. He said that interest rates went up quickly, which made some assets less valuable and people withdrew money from banks.
Ackman said that the Federal Deposit Insurance Corporation (FDIC) failed to provide better insurance which led to First Republic Bank being taken over by regulators and its assets sold to JPMorgan Chase. Ackman believes that if the FDIC had given temporary guarantees, First Republic Bank wouldn’t have gone through this and it would have saved the economy from a lot of damage.
The billionaire stated that certain big banks, called “globally systemic banks” (G-SIBs), have an unfair edge as they are so huge that no one expects them to go under. This means only the people who do not insure their money will feel secure. Until this imbalance is gone, smaller regional banks face a lot of risk.
Ackman said that it takes a long time to trust banks, but that confidence can be lost quickly. He then warned that if people don’t start investing in the weakest banking institutions soon, the situation will get worse and worse. He finished by saying, “We don’t have much time left to resolve this problem.”
Bill Ackman (a famous person) thinks that the U.S. government should make changes to their banking system really soon. He believes they need a type of ‘deposit guarantee regime’ which will stop banks from failing and potentially save people’s money in the long run. Do you think he is right? Let us know what you think in the comments section below!