SVB implosion ‘a-soon-to-be-irreversible mistake’ unless government intervenes

The consequences could be “vast and profound” if Silicon Valley Bank is not bailed out, according to billionaire investor Bill Ackman.

Ackman warned of an “irreversible mistake” if a major bank does not acquire SVB before business opens on Monday, or if the U.S. government does not guarantee all of the failed bank’s deposits.

“The gov’t has about 48 hours to fix a-soon-to-be-irreversible mistake,” Ackman said in a lengthy tweet on Saturday. “The world has woken up to what an uninsured deposit is — an unsecured illiquid claim on a failed bank.”

A California regulator closed SVB on Friday and the Federal Deposit Insurance Corporation stepped in as the bank’s receiver. SVB was popular with crypto-related companies, start-ups and venture capitalists.

Ackman believes it is unlikely that another major bank like JPMorgan Chase, Citibank or Bank of America will acquire SVB. The billionaire investor said he would have been open to participating with an “equity injection” if the government guaranteed deposits on Friday and allowed the bank to be transferred to a new owner.

He warned that the bank’s clients will soon run out of available funds if denied access to their accounts. 

“Thousands of the fastest growing, most innovative venture-backed companies in the U.S. will begin to fail to make payroll next week,” Ackman said.

Ackman also had harsh words for the FDIC and the Office of the Comptroller of the Currency, saying both agencies “screwed up” and should have been watching SVB more closely.

“The FDIC’s and OCC’s 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,” Ackman said.

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