Bank of America said to be buying Signature Bank, tweets Bill Ackman

Taking to Twitter on March 17, investor and renowned short-seller Bill Ackman said Bank of America has plans to step in and acquire distressed U.S. Signature Bank, one of three banks that went into forced receivership after a crisis in the U.S. banking sector last week.

Back of America to Signature’s rescue?

I am hearing that @BankofAmerica is going to buy Signature Bank on Monday. Unless and until we can protect uninsured deposits, the cost of capital is going to rise for smaller banks pushing them to merge or be acquired by the SIBs. I don’t think this is good for America.

— Bill Ackman (@BillAckman) March 17, 2023

Read more: Is SVB to big to fail? Will it get rescued? Bill Ackman already calling for bail-outs

Ackman on the contagion of Signature bank

Previously, Ackman said the US government should “guarantee” all deposits held by SVB to prevent the potential run on other banks and contagion to the broader financial institutions, which has already happened with the case of Credit Suisse and First Republic, two other banks now under distress.

In addition, Ackman warned of a potential “withdrawal of substantially all uninsured deposits” from all banks, not just the systemically important banks, if SVB’s deposits are not guaranteed, explaining that the world would then realize that uninsured deposits are “an unsecured illiquid claim on a failed bank.”

In a warning directed to the US government, Ackman stated that in the event of a failure to protect “all depositors” is a situation that could spiral out of control and lead to the potential destruction of community, regional, and other banks as rapid withdrawals from these banks could quickly escalate to bigger banks.

JPMorgan Chase, Citibank, and Bank of America recently announced they would step in to prop up distressed banks, agreeing to provide liquidity to markets on March 17. According to another consortium of unsubstantiated rumors, several banks–including Jp Morgan Chase and Morgan Stanley–are in talks to rescue First Republic, as that bank also requires fresh capital in response to depositor withdrawals that began this week.

Ackman said on March 10 that if the government doesn’t immediately step in to guarantee SVB’s deposits, a broader financial calamity would be near. On March 12, the government did step in, sending the FDIC to take the bank into Federal receivership.

Now, a full five days since entering forced receivership by the FDIC, shards of Signature bank remain up for sale — with Ackman’s latest prediction just the latest in an ongoing drama that threatens to engulf and cause contagion and broader distress to financial markets writ large.