With a post on Twitter, Bill Ackman, billionaire investor and CEO of Pershing Square, warned that the flight of deposits from banks, and therefore the run on branches, could accelerate, after US Treasury Secretary Janet Yellen, in her hearing on yesterday in the United States Senate, he ruled out both a guarantee on all deposits of US banks and the possibility of raising the guarantee ceiling on them by the Federal Deposit Insurance Corp beyond the current maximum of 250,000 dollars.
“I’d be surprised if there wasn’t an immediate acceleration in deposit flight,” Ackman wrote on Twitter.
Along with Elon Musk, Bill Ackman in the previous days has
launched an appeal to the Fed inviting it not to raise rates. Musk, CEO of Tesla, Twitter and Space X had gone even further, calling for a cut of 50 basis points.
The Fed announced yesterday that it has raised fed funds rates by another 25 basis points, bringing them to the range between 4.75% and 5%.
“I haven’t considered or discussed anything to do with blanket insurance or all deposit guarantees,” Janet Yellen said in her US Senate hearing yesterday.
A statement that sent Wall Street to the bottom on the same day that Jerome Powell’s Fed announced it had raised rates.
The Dow Jones Industrial Average plunged 530.49 points, or 1.63%, to 32,030.11. The S&P 500 lost 1.65% to 3,936.97. The Nasdaq Composite lost 1.6% to 11,669.96. First Republic stock plunged more than 15%.