Billionaire hedge fund manager Bill Ackman made an impassioned plea for a depositor backstop in a tweet Wednesday.
"Banking is a confidence game," the CEO of the $18.5 billion Pershing Square Capital Management fund said in a post following the Federal Reserve meeting. "At this rate, no regional bank can survive bad news or bad data as a stock price plunge inevitably follows, insured and uninsured deposits are withdrawn and 'pursuing strategic alternatives' means an FDIC shutdown over the coming weekend.
That has put pressure on midsize banks, and the S & P Regional Bank ETF has fallen 40% year to date. Other options Banking analyst Mike Mayo at Wells Fargo suggested one alternative could be fully guaranteed deposits to $2 million, which he said is the average uninsured deposit per account. That would be along the lines of what the government did, albeit temporarily, after Lehman Brothers collapsed in 2008.
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