Blankfein Says “Govt Actions Removed Reasons For Bank Run” As Ackman Pleads “Regional Banks Are Incredible Bargain”
“The banking system is safe” –Joe Biden
“Government actions removed reasons for a bank run…” –Lloyd Blankfein
“Regional bank stocks are an incredible bargain now as long as the gov’t does the right thing…” –Bill Ackman
“This situation is not 2008…” -Anonymous Treasury Official
Over the weekend, billionaire hedge fund manager Bill Ackman observed in one of his lengthy, self-serving twitter threads that unless serious confidence is restored to the banking sector, “immediately”… “the giant sucking sound you will hear will be the withdrawal of substantially all uninsured deposits from all but the ‘systemically important banks’ (SIBs),” which will in turn “drain liquidity from community, regional and other banks and begin the destruction of these important institutions.”
While not incorrect (small banks as the next “credit event” is precisely what we warned about last week), some wondered why the sudden concern – after all Ackman is best known for his investing prowess (and occasionally crying on CNBC to make sure the Fed aligns with his trades), and not so much his humanitarian bent.
Today, to nobody’s surprise we learned that Ackman’s relentless fire and brimstone from the weekend had a far more prosaic basis: he was long.
As we noted earlier, amid the chaos following this weekend’s bank bailout – which as we warned was not nearly enough and would lead to even more selling of small and regional banks…
… Ackman fired off yet another desperate tweet which boiled down to – ‘we’re fucked, and unless the FDIC does more, right now, we’re uberfucked…’ to wit: “The @FDICgov needs to explicitly guarantee all deposits now. Hours matter.“
What he meant is that margin calls are coming at 2:30pm and yes, “hours matter.”
Margin calls coming at 2;30pm. Hours matter. https://t.co/ZEkR7odvzn
— zerohedge (@zerohedge) March 13, 2023
In any case, Bill is sure that will happen – therefore “Regional bank stocks are an incredible bargain now as long as the gov’t does the right thing, and I am confident it will.” The “right thing” in this case being even more bailouts, which may or may not happen, but at least anyone who trades based on Ackman’s tweets will have a bunch of bank stocks to buy from, well, Bill.
Our economy will not function effectively without our community and regional banking system. Therefore, the @FDICgov needs to explicitly guarantee all deposits now. Hours matter.
We also need a modern version of our deposit insurance regime, but that will take some time, and… https://t.co/38mcc75M9a
— Bill Ackman (@BillAckman) March 13, 2023
Bill wasn’t alone: former Goldman CEO Lloyd Blankfein was also high on hopium, tweeting on Monday: “A few banks may have issues like SVB, but only a few,” adding that “govt actions removed reasons for bank runs.”
Again, that may be the case for JPMorgan (and Goldman, if the bank hadn’t totally botched its attempted entry into consumer banking), but small banks may beg to differ today. Lloyd also said that while anxiety and volatility are high, “sharply lower interest rates, fed likely on hold, are strong positives for markets.”
Translation: make the rate hikes stop now, or else the Democrat-donor money train gets it.
A few banks may have issues like SVB, but only a few. Govt actions removed reasons for bank runs. Biggest banks have much tougher regulation and stress testing. Anxiety and volatility high, but sharply lower interest rates, fed likely on hold, are strong positives for markets.
— Lloyd Blankfein (@lloydblankfein) March 13, 2023