Activist warns of SVB collapse's aftereffects

Bill Ackman, a billionaire US investor and hedge fund manager, has warned the US of dire consequences following the implosion of Silicon Valley Bank (SVB), a major US lender focused on tech and startups. He wrote on his Twitter account that the government made a "soon-to-be irreversible mistake" in its treatment of the failed bank, as only 11% of SVB's $175.4 billion in deposits were insured at the time of the bank's failure. This means that when the banks reopen on Monday, the withdrawal of all uninsured deposits from all but the 'systemically important banks' (SIBs' will lead to an economic meltdown, as the withdrawals will drain liquidity from community, regional and other banks and begin the destruction of these important institutions. Ackman believes that US authorities should either find a buyer for SVB before the banks open on Monday or guarantee all of its deposits, as this approach would have minimized the risk of any gov't losses and created the potential for substantial profits from the rescue. SVB collapsed last Friday after its shares plunged due to a massive bank run. Senior management made a mistake by investing short-term deposits in longer-term, fixed-rate assets, leading to a bank run. US authorities were also at fault for the bank's failure, as their job is to monitor the banking system for risk. SVB had more than $200 billion of assets and $170 billion of deposits from business borrowers.