Janet Yellen REIGNITES Run on the Banks When She Walks Back Depositor Guarantee

Biden’s Treasury Secretary Janet Yellen may have just singlehandedly restarted the bank runs. Let this serve as a warning!

After the collapse of Silicon Valley Bank left the safety of deposits in question, Yellen and the federal government promised to backstop those deposits and made sure that they were all taken care off.

After that, the fear spread to ALL deposits at ALL banks in the U.S. as people began fearing that the same thing that happened at SVB could happen to any bank in the country.

Yellen responded to this by, again, promising to guarantee deposits this time for ALL banks in America which seemed to slow the bank runs… at least temporarily.

By that point $1.1 TRILLION in assets had already been withdrawn from smaller, more vulnerable banks, and Yellen’s backstop guarantee was able to stop that until, suddenly, she COMPLETELY pulled the rug on that promise.

Biden’s Treasury Secretary walked back the guarantee that stopped the bleeding, making it explicitly clear that systemwide backstops were, in fact, NOT being considered.

Famed hedge fund manager Bill Ackman warned that thanks to Yellen, we’re “headed for another train wreck.”

Ackman tweeted, “This afternoon, @SecYellen walked back yesterday’s implicit support for small banks and depositors, while making it explicit that systemwide deposit guarantees were not being considered.”

“We have gone from implicit support for depositors to @SecYellen explicit statement today that no guarantee is being considered with rates now being raised to 5%. 5% is a threshold that makes bank deposits that much less attractive. I would be surprised if deposit outflows don’t accelerate effective immediately.”

Yesterday, @SecYellen made reassuring comments that led the market and depositors to believe that all deposits were now implicitly guaranteed. That coupled with a leak suggesting that @USTreasury, @FDICgov and @SecYellen were looking for a way to guarantee all deposits reassured… https://t.co/GqaP5LYpza

— Bill Ackman (@BillAckman) March 22, 2023

The American banking system has $18 trillion in assets and Ackman warns that the Biden administration just made them ALL vulnerable once again.

Now the only way to stop the bank run that will ultimately lead to the collapse of the entire American banking system is for Congress to work out a bi-partisan solution and fix this hellish disaster that Yellen just unleashed on America.

Ackman warned that the longer this is allowed to go on – the more catastrophic it will be.

He tweeted, “Consider recent events impact on the long-term cost of equity capital for non-systemically important banks where you can wake up one day as a shareholder or bondholder and your investment instantly goes to zero. When combined with the higher cost of debt and deposits due to rising rates, consider what the impact will be on lending rates and our economy.”

He added, “The longer this banking crisis is allowed to continue, the greater the damage to smaller banks and their ability to access low-cost capital. Trust and confidence are earned over many years, but can be wiped out in a few days. I fear we are heading for another a train wreck. Hopefully, our regulators will get this right.”

Consider recent events impact on the long-term cost of equity capital for non-systemically important banks where you can wake up one day as a shareholder or bondholder and your investment instantly goes to zero. When combined with the higher cost of debt and deposits due to…

— Bill Ackman (@BillAckman) March 22, 2023

These are EXTREMELY dangerous times, and we have the MOST incompetent leadership we’ve ever had in Washington trying to put out these unprecedented fires. We’re in trouble.