Bill Ackman blames Yellen for bank runs. Could Fed chair Jerome Powell and US Treasury Secretary Janet Yellen be playing good cop bad cop?

“Yellen opens mouth stocks dump,” tweeted Zerohedge.

The latest is that Yellen is not considering a broad increase in deposit insurance.

That was enough to undo Powell’s dovish 25 basis point rate hike and a pause. So with a trough in the central bank liquidity cycle is now likely in, bulls were gearing up for an overdue bull recovery run, a melt-up in risk assets.

“Yellen opens mouth stocks dump”

BILL ACKMAN

But Yellen’s tamed-the-bull comment about not considering increasing deposit insurance excited bears pushing bulls back.

Exhibit 1 shows how the market moves based on words from the Fed head and US secretary.

FOMC statement, the rate pause, the preliminary stage of the great pivot from tightening to loosening monetary policy, stocks rally.

The preliminary stage of the great pivot is a pause, then an interest rate cut, then more cut and QE. 

The optimum time to build long-term positions in risk assets is when central bank liquidity has reached a trough and is moving into the loosening cycle. 

The US treasury enters the stage with the following comment and why Bill Ackman blames Yellen for bank runs

“Increasing the limit for deposits insured by the FDIC above $250,000 “is not something that we have looked at,” Yellen told lawmakers at a Senate hearing. It’s not something that we’re considering.”

Bill Ackman thinks this could cause a bank run on smaller community rural banks as depositors above the threshold of $250,000 move to the big banks you can count on one hand. 

“Increasing the limit for deposits insured by the FDIC above $250,000 “is not something that we have looked at”

JANET YELLEN

It is at the discretion of the FCIE board, the Fed board, the US Treasury, and POTUS, which depositors above the insured threshold will be made whole if the bank fails.   

So who gets a bailout and bailed in above the insurance threshold is at the discretion of the political ruling elite. If you are not in the club, you lose, and your wealth is confiscated. This is a kleptocracy, a government of people who use their power to steal citizens and country’s resources. We all pay for bank bailouts through currency debasement and inflation. 

“A temporary systemwide deposit guarantee is needed to stop the bleeding”
Bill Ackman

Bill Ackman blames Yellen for bank runs, and he sees more coming

So we could see more downside in banks until Yellen blinks.

“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,” tweeted Bill Ackman.

Ackman concluded by repeating his request: a comprehensive deposit guarantee on America’s $18 trillion in assets…

“A temporary systemwide deposit guarantee is needed to stop the bleeding. The longer the uncertainty continues, the more permanent the damage is to the smaller banks, and the more difficult it will be to bring their customers back,” he wrote.