Regulators have just a few options at their disposal to address a nettlesome crisis of confidence in the banking industry, with some type of measure to protect all deposits attracting a growing number of supporters on Wall Street. While blanket coverage is unlikely to take hold, a program where depositors could pay a fee to protect money above the $250,000 FDIC insurance threshold could be more feasible. 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bank can survive bad news or bad data as a stock price plunge inevitably follows, insured and uninsured deposits are withdrawn and ‘pursuing strategic alternatives’ means an FDIC shutdown over the coming weekend.” Ackman didn’t provide specifics on how he thinks a deposit guarantee program would work, but he said one is essential to restore investor confidence in regional banks. “We are running out of time to fix this problem. How many more unnecessary bank failures do we need to watch before the FDIC, @USTreasury and our government wake up?” he said. “We need a systemwide deposit guarantee regime now.” Fellow hedge fund titan Nelson Peltz, the Trian Fund Mangement co-founder, also suggested that depositors be required to pay a premium for anything above the $250,000 limit. “It should stop the deposit outflow from the small regional and community banks,” he was quoted saying in a Financial Times report . ” I don’t think we want all of the funds just going to major banks.” Insecurity over deposits has been at the center of the recent banking storm, which hit full force in early March during a run on Silicon Valley Bank. Worries over the bank’s liquidity caused depositors to begin withdrawing funds, which then caused the bank to have to sell long-duration assets at a loss…
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