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Raymond Pasillas
Mar 14, 2023 8:41AM ET
The printing press never stops.
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⏰ React to the Market Faster with Custom, Real-Time News Get Started
Big Short’s Michael Burry sees no 'true danger' from SVB crisis
© Reuters
By Ambar Warrick
Investing.com -- Hedge fund manager Michael Burry, who had famously shorted the 2008 subprime mortgage crisis, said on late-Monday that the ongoing turmoil in the American banking sector could be short-lived, without posing any big threats to the economy.
“This crisis could resolve very quickly. I am not seeing true danger here,” Burry said in a now-deleted tweet.
Burry’s comments come as the U.S. Government and the Federal Reserve intervened in the banking sector to stem a greater fallout from the collapse of Silicon Valley Bank - the second-largest banking failure in the U.S.
SVB was closed by regulators last week after it faced a bank run, as rising interest rates took a heavy toll on its balance sheet, while the value of its securities portfolio, which consisted largely of Treasury bonds, plummeted amid higher rates. This saw a near wipeout in the share value of SVB Financial Group (NASDAQ:SIVB), which owns the bank.
Still, the White House said that all depositors in the bank will be covered, while the Fed and the Treasury rolled out emergency borrowing measures allowing other embattled banks to easily access capital.
President Joe Biden also reassured investors that the American banking system was stable, in a televised address shortly after regulators took control of SVB.
SVB’s collapse coincided with the bankruptcy of two other banks - Silvergate Capital Corp (NYSE:SI) and Signature Bank (NASDAQ:SBNY), although the two were also burnt by their exposure to cryptocurrency markets.
Burry, who was portrayed by actor Christian Bale in the 2016 movie "The Big Short", had recently compared the SVB collapse to the 2008 crisis and the 2000 dotcom bubble crash.
He said that people “full of hubris and greed take stupid risks and fail,” which in turn forces the government into bailing them out by printing money.
Burry had also compared the SVB collapse to that of Enron, the energy trading giant that was charged with accounting fraud in 2001, which resulted in its bankruptcy, as well as the jailing of several high-level executives.
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Comments (11)
PM_Coffee
Mar 13, 2023 11:32PM ET
Why do I feel like Burry is tied up in his basement right now?
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TheEnd IsNigh
Mar 13, 2023 11:32PM ET
...and being forced to listen to Britney Spears on repeat.
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gitesh shah
Mar 13, 2023 11:25PM ET
to contain contagion, banks will have to increase deposit rates so that they do not loose out on depositors money to safe treasuries yielding greater than 4%. when they do that effect is low profits and lower stocks.
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James Pattison
Mar 13, 2023 11:10PM ET
Lets privatize profits and socialize loses… great stuff people… good job all around…
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William Smith
Mar 13, 2023 11:01PM ET
Printing money to finance the non bailout bailout. That's been the solution since Bernanke destroyed America with QE.
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Metl Mann
Mar 13, 2023 11:01PM ET
The “bailout” is funded with money the banks put in a pot just for this purpose.
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Steven ML
Mar 13, 2023 11:01PM ET
and where does this money come from?
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Casador Del Oso
Mar 13, 2023 10:59PM ET
If the contagion is contained then it's time to get back to higher rates for much longer.
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JIM VETTER
Mar 13, 2023 10:54PM ET
Biden stating all is well should give no one any solice.
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Gates Smith
Mar 13, 2023 10:47PM ET
well considering he thinks it's Tuesday is a red flag.
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Lio Gutierrez
Mar 13, 2023 10:15PM ET
if there was no danger the fed wouldn't have stepped in to cover the uninsured deposits.
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Ivan Draga
Mar 13, 2023 10:05PM ET
Sarcasm detector is broken here
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