Billionaire hedge fund executive Bill Ackman called for the Biden administration to "explicitly guarantee all deposits now" as 20 regional banks halted trading on Monday.
Ackman, founder and CEO of Pershing Square Capital Management, warned through his Twitter account that the "economy will not function" unless the Federal Deposit Insurance Corporation takes the necessary step.
"We need a time out where everyone feels safe, and we buy time for an updated deposit regime. People love their local banks," Ackman wrote. "They don't want to leave, but fear is a very powerful motivator."
"We need to hear from our gov't that it is explicitly committed to preserving our system of smaller banks," he continued, emphasizing that while each small bank is not "systematically important," they are collectively.
Ackman said he has confidence that Biden will eventually deliver the order but urged it to happen as soon as possible. It comes as the shock from Silicon Valley Bank's collapse on Friday has spread elsewhere.
The cryptocurrency-focused Signature Bank closed its doors over the weekend after a bank run spurred by SVB. On Monday, Citigroup's stock dropped 7.5%, Wells Fargo plunged 7%, Bank of America fell 5.9%, and JP Morgan was down 1.8%.
Amid the fallout, economist Stephen Moore suggested Monday that SVB's fall might be the "tip of the iceberg" for the financial system.
"The system is sound, but I do think you have a lot of major banks that are in some trouble," Moore said on Fox News.
Moore, a one-time adviser to former President Donald Trump, also blamed the banking crisis on "the massive inflation and the trillions and trillions of dollars of borrowing that the federal government has done."
Moore added: "And so what happened, because of the Biden spending and debt policies, is that not only did inflation go up, but interest rates have gone up."
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