Big Short’s Michael Burry sees no 'true danger' from SVB crisis
Investing.com | Author Ambar Warrick
Published Mar 13, 2023 08:37PM ET
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.
Get The News You Want
Written By: Investing.com
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.