(Bloomberg) -- Pershing Square Capital Management’s Bill Ackman said that regional bank stocks are an “incredible bargain” right now as long as the government does the “right thing.”

The trade is not without real risk but offers “very attractive asymmetry,” he said in a tweet, adding that a decline in rates makes this an even better investment. 

The turmoil that has hit bank stocks deepened on Monday with regional banks hit the hardest as the KBW Regional Banking Index sank as much as 12%. That is the sharpest intraday drop since March 2020. 

Ackman also said that the Federal Deposit Insurance Corp. needs to explicitly guarantee all deposits now for the time being and that the US needs to modernize its deposit insurance regime. The government must commit to preserving the US’s small bank system, he added.  

“While each small bank is not ‘systemically important’ like JP Morgan or Citi, collectively they are as, if not more, systemically important,” Ackman wrote in a tweet. 

The Pershing Square founder argued Sunday evening that more banks would likely fail despite the intervention from the Federal Reserve but applauded the government for laying out a “clear roadmap” on how it will manage them. 

The Pershing Square CEO said Monday that he won’t invest long or short in banks so he could “continue to be part of this conversation” but that he is “100%+ long North American companies,” which is an enormous  

--With assistance from Divya Balji.

(Updates to add latest trading and chart.)

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