Pershing Square's Bill Ackman Says Banks Are Insolvent (C, BAC)

The loquacious Bill Ackman is about to pound the media circuit to inform investors that the current large banks are insolvent. Bill Ackman is the founder of Pershing Square and initiated a large media campaign to get Target (NYSE: TGT) to spin off its real estate assets into a separate REIT. Ackman did generate a lot of media attention for his investment in Target, but his ultimate goal of the REIT spin-off did not succeed.

Ackman is undeterred and about to go on media blitz to explain why he thinks the share prices of big banks will fall.

Ackman told the NY Times that banks like Citigroup (NYSE: C) and Bank of America (NYSE: BAC) are effectively insolvent. Ackman's media frenzy will include urging banks’ bondholders to exchange their debt for equity in order to shore up the institutions. However, the act of bondholders exchanging their debt for equity will likely sink the common stock of the banking stocks like Bank of America and Citigroup, which would produce a healthy profit for Ackman.

Mr. Ackman told the Times he's protecting the interests of investors and, the case of banks, taxpayers. "The problem when you are C.E.O. of a business is that you get used to being able to do anything you want, and you get a little bit too full of yourself."

One final note, the NY Times asked if Ackman is ever overly confident to which he said: "I was full of myself years ago and experience has humbled me."

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