Notorious Investor Has Dire Prediction For People With Money in Banks

Hugh Hendry has spent quite a bit of time in the investment world. The Scottish hedge fund manager is known as the founder of Eclectica Asset Management and was recognized as Europe’s Best Absolute Return Fund Manager in 2009.

Speaking on a recent podcast about the banking crisis that is currently vexing markets, Hendry said that he could imagine the instatement of a new regulation that might prevent people from withdrawing their money.

“My fear -- and I do not say this lightly -- given the present peril with regard to the magnitude of losses on security portfolios held within predominantly the regional banks, you have to cast your mind back to 1934 and the Gold Reserve Act,” Hendry said. “I can actually conceive of a federal or treasury rule coming in and saying ‘for the next 180 days, you can’t pull your money out of the banking sector.’”

DON’T MISS: First Republic Bank Goes Down

The Gold Reserve Act of 1934 that Hendry mentions notably transferred ownership of all monetary gold -- held by both individuals and corporations -- to the U.S. Treasury. People, in return, received currency that reduced the value of their gold.

The current banking crisis, compounded by the Fed’s consistent interest-rate hikes, was set off by the collapse of Signature Valley Bank in March. The most recent bank to fall was First Republic, which went down on May 1.