“Umm…the banks are melting,” Musk tweeted early Thursday.

Silicon Valley Bank collapsed on March 11, followed by Signature Bank days later. Another regional bank, First Republic, has seen its shares fall nearly 90% this month despite an unusual rescue involving nearly a dozen large financial institutions aimed at preventing financial contagion. The failure of Swiss bank Credit Suisse in Europe, which UBS took over this weekend for more than $3 billion, has added to the sense of unease.

The banking crisis has contributed to wild swings in the Treasury market. This month the ICE BofA MOVE index, a widely followed gauge of bond market volatility, reached the highest level since the 2008 financial crisis, as the banking turmoil reduced market liquidity. 

Musk fed up with rate hikes

Musk also wrote on Wednesday: “A major driver of depositor flight is people moving money from low interest savings accounts to high interest money market (Treasury Bill) accounts. This foolish rate hike will worsen depositor flight.”

When a Twitter user suggested that Powell should be replaced by GPT-4—the recently released successor to the popular A.I. chatbot ChatGPT—Musk replied, “Couldn’t do worse!”

Musk isn’t alone in criticizing the Fed’s latest hike. 

Mark Zandi, chief economist of Moody’s Analytics, called the hike “unnecessary” on  Wednesday evening. “The Fed’s decision to raise interest rates again given the fragile stability in the banking system is disappointing,” he tweeted. “They now risk raising rates too high too fast.” 

Powell acknowledged that interest rate hikes contributed to the bank collapses at a news conference on Wednesday, saying, “Events in the banking system over the past two weeks are likely to result in tighter credit conditions for households and businesses, which would in turn affect economic outcomes.” 

But not everyone thinks Powell made the wrong move or sees the bank failures as a sign of deeper problems.

Citigroup CEO Jane Fraser called the hike “sensible” during an interview with David Rubinstein, head of private equity firm Carlyle. She added, “This is not a credit crisis. This is a situation where it’s a few banks that have some problems, and it’s better to make sure that we nip that in the bud.” 

Musk had urged the Fed on Monday to not only pause hikes, but reverse them, tweeting, 

“Fed needs to drop the rate by at least 50bps on Wednesday.” 

That came in response to Bill Ackman, founder of Pershing Square Capital Management, arguing the Fed “should pause” rate hikes given the banking turmoil, tweeting, “This is not an environment into which the Federal Reserve should be raising rates and adding additional pressure on the system as financial stability is the Fed’s first responsibility.”

Musk’s frustration with the Fed rate hike hikes goes back a ways. In December, he blamed the central bank for the steep drop in Tesla stock—last year the carmaker’s shares fell 65% and it lost $700 billion in market valuation—arguing interest rate hikes had made the stock market less appealing to investors.

“As the ‘risk-free’ real rate of return from Treasury Bills approaches the much riskier rate of return from stocks, the value of stocks drop,” he tweeted at the time. “For example, if T-bills and stocks both had a 10% rate of return, everyone would just buy the former.”

He added, “We don’t control the Federal Reserve. That is the real problem here.”