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Buffett says bank run would have been ‘devastating’ without deposit guarantees

Warren Buffett said the consequences would have been “catastrophic” had U.S. regulators not insured deposits at Silicon Valley and Signature banks.

“Despite the FDIC, [Federal Deposit Insurance Corporation] The upper limit is $250,000. . . Berkshire Hathaway’s CEO spoke to tens of thousands of shareholders who gathered in downtown Omaha for the company’s annual meeting Saturday.

The comments sparked debate about federal intervention following a string of bank failures in the United States. The federal government has insured deposits at levels above $250,000 covered by federal insurance at both SVB and signatory banks.

Regulators were able to circumvent that restriction by designating both as systemic risks. Local bank stocks have fluctuated wildly in recent trading sessions, but depositors are somewhat lulled by the implied assurance that the government will intervene in the crisis.

“I can’t imagine anyone in the administration, Congress, or the Federal Reserve … tomorrow I want to go on TV and explain to the American people why I only have $250,000 in insurance,” Buffett added. “It will start running in all banks.”

Berkshire is under pressure from the state of the banking system, Buffett said CNBC last month The country “has not survived the bank failure, but its depositors are not at stake,” he said.

The sprawling industrial insurance conglomerate used to invest in struggling financial institutions using its balance sheet, which Buffett likened to a fortress. Berkshire invested in both Goldman Sachs and Bank of America during the financial crisis.

But so far it has not intervened in the current crisis. Investors note that Berkshire’s portfolio already has positions in many large financial institutions.

Counselor of the First Republic sold this month It invests in JPMorgan Chase in a deal coordinated by US regulators.

It was due to the rapid deposit flights that the First Republic suffered. Advisors believed the bank would burn out with billions of dollars in capital injections if its investment in Berkshire wasn’t enough to boost confidence.

Buffett said Berkshire has become much more “cautious” than in previous financial crises, as depositors could move funds out of banks quickly. warned.

Americans are “probably as confused about banking as ever, and that’s having an effect,” he added.

“I have no idea what happened to deposit stickiness…and it changes everything. You can do it in seconds.”

The so-called Oracle of Omaha said some of the problems in the banking system can be seen by anyone willing to dive into the annual reports of already-failed banks, wrote the First Republic on low interest rates Pointed out jumbo mortgages. .

The Federal Reserve Board condemned For Trump-era regulatory and supervisory failures, and the inadequate risk management processes that ultimately led to the demise of SVB.

Buffett added that Berkshire was on the sidelines but had its capital ready should the opportunity present itself.

“We store our cash and Treasury bonds at Berkshire . “I don’t think so, but it’s possible.”

As a tribute to the crisis, but with his signature Midwestern folk charm, he pulled out two business cards when questioned about the issue: one for “Available for Sale,” the other. reads “held to maturity” and refers to the way banks classify the securities they hold on their balance sheets.

Buffett answered questions from shareholders on Saturday that touched on real estate planning, value investing and U.S.-China relations, and above all else gathered at the CHI Health Center in downtown Omaha was his succession at Berkshire.

The 92-year-old investor has confirmed that Greg Abel, the company’s vice chairman responsible for running all businesses except insurance, will remain his anointed successor.

“Everyone talks about the executive bench, which is ridiculous,” he added. “There aren’t many people who can run the five largest GAAP net worth companies and all kinds of diverse businesses.”

When Berkshire acquired utility MidAmerican Energy in 2000, Abel worked for the company for more than 20 years. In 2018, he was promoted to Vice Chairman along with Ajit Jain.

Charlie Munger, Buffett’s longtime right-hand man and the company’s vice chairman, added that it’s one of the reasons Berkshire has outperformed other large conglomerates.

“We change managers a lot less often than others, so that helped us,” he said.

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Warren Buffett said the consequences would have been “catastrophic” had U.S. regulators not insured deposits at Silicon Valley and Signature banks.“Despite the FDIC, [Federal Deposit Insurance Corporation] The upper limit is $250,000. . . Berkshire Hathaway’s CEO spoke to tens of thousands of shareholders who gathered in downtown Omaha for the company’s annual meeting Saturday.The comments sparked debate about federal intervention following a string of bank failures in the United States. The federal government has insured deposits at levels above $250,000 covered by federal insurance at both SVB and signatory banks.Regulators were able to circumvent that restriction by designating both as systemic risks. Local bank stocks have fluctuated wildly in recent trading sessions, but depositors are somewhat lulled by the implied assurance that the government will intervene in the crisis.”I can’t imagine anyone in the administration, Congress, or the Federal Reserve … tomorrow I want to go on TV and explain to the American people why I only have $250,000 in insurance,” Buffett added. “It will start running in all banks.”Berkshire is under pressure from the state of the banking system, Buffett said CNBC last month The country “has not survived the bank failure, but its depositors are not at stake,” he said.The sprawling industrial insurance conglomerate used to invest in struggling financial institutions using its balance sheet, which Buffett likened to a fortress. Berkshire invested in both Goldman Sachs and Bank of America during the financial crisis.But so far it has not intervened in the current crisis. Investors note that Berkshire’s portfolio already has positions in many large financial institutions. Counselor of the First Republic sold this month It invests in JPMorgan Chase in a deal coordinated by US regulators. It was due to the rapid deposit flights that the First Republic suffered. Advisors believed the bank would burn out with billions of dollars in capital injections if its investment in Berkshire wasn’t enough to boost confidence. Buffett said Berkshire has become much more “cautious” than in previous financial crises, as depositors could move funds out of banks quickly. warned. Americans are “probably as confused about banking as ever, and that’s having an effect,” he added.”I have no idea what happened to deposit stickiness…and it changes everything. You can do it in seconds.”The so-called Oracle of Omaha said some of the problems in the banking system can be seen by anyone willing to dive into the annual reports of already-failed banks, wrote the First Republic on low interest rates Pointed out jumbo mortgages. . The Federal Reserve Board condemned For Trump-era regulatory and supervisory failures, and the inadequate risk management processes that ultimately led to the demise of SVB.Buffett added that Berkshire was on the sidelines but had its capital ready should the opportunity present itself.“We store our cash and Treasury bonds at Berkshire . “I don’t think so, but it’s possible.”As a tribute to the crisis, but with his signature Midwestern folk charm, he pulled out two business cards when questioned about the issue: one for “Available for Sale,” the other. reads “held to maturity” and refers to the way banks classify the securities they hold on their balance sheets.Buffett answered questions from shareholders on Saturday that touched on real estate planning, value investing and U.S.-China relations, and above all else gathered at the CHI Health Center in downtown Omaha was his succession at Berkshire.The 92-year-old investor has confirmed that Greg Abel, the company’s vice chairman responsible for running all businesses except insurance, will remain his anointed successor.

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“Everyone talks about the executive bench, which is ridiculous,” he added. “There aren’t many people who can run the five largest GAAP net worth companies and all kinds of diverse businesses.”When Berkshire acquired utility MidAmerican Energy in 2000, Abel worked for the company for more than 20 years. In 2018, he was promoted to Vice Chairman along with Ajit Jain.Charlie Munger, Buffett’s longtime right-hand man and the company’s vice chairman, added that it’s one of the reasons Berkshire has outperformed other large conglomerates.”We change managers a lot less often than others, so that helped us,” he said.
https://www.ft.com/content/89a7adb8-af41-45d1-953b-6851742b50a5 Buffett says bank run would have been ‘devastating’ without deposit guarantees

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